AN EU INITIATIVE ON CONCESSIONS
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1 AN EU INITIATIVE ON CONCESSIONS QUESTIONNAIRE TO CONTRACTING AUTHORITIES The Commission is presently assessing the need for and impact of an initiative on concessions 1 with a view to improving the current legal framework. In this context, the Commission has prepared the present questionnaire the aim of which is to learn from public authorities awarding concessions as well as from their associations on their experience, hear their views on how the present rules on concessions work and to gather suggestions for improvements. The questionnaire is part of a wider consultation of stakeholders which includes an open consultation and two other specific questionnaires addressed to social partners and to private and public undertakings. An initiative on concessions would aim to facilitate the use of concessions and ensure best value for money for both users and contracting authorities, by providing all interested parties with legal security and guaranteeing transparency and equal treatment for economic operators. It would also enhance competition and the internal market in concessions contracts, and contribute to EU policy goals in the field of Public-Private Partnerships, as explained in the Commission's Communication on «Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships». In line with the Lisbon Treaty provisions and, in particular, the principle of proportionality, and taking into due account of the Commission's guidelines on «Better Regulation» as well as the European Parliament's report on new developments in public procurement (2009/2175(INI)), the Commission will seek to establish the most appropriate way to meet those objectives without making the legal framework too complex or burdensome while ensuring the necessary legal certainty. Profile: 0.a. Type of organisation State authority Regional authority Local authority DOBRICH MUNICIPALITY Association of regional or local authorities Body governed by public law (e.g. public institutions or foundations) Association of bodies governed by public law 1 According to the current definition of concessions set out in art. 1 (3) and (4) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, ( concessions are contracts similar to public contracts, with a difference that the contractor bears the economic risk of the exploitation of the work or service at stake. In light of the resulting case law of the EU Court of Justice, "the essential characteristic of the concession is that it is the concessionaire himself who bears the main, or at least the substantial, operating risk".
2 Other contracting entity in the meaning of Directive 2004/17/EC 2 Other (please specify) 0.b Scope of activity National Regional/ local - DOBRICH MUNICIPALITY Sectoral (please specify) 0.c Size of the respondent Please specify the approximate i) total number of beneficiaries of your activity 3 and ii) total budget of your organisation. 73 concessioner The planned budget of Dobrich Municipality for 2010 is BGN. If you respond as an association, please specify the approximate aggregate a) total number of beneficiaries and b) total budget of the Members of your association. 0.d What sector(s) are you responsible for? Water distribution Waste water and sewage processing Waste treatment Energy or heating services Transport (railway, tramway, bus, automated systems, cable) Port services Airport services Postal services Education (administration of schools, specialised education, training or catering) Health services Social services (kindergartens, employment coaching, care of the elderly) Road & Motorway operation Sports and leisure facilities (administration sports halls, library services) Catering Car parking Judiciary systems (administration of Courts or prisons) Research & laboratory services Other (please specify) - DOBRICH MUNICIPALITY 2 See Title I, Chapter II of Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors ( 3 E.g. total numbers of inhabitants in case of a municipality, total number of users in case of an utility operator etc.
3 0.e Country AT BE BG CY CZ DE DK EE EL ES FI FR HU IE IT LT LU LV MT NL PL PT RO SE SI SK UK IS LI NO CH 0.f Experience with concessions - Have you awarded a concession within the last 10 years? YES - Are you considering to award a concession in the future? YES 0.f 1 If not, why not? Direct provision of these services by contracting authorities Use of other public contracts which cannot be defined as concessions. Other please specify 0.f.2 If yes, in what sector? Water distribution Waste water and sewage processing Waste treatment Energy or heating services Transport (railway, tramway, bus, automated systems, cable) Port services Airport services Postal services Education (administration of schools, specialised education, training or catering) Health services Social services (kindergartens, employment coaching, care of the elderly) Road and motorway operation Sports and leisure facilities (administration sports halls, library services) Catering Car parking Judiciary systems (administration of Courts or prisons) Research & laboratory services Other (please specify) Assessment of the current situation 1. Are concessions a frequently used type of contract in your Member State? If possible, please elaborate, quote relevant statistics and explain the reasons. Dobrich Municipality has 73 active contracts for concessions from 1998 at present.
