Contribution to the communication

E3PO contribution to the Communication « Towards a Single Market Act » and an initiative on concessions
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16 May 2011
Posted in Stakeholders News

(European Public Private Partnerships operating compagnies in infrastructure and services)

E3PO contribution to the Communication « Towards a Single Market Act » and an initiative on concessions

19 January 2011, Brussels

1. Regarding the project on Single Market Act that is currently open to consultation, E3PO considers that the document in its current state as a good working basis. While expecting pending texts announced by the European Commission, E3PO suggests:
– to insist more on the necessity to develop PPP in all forms, in particular concessions, in accordance with the guidelines of the European Commission in the November 2009 Communication on PPP . This is a necessity in order to strengthen the quality and efficiency of public services, which is a prerequisite to the integration and the competitiveness of Europe, and taking account of the general state of debt and  deficit of States and local governments;
– therefore to seek the best ways to mobilize available savings to finance investments in PPP;
– to abolish obstacles to PPP and factors of unfair competition between public management and PPP, particularly of a fiscal nature: the prospect opened by the Green Paper on VAT should be deepened in this direction.

E3PO will read with keen interest, as soon as they become available, the proposals of the European Commission aiming at “making the allocation of markets more fluid”, both because they are contractual instruments used in many areas represented by the Association and because of its commitment to maintaining a clear distinction between concessions and public contracts.

2. More particularly on the initiative on concessions announced in the communication on the Single Market Act, E3PO:

– recalls that its priority is to promote the development of concessions in all Member States;
– welcomes the statement in the communication on the SMA, which specifies that a new possible legislation on concession should create a European framework in favor of such type of PPP without adding excessive constraints.

Consequently, without going back over the principle of such an initiative, E3PO confirms its willingness to be associated to the consultation process prior to the drafting of legislation.

Without prejudging future recommendations that it may present all along the progress of the reflection, E3PO presents today its first recommendations as follows:

a) E3PO considers that the distinction between concessions and public contracts is fundamental. In this respect, E3PO recommends that the definition of concessions should be based on the three following essential elements:

–  A concession is a contract that firstly expresses an agreement between a public authority and a concessionary operator ;
–  With the aim of transferring to the latter the right to exploit the service (or the right together with  remuneration ) to beneficiaries and the related obligations ;
– With a transfer of risk to the operator.

b) E3PO is in favor of the principle of advertising notice for service concessions with an adaptation to their specificities.
c) E3PO observes that the articulation between the current regime of works concessions and a future possible regime of service concessions should be closely monitored. E3PO is favorable to strengthening the legal security of the regime of concessions. However, this objective does not require a uniform alignment of the future regime of service concessions with the current regime of works concessions.
d) E3PO would like to underline that the contract of service concessions shall in no case make mandatory any percentage of subcontracting the exploitation, taking into consideration the global nature of the commitments and responsibility of the concessionaire towards the contracting authority on the whole duration of the contract. Some service concession contracts today preclude the use of subcontracting, and, in the case where subcontracting is not prohibited, because of the characteristics of duration and adaptability of service concessions, any obligation of ex ante percentage or a priori declaration of a percentage or of setting a list of subcontractors would be inconsistent with the actual conditions of preparation of service concessions tenders.
e) E3PO considers that the current obligations of competition for subcontracting works, as defined in the directive on works concessions, are inappropriate to subcontracting of works identified when the concession contract is subject of an invitation to tender and these obligations should therefore neither apply to such works nor to any service.
Indeed, when major works are identified in the specifications of the concession, the future operator has no other choice, if he has not the ability to achieve them by himself, than appealing to a construction company partner whose price is included in its offer. Unless submitting a co-contracting tender that might not satisfy any partner, the good practice is to consult with potential subcontractors in the preparation of the main offer, and then to finalize the subcontracting part on the basis of the results of the main negotiation. The obligation for concessionaires to open a formal competition after having signed the concession contract doesn’t correspond to the practical constraints of fixing a definite price in the offer.

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