Brussels, 19/02/2008 (Agence Europe) - On Monday 18 February, the European Commission adopted an interpretative communication on the application of Community law on public procurement and concessions awarded to institutionalised public-private partnerships (IPPPs). On the same day, the spokesperson for Commissioner McCreevy (internal market) declared that “this is about getting people to better understand how the Commission sees the setting up of IPPPs and how they work”. The communication focuses on European rules and principles applicable to the choice of private economic operator participating in this form of PPP and the phase following the setting up of the partnership. This puts an end to the European debate on institutionalised public-private partnerships (IPPP) that began with the Green Paper in May 2004 (EUROPE 8699), a European legislative initiative, which was ruled out at the time. On the other hand, the Commission is continuing its impact study on the possibility of launching a draft directive on concessions to services, which was expected out last year. Mr McCreevy's spokesperson confirmed that “we still don't have any conclusions on concessions”.
Public-private partnerships are usually set up to provide services for the public, in particular at the local level, in sectors such as telecommunications, water distribution, waste management and transport. The role played by a partner from the private sector makes them different from the traditional public procurement markets. Private partners participate in all the different project phases (designing, execution, utilisation) and undertake risks usually shouldered by the public sector. They are paid via the use of the service or utility provided and which constitutes the subject of the partnership. A PPP becomes “institutionalised” when it: involves the creation of a legal entity for the capital jointly controlled by the public and private partners, and when public procurement or a concession has been awarded to this entity. A PPP also becomes institutionalised when the private partner participates in an existing public undertaking which is already executing a contract or benefiting from a concession.
“Stadt Halle” ruling. There are no specific European rules governing implementation of institutionalised private-Public partnerships (IPPPs). However, the Commission has indicated that any contact reached between a public undertaking and a third party must at least respect the principles of transparency, equal and proportionate treatment, as laid down in the European Treaty. When an IPPP involves public procurement or a works concession, the public entity must act in compliance with European directives (2004/17/EC and 2004/18/EC) on public procurement tendering procedures. The Commission also has to explain how the mixed undertaking set up as an IPPP cannot benefit from contracts without being open to competition. In its Stadt Halle (C-23/03) ruling, the European Court of Justice decided that even with a minority stake in the capital of a mixed undertaking, the public partner is not allowed to exercise the same control as it exercised over its own services (“in house” relationship). It is therefore also subject to the principles and rules of the European Treaty in the award of contracts to mixed entities.
A Commission expert said: “We get the impression that the local public authorities are now aware of the legal, economic and practical risks” of not having European jurisprudence. In France, IPPP is welded to the existence of mixed investment companies. The Commission expert said that these companies see this development positively. The companies do not appreciate the double tendering procedure for IPPP - the first for selecting the private partner and the second for awarding the public procurement or concession to the mixed investment company. In Germany, the IPPP phenomenon is much more recent, with the opening up of certain local corporations (Stadtwerke) with private capital.
IPP are generally set up for long periods of sometimes twenty years. In an effort to take into account economic, legal and technical development, the partnership contract can be modified if this was initially agreed. Any modification to the essential terms of the contact, such as the nature of the work or service provided or the kind of payment made by users, requires further Commission examination. Certain unexpected exceptional situations or those justified by reasons of public order or public health can also justify the award of a contract without complementary work or services having to be put out to competition, and which were not included in the initial contract. The Commission believes that the mixed investment undertaking as part of an IPPP is free (as the other economic operators) to participate in other tenders. If these tenders come from public public-private partnerships themselves, specific safeguard measures will be required within the adjudicating authority and undertaking, so as to avoid discrimination against other tenders. (M.B.)