4 2. What is according to your estimation - the economic importance (by number and value of contracts) of the use of concessions in the market(s) on which you procure works and/or services? What is their increase potential? Please respond to the above questions for each market separately. The approximately value of the yearly concession payments is BGN. Our estimation from economic importance is: It is more important the concessioner to provide good quality of the service and the concessioner to be a good user. 3. Are you familiar with the jurisprudence of the Court of the EU on concessions? Do you consider it to provide sufficient guidance on the award of concessions? Please explain your answer. - YES, construction concession. 4. The Commission explained the definition and the application of the Treaty principles to the award of concessions in its Communication on Concessions 4 and in the Green paper on PPPs 5. Do you consider that the guidance provided by the Commission is sufficient for you to conduct a procedure for the award of concessions? Please explain your answer. - YES 5. In your view, what are the possible shortcomings and operational downsides, if any, associated with the present definition of concession in EU law 6? We don t view shortcomings and operational downsides at this moment. 6. Do you consider it difficult distinguishing between public contracts and concessions 7? If yes, please explain with reference to one or more of the responses below. - NO a) It is difficult to define "substantial" or "significant part" of the operating risk b) It is not clear what categories of risks are to be taken into account to this effect c) It is not clear how much of the consideration can be paid by the contracting authority c) Other reasons (please specify) 4 Commission interpretative communication on concessions under Community law, Official Journal C 121, 29/04/ Green Paper on public-private partnerships and Community law on public contracts and concessions, COM/2004/0327 final 6 See Article 1 (3) and (4) of Directive 2004/18/EC (referred to in footnote 1) 7 According to the ECJ judgment in Helmut Mueller case (C_451/08), "the essential characteristic of the concession is that it is the concessionaire himself who bears the main, or at least the substantial, operating risk"
5 7. With reference to your national law or national practice, how do you differentiate between a public contract and a concession? And between a works concession and a services concession? Please provide the relevant references. Public contract: LAW FOR THE PUBLIC PROCUREMENT Concessions: - LAW OF THE CONCESSIONS - LAW OF THE CONCESSIONS In this law very clearly and detailed are explained the meaning of concession for construction and concession for service According to the low: The concession shall be right to exploitation over an object and/or a service of public interest, granted by concedent to trader concessionaire, against the obligation of the concessionaire to construct and to manage and maintain the object of the concession or to manage the service at his/her own risk. The concession shall be granted on the basis of long term written contract with defined material interest, concluded between the concedent and the concessionaire. According to their subject the concessions shall be: 1. concession for construction; 2. concession for service; 3. concession for extraction. 8. How would you explain, under EU law, the relation between the notions of an exclusive right and a concession? How do you differentiate between a concession and a licence? Please explain. In Republic of Bulgaria there are detailed described laws, where concrete are showed the notions and their interpreting. 9. What procedure do you follow for the award of a service concession? Please describe the procedure with reference, in particular to services covered, level of publication, method for calculating the value of the contract, applicable thresholds, technical specifications and selection and award criteria. The concession for service is regulated at the LAW OF THE CONCESSIONS: The concession for service shall have as subject management of the service of public interest at concessionaire s risk, the remuneration consisting in the right of the concessionaire to exploit the service or in this right and compensation on behalf of the concedent under art. 6 from the LAW OF THE CONCESSIONS. The concessionaire s right to exploit the service of public interest shall include provision of services and/or carrying out other economic activities against getting income. Management the service of public interest shall include maintaining the service available and provision of consistency and quality level of the provided services in conformity with the clauses of the concession contract. The concession for service may also include implementing of partial construction and mounting works in the cases when there is need for partial extension, partial reconstruction, partial rehabilitation or repair of the subject of the concession.
