12 PUBLIC PRIVATE PARTNERSHIPS
(27029)
12303/05
COM(05) 569
| Council Communication on public-private partnerships and Community law on public procurement and concessions
|
| Legal base | —
|
| Document originated | 15 November 2005
|
| Deposited in Parliament |
25 November 2005 |
| Department | HM Treasury
|
| Basis of consideration |
EM of 19 January 2006 |
| Previous Committee Report |
None; but see HC 42-xxiii (2003-04), para 16 (16 June 2004), and HC 42-xxxiv (2003-04), para 17 (27 October 2004
|
| To be discussed in Council
| No date set |
| Committee's assessment | Legally and politically important
|
| Committee's decision | Cleared
|
Background
12.1 The previous Committee considered a Commission Green Paper
on public-private partnerships and Community law on public contracts
and concessions on 16 June and 27 October 2004. The Committee
noted that the Green Paper was intended to initiate a consultation
on the application of Community law to the award of public contracts
and the grant of concessions to public private partnerships (PPPs).
It noted the Government's view that domestic consultation had
not exposed any issues of concern raised by the Commission in
relation to the ineffectiveness of legislation or barriers to
competition preventing the involvement of foreign companies in
PPP programmes.
12.2 The Committee also noted the Government's view
that it was unconvinced of the value to be added by a common legislative
framework for PPPs at EC level, that it would result in a resource
intensive task for businesses and that it might reduce the competitive
market appetite for competing for public service contracts, as
well as undermining the flexibility needed to develop successful
PPPs within the national context.
The Commission communication
12.3 The present Commission communication seeks to
draw policy conclusions from the Green Paper consultation, but
notes that the choice of options "has to be seen in a wider
context" including conclusions to be drawn from judgments
of the Court of Justice (ECJ) as well as the Commission's own
experience from proceedings for infringement brought under Article
226 EC, and the Commission's bilateral contacts with stakeholders.
12.4 The communication notes that the responses to
the Green Paper showed that only a few of the subjects raised
were thought to require follow-up initiatives at EC level. These
concern the award of concessions and the establishment of undertakings
held jointly by a public and private partner in order to perform
a public service ("institutionalised PPPs"). The communication
notes that there was significant opposition to a regulatory regime
covering PPPs in general, and no support for Community action
to foster PPPs or to clarify their contractual framework or rules
on sub-contracting. Nevertheless, the Commission states that the
communication does not aim to conclude the debate on PPPs and
that it will seek to continue discussions. The communication also
notes that the Commission will produce a document clarifying aspects
of the "Competitive Dialogue" procedure, a new award
procedure for the award of complex public contracts and which
was introduced by Directive 2004/18/EC.[68]
12.5 On the question of concessions, the Commission
notes that one of their key features is the conferring of a right
on the concessionaire to exploit a building or service in consideration
of the construction of the building or the provision of the service,
and that one of the main differences from public procurement is
the bearing of financial risk by the concessionaire. The Commission
recalls that a few provisions of secondary Community law apply
to the procedures by which works concessions are awarded, and
that in relation to services such rules as apply are derived from
principles under Articles 43 and 49 EC. The Green Paper asked
whether a Community legislative proposal was desirable, but the
Commission notes that, although there was a demand for greater
legal certainty, opinion was divided on whether this was better
achieved by the Commission issuing an interpretative statement,
or by new legislation. The communication explains that legislation
is the preferred option, but that its content will require further
analysis in order to comply with "Better Regulation"
principles. A proposal would be likely to include rules requiring
adequate advertising of an intention to award a concession and
the selection of concessionaires on the basis of objective, non-discriminatory
criteria as well as rules to apply a principle of equality of
treatment of all participants in a competition for the award of
a concession.
12.6 In relation to "institutionalised PPPs",
the communication notes that only a few respondents to the Green
Paper argued in favour of legislation, with most preferring an
interpretative communication to clarify the application of EC
public procurement rules to the establishment of undertakings
owned jointly by the public and private sector. The Commission
concludes that an interpretative communication would be more suitable
and that it should clarify the application of the public procurement
rules first to the establishment of "mixed capital entities
the objective of which is to perform services of general (economic)
interest" and, secondly, to the participation of private
firms in existing public companies which perform such tasks. Any
future interpretative communication should outline ways of establishing
PPPs which are compatible with EC law.
The Government's view
12.7 In his Explanatory Memorandum of 19 January
2006 the Financial Secretary to the Treasury (John Healey) the
Minister states that the Government welcomes the Commission's
initiative to clarify the Competitive Dialogue procedure and the
EC law relating to PPPs. The Minister considers that "the
most favourable conditions for further development of PPPs in
investment and service delivery include a transparent procurement
framework and flexibility to deal with innovative or complex approaches".
The Minister also considers that the existing public procurement
rules largely meet these needs, that the UK would be concerned
to see that any reform did not disrupt the procurement process
for existing national PPP programmes and that it remained unconvinced
of the value to be added by a common legislative framework for
PPPs at the EC level.
12.8 The Minister states that the Government agrees
with the Commission's intention to bring service concessions within
the existing procurement framework (which he considers could be
achieved by amending the existing Directive 2004/18/EC), but considers
that separate legislation would be redundant. It would have the
drawbacks of causing legal uncertainty as to which set of rules
would apply and would take a long time to negotiate and implement
during which time the PPP market would have developed and changed
considerably. The Minister points out that Member States are already
in the process of implementing two new procurement directives
(Directives 2004/17/EC and 2004/18/EC) which provide for a competitive
award procedure for concessions, including the advertising of
the intention to award a concession on the basis of objective,
non-discriminatory criteria, and that, therefore "a cautious
approach should be taken to expanding the Community's role in
setting the legislative framework for PPPs".
Conclusion
12.9 Whilst we generally welcome the response
by the Commission to the comments made on its Green Paper, we
agree with the Minister's caution about devising a new legislative
framework at EC level for public private partnerships, and we
also agree that such rules as may be necessary for the award of
service concessions would most conveniently form part of the general
rules on public procurement currently contained in Directive 2004/18/EC.
12.10 We have no questions to put to the Minister
and are content to clear the document.
68 OJ No L 134 of 29.04.2004, p.114. Back
| 
