New Rules on Public Contracts and Concessions Simpler and More Flexible

NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE

Internal Market and Services 1

TABLE OF CONTENTS

2 MESSAGE FROM RAMÓN LUIS VALCÁRCEL SISO, Europe Direct is a service to help you find answers PRESIDENT OF THE COMMITTEE OF THE REGIONS to your questions about the European Union. 3 FOREWORD BY MICHEL BARNIER, MEMBER OF THE EUROPEAN COMMISSION Freephone number (*): IN CHARGE OF INTERNAL MARKET AND SERVICES 00 800 6 7 8 9 10 11 5 TWO MAJOR REFORMS FLEXIBLE MORE AND SIMPLER CONCESSIONS AND CONTRACTS PUBLIC ON RULES NEW (*) Certain mobile telephone operators do not allow access to 00 800 numbers LESS UNCERTAINTY, or these calls may be billed. FREEDOM OF ORGANISATION RETAINED

7 PUBLIC PROCUREMENT A DRIVING FORCE FOR JOBS AND GROWTH, FOR THE BENEFIT OF SOCIETY

13 CONCESSIONS A NEW CHAPTER FOR THE SINGLE MARKET

More information on the European Union is available on the Internet (http://europa.eu). Luxembourg: Publications Office of the European Union, 2014 ISBN 978-92-79-36177-7 doi:10.2780/45535 © European Union, 2014 Reproduction is authorised provided the source is acknowledged. Printed in Belgium 2

3 MESSAGE FOREWORD

Public procurement is a powerful lever for growth and jobs. The Com- Public contracts and concessions are tools to modernise the public mittee of the Regions and its rapporteur, Ms Catarina Segersten- sector and contribute to a more equitable and sustainable model Larsson, stressed in their opinion that it is important for small and of growth. The rules we have adopted will allow public policymakers medium-sized enterprises to be able to take part in public procure- to use these tools more effectively, and at the same time make the ment procedures. They also insisted that the rules be simplified and best use of taxpayers’ money. that it should be possible to take environmental and social issues into account more easily and to launch procurement contracts based The simplification and legal certainty brought about by this reform on innovation. With these new rules, I am convinced that public au- ‘ will mean that public contracts can be managed more easily and thorities will be able to go even further and use public procurement effectively, with savings in terms of time and resources for both to deliver innovation, sustainability and inclusion. public clients and enterprises, in particular SMEs. Social inclusion, the environment and innovation are also recognised as priorities in Ramón Luis The new rules also take the specific needs of regional and local Michel Barnier their own right, allowing public policymakers to opt for the best Valcárcel Siso authorities into account. They give public authorities the possibility Member of the European offer rather than simply the cheapest one. President of Commission in charge the Committee to adapt the award criteria in function of their own objectives, such of Internal Market of the Regions as integrating young people or the long-term unemployed in the and Services As far as concessions are concerned, this is a form of public private

labour market or reducing the CO2 impact of the goods they pur- partnership which has proved its worth, in particular for the financing chase. This gives them the freedom to take their specific needs of the infrastructure Europe so badly needs. For policymakers using FLEXIBLE MORE AND SIMPLER CONCESSIONS AND CONTRACTS PUBLIC ON RULES NEW more into account, in accordance with the principle of subsidiarity. this option, and stakeholders in the sector, the new directive creates an internal market which works, where local authorities, enterprises The new rules on concessions will improve legal certainty for all and SMEs can gain access to opportunities five to ten times greater public authorities, and enable European businesses to apply for calls than those in their national market alone. Concessions will benefit for tender in all EU Member States. from a single, transparent and reliable European framework guaranteeing the freedom of organisation, better value for money for local authorities and legal certainty for enterprises.