6 In the cases (of the above paragraph) the decision for opening the procedure for granting concession and in the concession contract the partial construction and mounting works shall be determined as consequence or supplement of the basic subject of the concession. Obligation of the concessionaire to implement concession payment to the concedent for the granted right to exploitation of the object of the concession ma be provided. The extent of the concession payment shall be determined in each concrete case depending on: 1. the economic benefit which the concessionaire will receive from the concession; 2. the fair distribution of the economic benefit between the concedent and the concessionaire; 3. the achieving of socially acceptable price of the services rendered with the object of the concession when the price is determined with normative act. The order and the terms for implementing the concession payment shall be determined with the concession contract The commission shall implement selection of the participants admitted to participation in the procedure for granting of concession according to the following criteria: 1. fitness for fulfillment of professional activity; 2. economic and financial status; 3. technical abilities and/or professional qualification. The criterion fitness for fulfilment of professional activity shall be proven by: 1. registration in professional and commercial register according to the legislation of the state in which the candidate is settled, and/or 2. experience in the fulfilment of activities identical or similar to the activities which may be implemented with the subject of the concession as well as the possession of licenses or permits for implementing the respective activities according to the legislation of the state in which the candidate is settled. The criterion economic and financial status shall be proven by: 1. registered capital stock fund of the candidate; 2. balance sheet and/or market value of the assets of the candidate which shall be certified with the annual financial report or with the respective market valuation prepared by licensed valuers; 3. annual financial reports of the candidate for the last three years. The criterion technical abilities and/or professional qualification shall be proven by: 1. declaration containing lists of fulfilled or being fulfilled during the last 5 years contracts with subject identical or similar with the subject of the concession including the basic elements of the contracts, and/or 2. description of the technical equipment and the abilities for ensuring high quality fulfilment of the concession contract, and/or 3. list of the technical persons, including these who will be responsible for the quality of fulfilment of the concession contract, and/or 4. certificates for quality management or preservation of environment, and/or
7 5. documents certifying the education and the professional qualification of the managerial staff who will be responsible for the fulfilment of the activities of the concession contract, and/or 6. data about own or hired technical persons who the candidate or the participant will use for fulfilment of the construction upon concession for construction. The minimum levels of applicable requirements related to meeting the criteria for selection of the participants shall be determined in compliance with the specifics of the subject of the concession and/or management of the service of public interest and they shall be indicated in the announcement. With the decision for opening of procedure for granting of concession may be provided opportunity the proving of the compliance with the criteria of par. 1, items 2 and 3 from art. 26 from the LAW OF THE CONCESSIONS to be implemented through the capacities of third persons. In these cases the candidate should present proofs that he will have at disposal the capacity of the third person. The candidates who meet the criteria for selection shall be determined with decision of the commission and may continue their participation in the procedure and the rest shall be removed. Concession shall be granted observing the following principles: 1. publicity and transparency; 2. free and loyal competition; 3. equality of all candidates and participants in the procedure for granting of concession and not admitting discrimination. In the decision for opening of procedure for granting of concession, in the announcement or in the documentation for participation in the procedure for granting of concession cannot be included conditions or requirements giving priority or ungrounded restrict the participation of defined persons. The commission for conducting the procedure for granting of concession, called hereinafter "the commission", shall not have right to concede information with which is discriminated or favoured candidate or participant in the procedure. 10. Whenever you resort to a negotiated procedure 8 to award a concession contract, what guarantees and arrangements do you apply to preserve transparency and fairness of the procedure? Dobrich Municipality provide only open procedure for concession. 11. In case of existing national legislation on the award of services concessions please indicate the relevant references and its scope: National rules Regional rules Local rules Are there any sectoral specificities? Please describe. 8 According to Art (d) of Directive 2004/18/EC, " Negotiated procedures means those procedures whereby the contracting authorities consult the economic operators of their choice and negotiate the terms of contract with one or more of these".
