In recent years, Public-Private Partnerships (PPP) have developed in many fields. The hallmark of this form of cooperation, which is generally geared to the longer term, is the role of the private partner, who is involved in the various phases of the project (planning, implementation and operation), who is intended to bear risks that are traditionally borne by the public sector and who often contributes to financing the project.
Under Community law, public authorities are free to pursue economic activities themselves or to assign them to third parties, such as mixed capital entities founded in the context of a PPP. However, if public bodies decide to involve third parties in economic activities and if this involvement qualifies as a public contract or a concession, the Community provisions for public procurement and concessions must be complied with. The aim of these provisions is to enable all interested economic operators to tender for public contracts and concessions on a fair and transparent basis in the spirit of the European internal market, thereby enhancing the quality of such projects and cutting their costs by means of increased competition1.
The public consultation on the Green Paper on Public-Private Partnerships and Community law on public contracts and concessions2 showed3 that there was considerable need for clarification on the application of these rules to so-called "institutionalised" PPP (IPPP). IPPP are understood by the Commission as a co-operation between public and private parties involving the establishment of a mixed capital entity which performs public contracts or concessions.4 The private input to the IPPP consists - apart from the contribution of capital or other assets - in the active participation in the operation of the contracts awarded to the public-private entity and/or the management of the public-private entity. Conversely, simple capital injections made by private investors into publicly owned companies, do not constitute IPPP and are therefore not covered by the present Communication.
The perceived lack of legal certainty in relation to the involvement of private partners for IPPP may undermine the success of such projects. The risk of establishing structures based on contracts which might subsequently turn out to be non-compliant with EC law may discourage public authorities or private parties from entering into IPPP at all.
The European Parliament, in its Resolution on Public-Private Partnerships of 26 October 20065, acknowledged that practitioners want clarity about the application of procurement law to the creation of public-private undertakings in connection with the award of a contract or concession, and it called on the Commission to provide the relevant clarifications at the earliest opportunity.
The present Communication sheds light on the Commission's understanding of how the Community provisions on public procurement and concessions6 are to be applied to the founding and operation of IPPP.7 The Communication aims at enhancing legal certainty and, in particular, assuaging repeatedly expressed concerns that applying Community law to the involvement of private partners into IPPP would make these arrangements unattractive or even impossible. The present Communication is part of the Commission's commitment to provide legal guidance in the area of services of general interest as set out in the Commission Communication on services of general interest, including social services of general interest8 of 20 November 2007.
This Communication does not create any new legislative rules. It reflects the Commission's understanding of the EC Treaty, the Public Procurement Directives and the relevant case-law of the European Court of Justice (ECJ). It should be noted that, in any event, the binding interpretation of Community law is ultimately the role of the ECJ.
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1 The European Parliament noted in this connection that compliance with these rules "can be an effective mechanism for preventing inappropriate restrictions on competition by enabling, at the same time, the public authorities themselves to lay down and monitor conditions for ensuring quality, availability, social standards and compliance with environmental requirements" (European Parliament Resolution on the Green Paper on Services of General Interest [P5_TA(2004)0018], paragraph 32).
2 COM(2004) 327 of 30.4.2004.
3 Communication on Public-Private Partnerships and Community Law on Public Procurement and Concessions, COM(2005) 569 of 15.11.2005, page 9.
4 The Member States use different terminology and schemes in this context (for instance Kooperationsmodell, Joint Ventures, Sociétés d'Economie Mixte).
5 P6_TA(2006)0462, paragraph 35.
6 'Public works concession' is a contract of the same type as a public works contract except for the fact that the consideration for the works to be carried out consists either solely in the right to exploit the work or in this right together with payment; '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 (see Article 1 paragraph 2 [3] and [4] of Directive 2004/18/EC, OJ L 134 of 30.4.2004, page 114).
7 The present Communication does not cover those public service contracts and service concessions to which Article 5 paragraphs 2 to 7 of Regulation (EC) 1370/2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ L 315 of 3.12.2007, page 1) apply.
8 COM(2007) 725 of 20.11.2007; see also the Commission Staff Working Document "Frequently asked questions concerning the application of public procurement rules to social services of general interest" SEC(2007) 1514 accompanying the Communication of 20.11.2007.