Sunday, 14 December 2008

Procurement in the European Union: Service concession

How does the Procurement Directive 2004/18/EC define a service concession?

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Service concession

Article 1.4 of the Procurement Directive 2004/18/EC defines a service concession in the following way:

4. ‘Service concession’ is a contract of the same type as a public service contract except for the fact that the consideration for the provision of services consists either solely in the right to exploit the service or in this right together with payment.


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Public service contract

First we have to return to the definition of a public service contract in Article 1.2(d) to find the similarities:


(d) ‘Public service contracts’ are public contracts other than public works or supply contracts having as their object the provision of services referred to in Annex II.

A public contract having as its object both products and services within the meaning of Annex II shall be considered to be a ‘public service contract’ if the value of the services in question exceeds that of the products covered by the contract.

A public contract having as its object services within the meaning of Annex II and including activities within the meaning of Annex I that are only incidental to the principal object of the contract shall be considered to be a public service contract.

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Annex II services

Annex II Services referred to in Article 1(2)(d), from page 67 in the consolidated Directive, lists the following services (with further precisions in the Annex):

1. Maintenance and repair services
2. Land transport services, including armoured car services, and courier services, except transport of mail
3. Air transport services of passengers and freight, except transport of mail
4. Transport of mail by land and by air
5. Telecommunications services
6. Financial services: (a) Insurance services; (b) Banking and investment services
7. Computer and related services
8. Research and development services
9. Accounting, auditing and bookkeeping services
10. Market research and public opinion polling services
11. Management consulting services and related services
12. Architectural services; engineering services and integrated engineering services; urban planning and landscape engineering services; related scientific and technical consulting services; technical testing and analysis services
13. Advertising services
14. Building-cleaning services and property management services
15. Publishing and printing services on a fee or contract basis
16. Sewage and refuse disposal services; sanitation and similar services

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Public service concession

What makes a public service contract into a service concession is that the consideration for the provision of services consists either solely in the right to exploit the service or in this right together with payment.

The Commissions Guide to the Community rules on public procurement of services (based on the old Directive 92/50/EEC) explains the background and offers a broad description on page 5:

The Commission's original proposal contained provisions on public service concessions analogous to those existing in the Works Directive for public works concessions. However, the Member States in Council decided not to include this type of contract because of wide divergence of national practices in matters of public service concessions. Thus the Services Directive does not apply to public service concessions, which broadly means that the Directive does not apply to contracts whereby a public authority transfers the execution of a service to the public lying within its responsibility to an undertaking of its choice and the latter agrees to execute the activity in return for the right to exploit the service, or this right together with payment. Nevertheless, the award of such contracts is, of course, subject to the Treaty rules concerning the freedom to provide services and to the general principles of Community law such as non-discrimination, equality of treatment, transparency and mutual recognition.


Ralf Grahn