8 12. Do you apply the same procedures for the award of concessions to a mixed entity (public-private undertaking) as to any other third parties? If not, please explain. YES 13. What are the costs and benefits of the procedure you presently follow for the award of concession contracts? Please explain with reference to compliance and enforcement costs and the price and quality of the services awarded. Dobrich Municipality has two type concession contracts: concession for service and concession for construction. The costs and the benefits for each procedure are strictly individual. 14. What is the average duration of service concessions you have awarded and which services were concerned? Is the duration limited by any concerns on competition for the contract or on the efficiency of the services to be provided? The average duration is years. 15. What is the average number of tenderers in the procedures for the award of concessions you have launched? The average number of tenderers from 2 to 3. Were there any tenderers from other Member States? (please distinguish between tenderers established in your MS and those tendering directly from another MS) Were there any consortia composed of SMEs? NO 16. Have you ever awarded a concession to a tenderer from another MS (please specify as above)? NO What about to a consortium composed of SMEs? NO 17. Are you aware, in tendering procedures you have launched of any practices of tenderers or of market structures restricting competition between tenderers (i.e. collusion or other unfair methods of competition, oligopolies, etc.)? Please explain. NO 18. In your opinion what are the most important reasons favouring the direct provision of a service? Services are provided according to Law of Concessions and Law for the Public Procurement. 19. In your opinion what are the most important reasons favouring the use of concessions? Long term concession for identifying a greater certainty for investors - the concessionaire. So he invested more money in property, protect the property with due diligence and offer better services.
9 20. In your view and taking into account the present circumstances, how will the above reasons play into your future decision on whether to opt for direct provision of a service or for the award of a service concession contract? Provide services through a concession contract (as a natural matter the type of service). 21. What is your assessment of the provisions of Directive 2004/18/EC 9 on works concessions (especially concerning the advertisement, time limits, award of complementary works and sub-contracting)? In particular: YES a) Do they ensure a sufficient degree of transparency and equal treatment of the award procedure? b) Do they ensure sufficient degree of legal clarity? c) Do they involve important costs? If yes, what categories of costs (compliance cost? enforcement cost?) and what is their importance in relation to the contract value? d) What are their benefits? e) What is their impact on prices and quality? Expected impacts of new legislation on concessions General issues 22. In you opinion, what would be the results of new legislation providing for compulsory advertisement of concessions at the European level services concessions in your Member State with regard to: a) Consumers b) Companies c) Incumbent operators d) Jobs and wages e) Investments and innovation f) The market structure g) Public subventions (associated with the provision of the service) In any case, greater visibility will contribute to some positive outcomes for all. 23. Under EU law public authorities are free to provide services (including services of general economic interest) directly or to externalise provision of those services to third parties (i.a. by means of concessions). Without prejudice to this freedom, what could be 9 See in particular Articles 56 to 65 of Directive 2004/18/EC. The award of services concessions are presently not subject to any provisions of this Directive (with the exception of the definition itself, see Article 1 (4)).