Public contracts and concessions are powerful generators of growth and employment. Let’s act! 4

© SHUTTERSTOCK proper application once they are adopted. The CommissionwillassistMemberStatestotransposetheserules and willmonitortheir law (exceptwithregardtoe-procurement,wherethedeadlineisSeptember 2018). tional The MemberStateshaveuntilMarch2016totransposethenewrulesintotheirna - protect certain well established ways of managing public services: The newEuropeanrulesdonotaffect nationalorlocalcompetenceinthisareaand • • WHEN WILL THE NEW RULES APPLY? TO ORGANISE COOPERATION BETWEEN PUBLIC AUTHORITIES GUARANTEEING THE FREEDOM TO ORGANISE PUBLIC SERVICES AND FREEDOM OF ORGANISATION RETAINED LESS UNCERTAINTY, TWO MAJOR REFORMS on public contracts and concessions apply. delegating thesetaskstoexternalfirms–itisonlyinthelattercasethatrules the publicinteresttasksfor whichitisresponsible,eitherusingitsown stafforby organise publicservicesastheyseefit.A authorityremainsfreetoperform are met. of snow inwintercouldbenefitfromthisexemptionaslongtheassociatedconditions For example,anagreementbetween adjacentlocalauthoritiesonclearingtheroads directives on public contracts and concessions (e.g. in the field of social housing). met by theentitiesconcernedsothattheycanbeexemptedfromscopeof in E N nd oftheuncertaintyregardingcooperationbetweenpublicauthorities, ational freedomoforganisationnotaffected: itisfor theMemberStatesaloneto

particular betweenlocalauthorities.Thenewrulesspecifytheconditionstobe particular

5 NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE 6

© SHUTTERSTOCK to provide high quality public services to users: ties andfirms,inparticularSMEs, so thatpublicfundsareusedasefficientlypossible Simpler andmoreeffective rules havebeenestablishedtobenefitbothpublicauthori- emergence of a mustbeharnessedtostimulategrowth inEuropeandusedtopromotethe procurement constraints, haveshown theneedtoupdatethem.Givenitseconomicimportance,public date from2004andrecenteconomic,socialpoliticaltrends,together withbudgetary annually or3.4 Public contractsfallingwithinthescopeofEuropeandirectivesrepresent EUR425billion LESS RED TAPE – SIMPLER AND MORE FLEXIBLE PROCEDURES WHAT BENEFITS WILL THE NEW RULES BRING? WHY MODERNISE THE RULES ON PUBLIC PROCUREMENT? FOR THE BENEFIT OF SOCIETY A DRIVING FORCE FOR JOBS AND GROWTH, PUBLIC PROCUREMENT quality public procurement which respects social needs.’ quality public procurement which respects social needs.’ labour rights,willrepresenta hugestepforward towards high tracts andreinforcing themechanismsfor protectingsocialand it easierfor companies,inparticularSMEs,tobidfor publiccon- best valuefor moneyratherthanmerelythecheapest,making or undertake works.Inthiscontext,favouringthebidoffering helping public authorities when they purchase goods or services public moneyisusedmoreeffectively andtransparentlywhilst ‘The newEuropeanrulesonpublicprocurementwillensurethat % oftheEU’s GDP(2011figures).Thecurrentrulesonpublicprocurement more sustainable and inclusive model of economic development. Member of European Parliament and rapporteur on the reform Marc Tarabella

7 NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE 8 on conditions(suchaslower energyexpenditure).Theywillbeallowed policy toevaluatebids The newruleswillallow awardingauthoritiestoincludesocial,environmentalandother of innovative products and services establishes a helping toresolvethechallengesfacingsocietytoday. Thenewprocedurefor thepurchase and servicescontributestoimproving theeffectiveness andqualityofpublicserviceswhilst Innovation isthedrivingforce for futuregrowth. Theacquisitionofinnovative goods,works • • • • • • • • • PUBLIC PROCUREMENT AT THE SERVICE OF SOCIETY ENCOURAGING INNOVATION the basis of broader parameters: atory by September 2018. a of disadvantagedpeopleortheuse ofenvironmentally-friendlymaterials,couldbe solution tailored to the needs of the buyer. cessful tenderer. ment andtheprinciplethatsupportingdocumentsarerequiredonlyfromsuc- tenance andhave a longerlife span. even thoughtheyaremore expensive initially, consumelessfuel,requiremain- T Example: a can be taken into account. T partners. the public authority has the option to A A S G A S L he he ess paperwork implified publication obligations for regional and local authorities. horter procedural deadlines. t eachstage(researchanddevelopmentmarketing ofthesolutionby thepartner), more widespread use of

