In practice, an IPPP is usually set up
• either by founding a new company, the capital of which is held jointly by the contracting entity and the private partner - or, in certain cases, by several contracting entities and/or several private partners - and awarding a public contract or a concession to this newly founded public-private entity
• or by the participation of a private partner in an existing publicly owned company which has obtained public contracts or concessions "in-house" in the past.
Irrespective of how the IPPP is set up, Community law on public contracts and concessions requires a contracting entity to follow a fair and transparent procedure, either when selecting the private partner, who supplies goods, works or services through his participation in the IPPP15, or when granting a public contract or a concession to the public-private entity.16 It is important to note that public authorities are not permitted "to resort to devices designed to conceal the award of public contracts or concessions to semi-public companies".17
In any case, the Commission does not consider a double tendering procedure - one for selecting the private partner to the IPPP and another one for awarding public contracts or concessions to the public-private entity - to be practical.
One possible way of setting up an IPPP, which is, in the Commission's view, suitable for complying with the principles of Community law while at the same time avoiding a double tendering procedure, is as follows: The private partner of the IPPP is selected by means of a procedure, the subject of which is both the public contract or the concession18 which is to be awarded to the future public-private entity, and the private partner's operational contribution to perform these task and/or his contribution to the management of the public-private entity. The selection of the private partner is accompanied by the founding of the IPPP and the award of the contract or concession to the public-private entity.
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15 A fair and transparent selection of the private partner of an IPPP ensures that the objective of free and undistorted competition is met and the principle of equal treatment is complied with, in particular by avoiding undue advantages of the private undertaking with a capital presence in the IPPP over its competitors. Thus, the founding of an IPPP via a fair and transparent selection of the private partner of this public-private entity meets the respective concerns expressed by the ECJ in Case C-26/03, Stadt Halle, see footnote 13 above, paragraph 51.
16 Contracting entities are entitled to award public contracts covered by Directive 2004/17/EC directly to their affiliated undertakings as defined in Article 23 of this Directive.
17 Case C-29/04, Commission v. Austria, ECR 2005, I-9705, paragraph 42.
18 If the IPPP in question is set up by the participation of a private partner in an existing publicly owned company, the subject of the selection procedure of the private partner for this IPPP could be the award of public contracts or concessions which were performed "in-house" by the respective publicly owned company in the past.