10 the impact, if any, of a new legislation providing for compulsory advertisement of concessions at the European level in relation to services which are at present: a) Directly provided by public authorities or public "in-house" 10 entities (notably in terms of possible incentives for shift towards concession-based provision of services)? b) Provided on the basis of concessions (notably in terms of possible incentives for shift towards direct provision of services by administration or public "inhouse" entities? Please distinguish between the likely impact on short, medium and long term. 24. In case of EU a new legislation providing for compulsory advertisement of services concessions at the European level, do you expect to see new entrants to the market? NO If yes, please indicate the categories of entrants below which are likely to enter the market Foreign (non-national) companies Domestic companies extending activities to new business areas (e.g. multiutility companies) Joint ventures between national and foreign companies Small and Medium Enterprises Specific questions 25. With reference to service concessions would you be in favour of EU rules providing for the a) The obligation for the contracting authority to publish a concession notice in the Official Journal of the European Union? What should the thresholds for publication and which method should be used to calculate them? We think the value needs to be at least over Euros and are used as the basis for calculation services, and any income from them. b) The obligation to respect minimal deadlines for the presentation of applications for the concession (e.g. not less than 52 days); The term is sufficient for providing the procedure. c) The obligation for a concession holder to respect the principle of non-discrimination while selecting holders of sub-contracts (if possible, please also give your 10 The conditions of the "in-house" status have been specified by the ECJ in its judgment in the Teckal case (C- 107/98)
11 assessment of the relevant provision presently applicable to works concession holders) 11 ; According to the legislation of Republic of Bulgaria: Concession shall be granted observing the following principles: 1. publicity and transparency; 2. free and loyal competition; 3. equality of all candidates and participants in the procedure for granting of concession and not admitting discrimination. d) The possibility for direct award of additional services to the original concession holder only if these services, through unforeseen circumstances, have become necessary for the performance of the originally stipulated services and if such additional services are technically or economically inseparable from or strictly necessary for the completion of the original services; This is a good possibility. e) The possibility for the contracting authority to require the concession holder to award a minimum of 30% of sub-contracts to the third parties, or to request the concession holder to specify the percentage of services to be sub-contracted to the third parties; This is a good possibility. f) Effective remedies for aggrieved bidders with the same guarantees as those provided under the Remedies Directives 12? Please explain your answers above. For each of the above options, please indicate what effects you would expect on access to the market and competition in the sector as well as other specific positive/negative impact you might see (e.g. on innovation, consumer satisfaction, sustainability of services, public subventions, jobs, etc.) 11 See Title III, Chapters II-III of Directive 2004/18/CE 12 Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts ( Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts ( Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (
12 26. With reference to service concessions and works concessions would you be in favour of EU rules providing for: a) The obligation to clearly announce qualification criteria restricted to issues related to financial, economic and technical capacity of a tenderer? Please justify indicating possible effects on access to the market and competition in the sector and other specific positive/negative impact (e.g. on innovation, consumer satisfaction, sustainability of services, public subventions, jobs,). b) The possibility for an EU operator (such as a SME) to prove it meets qualification criteria for participation in a tendering procedure, in particular by relying on the standing of other entities (other members of the consortium, sub-contractors), regardless of the legal nature of the links which it has with them, provided that it is able to show that it actually has at its disposal the resources of those entities. c) The obligation to restrict the admissible award criteria to price and economically most advantageous tender? Alternatively, would you be in favour of introducing basic guarantees of objectivity and non-discrimination while setting award criteria? With regard to each of the aforementioned options. d) Provisions on non-discriminatory use of technical specifications, e.g. as provided for in Art. 23 of Directive 2004/18/EC? e) The limitation (with the exception of the utilities sector) of the choice between an open procedure, restricted procedure or competitive dialogue, as described in Directive 2004/18/EC, and admitting negotiated procedure only in exceptional situations, e.g. those currently provided for in Art. 30 of Directive 2004/18/EC? Alternatively, would you be in favour of introducing basic requirements of standards and arrangements guaranteeing equal treatment and transparency in the conduct of award procedures (notably negotiated procedures)? Which requirements would you consider as the most relevant? Please explain your answers above. For each of the above options, please indicate what effects you would expect on access to the market and competition in the sector as well as other specific positive/negative impact you might see (e.g. on innovation, consumer satisfaction, sustainability of services, public subventions, jobs, etc.) Many of these provisions are included in force at the present moment in the Law of Concessions and its implementing rules and apply both to concessions for construction and concessions for service. 27. Do you consider that the current legal framework of modifications of concessions, as established by the European Court of Justice in its Succhi di Frutta, Pressetext, Acoset and Wall AG judgments 13, is sufficiently clear an allows to take into account the evolving nature of concessions? Please explain. 13 Respectively, cases C-496/99, C-454/06, C-196/08 and C-91/08.
13 28. If you encountered any problem in relation with the award of concessions other than those referred to in the questions above, or you wish to make any other remarks on a EU initiative on concessions, please describe them here (specifying whether it concerns works concessions and services concessions).
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