reater determining factor in the choice of contractor. tendering phase to choose the most suitable partner(s) to develop an innovative total lifecycle cost(includingthecarbonfootprint) ofgoodsorservicesbought production process for goodsandservicespurchased,e.g.theemployment freedom to negotiate thanks to less cumbersome negotiated procedures. local authority wishing to purchase a , thankstothenewsingleEuropeandocumentfor publicprocure- electronic means as the main form of communication, oblig or reduce the number of end thepartnership or reduce the numberof clear legal framework featuring: school bus could favour buses which, -

participation by SMEs in public procurement would have a figures); theyhaveanimportantroletoplayinjobcreation,growth andinnovation; greater principles of democracy and equal access to contracts: of interestandillicitpracticesundermine therules,todetrimentoffundamental Corruption inpublicprocurement costs oursocietiessomeEUR2billiona year. Conflicts SMEs represent52 COMBATING FAVOURITISM AND CORRUPTION • • • FACILITATING ACCESS FOR SMES • unemployed peoplefor a publicbuildingsmaintenancecontract. Example: a localauthoritycouldfavour a firmwhichemploys morelong-term principle (at a law or environmental protection obligations. ry of employee makes up more than 30 the long-term unemployed or members of disadvantaged minorities) where this catego- is tobringintothelabourforce disabledorotherwisedisadvantagedpersons(suchas contracts and must be able to explain the reasons for not doing so. A A T C he minimumturnover required totake part ina publictenderistobecapped ny ontracts couldbereservedfor shelteredemployment undertakingswhoseobjective warding authorities are encouraged to abnormally low bid willberejectedifitindicatesa failuretoobservesocial,labour respect could be excluded from public tendering procedures. respect could be excluded from public tendering procedures. monitor this;anyeconomicoperatorfound tobeatfaultinthis law. Itisfor theMemberStatesandpublicauthoritiesto under EUornationallaw, collectiveagreements orinternational applicable environmental,socialorlabourlawobligations A new general clause recalls maximum of double the estimated value of the contract). % oftheEUeconomyandwin60 % of the staff of the organisation concerned. split largecontractsintosmallersub- the need to comply with the the needtocomplywith % of public contracts (2006-2008 % ofpubliccontracts(2006-2008 positive impact on growth:

9 NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE 10

© SHUTTERSTOCK from one country to another. Simpler arrangements were called for: country. Different culturaltraditionsmeanthatsuchservicesareorganisedverydifferently Social, healthandeducationservicestend,by theirverynature,tobelimitedhome A NEW SIMPLIFIED REGIME FOR SOCIAL SERVICES • • • • • • • security services. cultural services,suchashomehelpeducationandtraining,social ures to prevent, identify and remedy such conflicts. awarded. awarded. European structural funds are involved). falling withinthescopeofnewregime,exceptinspecificcases (inparticularif ciple, notbeingattractivetoenterprisesfromotherMemberStatesand therefore not ber States to do away with the cost-only criteria for the award of such contracts. (e.g. accessibility, continuity, needsofthevariouscategoriesuser);scopefor Mem- firm bestmeetingqualitativecriteriasetoutinthetenderfor theserviceinquestion F V B undue influence or making false declarations. T A those S C tors and operators from other Member States; otherwise, national rules will apply. form andnotification ofawardthecontract;equaltreatmentnationalopera- ocus onthequalityofsocialservices:possibilityawardingcontractto he larification ery limitedEuropean-levelobligations: publication of a ignificant raisingofthethresholds:contractsconcernedwill, henceforth, be cleardefinitionof‘conflictsinterest’inorderfor MemberStatestotake meas - eneficiary services:thoseexplicitlyidentifiedintheDirective,i.e.social,healthand exclusion ofanyeconomicoperatorguiltyillicitconduct,suchasexerting exceeding services is entrusted to an outside company. simplified regimewillapplyonlyiftheperformance ofsuch ising theirown obligatorysocialsecurityservices.Thenew The MemberStateswillremainsolelyresponsiblefor organ- of thesituationsallowing amendmentstocontractsaftertheyhavebeen EUR 750 000; thoseofa lower value will be considered as, in prin-

