9.2 The EU public procurement rules make particular requirements of public sector bodies which are "contracting authorities"71 and which establish corporate JV bodies, and/or confer contracts for services, works or supplies (goods). This applies equally to JVs established as partnerships. Account needs to be taken of this in structuring the selection process for the JV partner.
9.3 Even where there is no strict requirement to apply the EU rules to the selection of a partner the principles derived from the EU treaties72 may still apply. Where these principles apply, advertising and running a competition for the selection of the partner is likely to be required.
Reference should be made to the Commission Interpretative Communication on the application of Community law on Public Procurement and Concessions to Institutionalised Public-Private Partnerships (IPPP)73. IPPPs are understood by the Commission to be a cooperation between public and private parties involving the establishment of a mixed capital entity which performs public contracts or concessions, and 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 entity or the management of the entity74.
9.4 In considering the procurement issues specific points to note include:
● even if the establishment of a JV does not involve the provision of services, works or supplies which are strictly subject to the EU rules, some sort of advertising and competition may still be required for the selection of the private sector partner in the JV in accordance with EU Treaty principles; and
● where a public sector body wishes to select a partner for a JV and at the same time to award a contract for services, works or supplies to the JV, a single procurement exercise can be undertaken to select the partner and award the contract to the JV once established. This approach has been endorsed by the European Commission in its Interpretative Communication on IPPPs and avoids the need for two separate competitions (i.e. one to select the partner and a further competition to award contracts to the JV). An example of this "one competition approach" is the Building Schools for the Future programme ("BSF"), where the outcome of the competition is that the winning bidder secures his place as a shareholder in the newly established Local Education Partnership ("LEP") and the LEP, once established, then has the right/obligation to deliver BSF schools projects either through the LEP itself or a special purpose company managed by the LEP.
9.5 In any event the applicability of the EU public procurement rules and most appropriate approach to competition should be the subject of independent legal advice.
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71 The Office of Government Commerce (OGC) publishes best practice guidelines on procurement-related issues (www.ogc.gov.uk/procurement.asp).
72 The five principles are: non-discrimination, transparency, equal treatment, mutual recognition and proportionality.
73 Reference: C(2007)6661, Brussels 05.02.2008.
74 Where the JV is entirely controlled by a public sector entity, or more than one public-sector entity, there is within ECJ Case Law an exemption from the public procurement rules in respect of procurements by the controlling entity or entities. Clearly a JV with control shared with the private sector will not meet this criterion. Moreover, this exemption - known as the Teckal exemption after the case which gave rise to it "Teckal SrL v Comune di Viano and Azienda Gas - Acqua Consorziale di Reggio Emilia (C-107/98)" is quite narrowly construed and there must be adequate control and the supplying entity needs mainly to supply only the controlling authority or authorities.