New directive on contract concessions

By Ruth Smith

In response to inconsistencies and uncertainties at European level regarding the procurement of concession contracts, the new directive on concessions is intended to clarify and standardise requirements and produce a more level playing field. The latest draft has just been published.

A concession contract is a contract under which a contracting authority or a utility outsources works or services to a contractor or provider, who then has the right to commercially exploit those works or services in order to recoup its investment and make a return. The key feature is that the contractor/provider bears the operating risk of the arrangement and so has no guarantee of recouping its investment or operating costs.

Common examples of concessions might include running catering establishments in publicly owned sports and leisure facilities, the provision of car parking facilities and services or the operation of toll roads. Under the existing public procurement directive and UK regulations, a ‘light-touch’ procurement regime already applies for certain public works concessions. Services concessions fall outside the scope of the existing legislation but, if there is a cross-border interest in the arrangement, will still be caught under the EU Treaty and so subject to the general obligations of transparency (including a duty to advertise), equal treatment and non-discrimination…

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