tender notice in a

simplified

11 NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE 12

13 CONCESSIONS A NEW CHAPTER FOR THE SINGLE MARKET

‘The adoption by the European Union of clear, simple and prag- matic rules for the award of concession contracts is a major step forward for the internal market and its citizens. The added value of this new legislation is crucial: not only will it put an end to years of evolving case law and legal uncertainty due to a lack of clear rules, a damaging situation for both public authorities and economic operators, but it will ensure that public authorities’ decisions are impartial and transparent, and that taxpayers’ money will be properly spent. Above all, this Directive creates a stable and reliable environment for investment in high quality public services and much needed infrastructure. This is what Europe needs to find its way to global competitiveness and economic recovery.’ SIMPLER AND MORE FLEXIBLE MORE AND SIMPLER CONCESSIONS AND CONTRACTS PUBLIC ON RULES NEW Philippe Juvin Member of the European Parliament and Rapporteur for concessions

WHAT ARE CONCESSIONS?

Concessions are well known forms of partnerships between the public sector and mostly private companies which have demonstrated their usefulness, for instance in the development of infrastructure. According to the European Investment Bank, more than 1 300 public private partnership (PPP) contracts were signed in the EU between 1990 and to 2009, representing more than EUR 250 billion. Concessions are the most common form of PPP (60 %).

Concessions are used in vital sectors of the economy affecting the quality of life of all EU citizens on a daily basis. For example, concessions include the provision of road and rail transport, port and airport services, motorway maintenance and management, waste management, energy and heating services, leisure facilities and car parks. For many Member States, they are an instrument of choice when it comes to developing infrastructure projects, an area where Europe’s needs remain considerable. © SHUTTERSTOCK ©

publics. La directive 89/665/CEE s’applique aux marchés publics tandis que la directive 92/13/CEE s’applique aux marchés dans les secteurs de l’eau, énergie, transports et télécommunications. Les deux directives ont été modifiées par la directive 2007/66/CE. 14 in turn, will contribute to new investment, rules willimprove substantiallythissituationby creatinga stablelegalenvironment.This, lenged andterminated.InallcaseswhereMemberStatesoptfor concessions,thenew amount ofmoneytolong-termconcessions.Publicauthoritiesmayseetheircontractschal- certainty. Economicoperatorsandbankstherefore runhighriskswhencommittinga large legislation.Itlacksbasicclarityand,asa result,doesnotprovide national sufficientlegal The currentlegalframeworkisfragmented,basedoncomplexcaselawanddivergent by Concessions aredifferent frompubliccontractsthathavetraditionallybeenused public debt. and allow for newinvestmentinpublicinfrastructureandserviceswithoutincreasing Concessions EU and services,and,ultimately, economicrecovery. Thenewruleswillalsoensurethat get the • • WHY DO WE NEED RULES ON CONCESSIONS?

public authorities to procure supplies, works or services. companies completing the required work or service. generated would notcover investment andothercostsincurred. than being remunerated through tolls, where they would run the risk that the revenue Example: a privatecompanybuildsandmanagesmotorwayfor a fixedpricerather being permitted to run the work or service. Under a U nder a publiccontract,aneconomicoperatorisawardedfixedpaymentfor best value for taxpayers’ money.

concession, an economic operator receives mobilise privatecapitalandknow-how tocomplementpublicresources have greater access to business opportunities innovation, the substantial remuneration through substantial remunerationthrough development of infrastructure development ofinfrastructure and that public authorities

