EU Directive on Concession Awards in Waste Sector: Benefits and Relevance

1. The proposal for an EU Directive on the award of concessions – what can it bring for the waste sector?Municipal Waste Europe conference on Public Responsibility, Brussels 27 September 2012Michael KÖNIGDeputy Head of UnitEuropean Commission, Internal Market and Services DGDisclaimer: The views expressed are personal and do not bind the European Commission

2. Structure • Introduction • The Draft Directive – background and main features • Relevance for the waste sector • In particular: Public-public cooperation

3. What is a concession in light of the EU procurement rules? • Contracts of the same type as public works/service contracts but: the consideration for the works/services consists • in the right to exploit the work/service • = remuneration mainly via user fees, not payment from authority • the risks inherent in the exploitation are transferred to the concessionaire

4. Scope of EU secondary public procurement legislation

5. Commission evaluation (Impact Assessment) found: • Lack of legal certainty (with regard to the definition and award process of concessions). • Disparity of national rules and unlawful practices of contracting authorities/entities. • Insufficient legal protection of tenderers.

6. Therefore rules are needed to ensure: • Transparency and objectivity in selection of private operators for public tasks • Efficient spending of public money • Facilitating PPPs where they are considered as the most efficient solution

7. What the proposal is NOT about: • Privatisation of services / forced outsourcing of public tasks • Setting quality standards for the provision of services • Liberalisation / Conditions of access to an economic activity

8. Scope of the instrument • Threshold of 5 million € for all concessions (works, services) • Cross-sectoral, horizontal instrument • Exemptions for: • concessions adequately regulated by relevant sectoral provisions (public passenger transport Reg. (EC) 1370/2007; air transport Reg. (EC) 1008/2008), • public-public cooperation.

9. Contents – main elements (I) • Definition of concessions • Clearer distiction between concessions and public contracts: • Right to exploit implies the transfer to the concessionaire of the substantial operating risk (no guarantee to break even on investments and costs incurred) • definition of operating risk (demand or availability risk). • Clearer distiction between concessions and authorisations/licences.

10. Contents – main elements (II) • Publication of notices in the OJEU (ex post & ex ante). • Procedural guarantees (no mandatory procedure required). • General requirements on criteria of selection & exclusion of candidates. • Extension of Remedies Directive (rights to appeal)

11. Contents – main elements (III) • Award criteria: • Option to use "most economically advantageous tender" - criterion or award criteria meeting only general requirements • objective • linked to the subject matter of the concession, • no unrestricted freedom of the contracting authority • However may encompass references to financial soundness or experience of the tenderers as well as to certain policies (personnel, environment) or internal organization of the undertaking

12. Impact on the waste sector • Concession models currently less frequent than in other sectors, outsourced mainly on the basis of service contracts • No obligation to choose certain model or to externalise • Eliminates discrimination in award regime between contracts and concessions • Ensures transparency + objectivity in the choice of service providers (if it is decided to outsource)

13. Impact on the waste sector • Potential for public authorities to explore innovative options and for firms to present them – fair comparison to arrive at the best solution • Flexible regime on award criteria: • No forced downward pressure on quality (price cannot be the only criterion) • Particularities in municipality can be integrated in evaluation criteria and performance clauses (interoperability, quality standards) • Cooperation among municipalities remains possible

14. Special scenario: Public-public cooperation • When can a public authority involve other public entities in the execution of its tasks without following EU PP rules? • -> Example: joint operation of waste incinerators or recycling facilities • Contracts between public authorities do not in general fall outside the scope of EU Public Procurement rules • However: Freedom of public authorities to choose to perform their public interest tasks using their own resources

15. Public-public cooperation in the Commission's reform proposals • Commission decided to establish rules on public-public cooperation in all new PP directives (Art. 11 Classic sector directive, Art. 15 concessions directive) • Proposed provisions codify case law and render criteria more precise

16. “In-house” scenario 1: Single control • Public authority exercises control over contractor similar to the control over its own departments (decisive influence over strategic objectives and significant decisions) • Contractor carries out at least 90% of its activities for the controlling authority („essential part“) • No private capital in the controlled entity (controlling authority may have private capital participation)

17. “In-house” scenario 2: Joint control • Public authorities jointly exercise control over contractor similar to the control over its own departments • representatives in decision making bodies • jointly decisive influence • no distinct interests pursued by controlled entity • no gains other than cost reimbursement

18. “In-house” scenario 2: Joint control • Contractor carries out at least 90% of its activities for the controlling authorities or entities controlled by them („essential part“) • No private capital in the controlled entity (controlling authorities may have private capital participation)

19. P1 P5 P2 P6 P4 P3 “Horizontal” cooperation • Genuine cooperation aimed at joint performance of a public service task • Mutual rights and obligations • Only public interest considerations • No transfers between participants other than reimbursement of costs • Proportion of joint activity performed on open market below 10% • No private capital in any involved entities

20. Thank you for your attention!