• • • • TRANSPARENCY AND BUSINESS OPPORTUNITIES LEGAL CERTAINTY WHAT DO THE NEW RULES BRING US? fronted withexternalcircumstancesthattheycouldnothave foreseen. degree offlexibilitytoadapta concessionwhenthecontractingauthoritiesarecon- in Greater transparency will increase business opportunities for EU companies, value of the concession is equal to or greater than EUR 5 million. Compulsory publicationofconcessionnoticesintheEU’s OfficialJournalifthe clear, precise and unequivocal review clauses. The directive also allows a where themodificationshave beenprovided for intheinitialconcessiondocuments Example: itwillbepossibletomodifya concessionwithoutnewawardprocedure they require a lic authoritiesintheirdecisionswhetheramendmentsareofsucha naturethat Clear rulesapplicabletomodificationsoftheoriginalconcessionswillguidepub- sectors, withoutrenderinganyspecificworks orservicestothecontractingauthority. ised toexploitcertainpublicdomains,notablyinthemaritime,inlandportorairport authority. Neitherdoesitqualifyasa concessionifaneconomicoperatorisauthor- ing as aconcession ifsuchanoperatoriscompensatedfor hislossesby thecontract- a low numberofusersmayresultina loss.However, thecontractisnotdefined Example: ifaneconomicoperatorisremuneratedby meansoftollspaidby theusers, cessions and public contracts or unilateral acts such as authorisations or licences. A cleardefinitionofconcessionsallowing stakeholders todistinguishbetweencon- particular SMEs. particular new concession award procedure. certain

15 NEW RULES ON PUBLIC CONTRACTS AND CONCESSIONS SIMPLER AND MORE FLEXIBLE 16

FLEXIBILITY

• No need for public authorities to follow a specific tendering procedure. • Member States define the procedures that apply, taking into account the principles of transparency and equal treatment.

Example: in complex projects to build motorways or provide certain airport services, contracting authorities will be free to run negotiations with candidates and tenderers. However, the contracting authorities will have to adhere to the established subject- matter of the concession, the award criteria and minimum requirements.

IMPARTIALITY AND JUDICIAL PROTECTION HOW TO OBTAIN EU PUBLICATIONS Free publications: • Applicability of the judicial guarantees established in the Remedies Directives (1) • one copy: to all concessions. This increases confidence in the impartiality of public authori- via EU Bookshop (http://bookshop.europa.eu); ties’ decisions and encourages economic operators to take part in tendering pro- • more than one copy or posters/maps: from the European Union’s representations (http://ec.europa.eu/represent_en.htm); cedures at home and abroad. from the delegations in non-EU countries (http://eeas.europa.eu/delegations/index_en.htm); by contacting the Europe Direct service (http://europa.eu/europedirect/index_en.htm) or Example: public authorities will be obliged to abstain from concluding a concession calling 00 800 6 7 8 9 10 11 (freephone number from anywhere in the EU) (*).

contract before the standstill period expires (period during which bidders can decide (*) The information given is free, as are most calls (though some operators, phone boxes or hotels whether they want to initiate review procedures). If they do so within the standstill may charge you). period, the award procedure will be suspended until the review body takes a decision. In addition, national courts will be able to render concession contracts ineffective if Priced publications: • via EU Bookshop (http://bookshop.europa.eu). they have been illegally awarded without transparency and prior tendering. Priced subscriptions: • via one of the sales agents of the Publications Office of the European Union (http://publications.europa.eu/others/agents/index_en.htm).

FOR MORE INFORMATION: http://ec.europa.eu/internal_market/publicprocurement/index_en.htm

1. The Remedies Directives coordinate national review systems of public procurement cases. Directive 89/665/EEC is applicable to the public sector whereas Directive 92/13/EEC is applicable to the utilities sector. Both Directives were substantially amended by Directive 2007/66/EC. KM-02-14-193-EN-C

ISBN 978-92-79-36177-7 doi:10.2780/45535