Part IV – Concessions
Title I – General provisions
Article 114
Scope
1.This Part applies to concessions for the execution of works and provision of services as defined in Article 115.
2.Unless otherwise provided for in this Part, all the provisions of this Regulation applicable to public contracts apply to concessions.
Article 115
Definition and characteristics of concessions
1.For the purposes of this Regulation, the following definition shall apply:
(a)‘concession’ means a contract for pecuniary interest, regardless of its formal designation, where one or more public buyers entrust the execution of works or the provision and management of services to one or more economic operators (‘concessionaire’) for benefit of users and that complies with the following conditions:
(i) the remuneration of the concessionaire consists either solely in the right to exploit the works or services that are the subject of the contract or in that right together with payment by the public buyer; and
(ii) it entails the transfer to the concessionaire of an operating risk in exploiting those works or services to which the public buyer would be exposed if it was to execute the works or perform the services itself.
(b)The concession provides for legally enforceable obligations under which the public buyer determines the nature, scope and conditions for the execution of the works or the provision and management of services by establishing specific requirements to ensure that the concessionaire performs those tasks in pursuit of the objectives defined by that public buyer and complies with those requirements, throughout the duration of the concession.
(c)The concession has as its subject-matter the performance of those works or services and shall not consist merely in the entitlement of all operators fulfilling certain conditions to perform a given task without any selectivity.
Agreements the sole or predominant subject-matter of which is the granting of a right to occupy or exploit public domain or resources, including leases or other rights relating to public property, as well as rights of way or other permissions allowing the use of the public domain for infrastructure or network deployment, and in respect of which the public buyer establishes only general conditions of use without entrusting the performance of specific works or services, shall not constitute concessions within the meaning of this Regulation.
2.For the purpose of paragraph 1, ‘operating risk’ means the risk that the concessionaire will not recoup, under normal operating conditions, the investments made and the costs incurred in the execution of the works or the provision and management of the services which are the subject-matter of the concession, so that the concessionaire bears the risk of losses attached to the performance of the concession, such as risks linked to uncertainties affecting demand, revenues, operating costs, availability, technical and operational conditions or performance. The operating risk shall involve genuine exposure to the changing market conditions, and any potential estimated loss incurred by the concessionaire shall not be economically insignificant.
Article 116
Mixed concession contracts
1.In addition to Articles 86 and 87, the applicable legal regime for contracts containing elements of concessions and of other public contracts (‘mixed concession contracts’) shall be determined in accordance with paragraphs 2 and 3 of this Article.
2.Where the different parts of a mixed concession contract are objectively separable, but are not procured separately by the public buyer, the mixed concession contract shall be awarded in accordance with Part III.
3.Where the different parts of a mixed concession contract are objectively not separable, the applicable legal regime shall be determined on the basis of the main subject-matter of that contract.
Where such a contract contains elements of a services concession and of a supply contract, the main subject-matter of that contract shall be determined in accordance with the higher of the estimated values of the respective services or supplies.
Article 117
Excluded concessions
1.In addition to the exclusions provided for in Part III, Title II, Chapter 1, this Regulation does not apply to the following concessions:
(a)for air transport services based on the grant of an operating licence within the meaning of Regulation (EC) No 1008/2008 80 of the European Parliament and of the Council;
(b)for public passenger transport services within the meaning of Regulation (EC) No 1370/2007;
(c)for provision or operation of fixed networks intended to provide a service to the public in connection with the production, transport or distribution of drinking water, or to supply drinking water to such networks;
(d)having one or both of the following subject-matters where they are connected with an activity referred to in point (c):
(i) hydraulic engineering projects, irrigation or land drainage, provided that the volume of water to be used for the supply of drinking water represents more than 20 % of the total volume of water made available by those projects or installations for irrigation or drainage installations;
(ii) the disposal or treatment of sewage;
(e)for lottery services, which are covered by CPV code 92351100-7, awarded by a Member State to an economic operator on the basis of an exclusive right;
(f)awarded to an economic operator on the basis of an exclusive right which has been granted in accordance with the Treaty and Union legislation laying down common rules on access to the market applicable to the activities referred to in Annex III, unless that Union legislation does not provide for sector-specific transparency obligations, in which case Article 20 shall apply.
2.Where a Member State grants an exclusive right to an economic operator for the exercise of one of the activities referred to in Annex IV, it shall inform the Commission thereof within one month of granting that exclusive right.
Article 118
Threshold and estimation of the value of a concession
1.This Regulation applies to concessions with an estimated value equal to or greater than the threshold specified in Article 2(1), point (a).
2.The estimated value of a concession shall be the projected total turnover, net of VAT, that the concessionaire may generate over the maximum duration of the concession, as estimated by the public buyer, in consideration for the works and services that are the subject-matter of the concession, and for the supplies incidental to such works and services.
3.The estimated value of the concession shall be calculated using an objective method specified in the procurement detail. In calculating the estimated value of the concession, the public buyers shall, where applicable, take into account in particular:
(a)the value of any form of option and any extension of the duration of the concession;
(b)revenue from the payment of fees and fines by the users of the works or services other than those collected on behalf of the public buyer;
(c)payments or any financial advantage in whatever form, granted by the public buyer or any other public authority to the concessionaire, including compensation for performance of a public service obligation and public investment subsidies;
(d)the value of grants or any other financial advantages, in whatever form, granted by third parties for the performance of the concession;
(e)revenue from the sale of any assets forming part of the concession;
(f)the value of all the supplies and services that are made available to the concessionaire by the public buyers, provided that they are necessary for the execution of the works or provision of the services;
(g)any prizes, payments, compensation or reimbursement granted to economic operators in connection with the procedure for the award of a concession.
Title II – Preparation, design and procedure
Article 119
Contractual obligations relating to public needs
1.Public buyers shall determine in the procurement detail mandatory conditions governing the performance of the concession, they deem necessary, having regard to the nature and subject-matter of the works or services concerned, including those aiming at ensuring the continuity, quality, accessibility, safety, and effectiveness of the works and services provided to users.
2.Where appropriate, the mandatory conditions governing the performance of the concession, referred to in paragraph 1 shall be established as clear, objective and measurable performance requirements, including indicators relating to the following:
(a)the quality of service;
(b)the availability and continuity of the service;
(c)the efficiency and reliability;
(d)the sustainability and resilience.
3.Where performance requirements are established in accordance with paragraph 2, the procurement detail shall enable effective monitoring of the performance and may in particular include the applicable key performance indicators, the methods for monitoring and verifying performance, and, where appropriate, the consequences of performance outcomes, including incentives or deductions.
Article 120
Structured risk assessment
1.Before initiating a procedure for the award of a concession, public buyers shall carry out an assessment of the main economic risks related to the performance of the concession, taking into account the nature, duration and economic characteristics of the works or services concerned.
The assessment shall identify the principal categories of risks associated with the performance of the concession, distinguishing between, on the one hand, operating risks relating to the exploitation of the works or services and to exposure to market uncertainties, and, on the other hand, general contractual risks. The risk assessment shall determine, on the basis of objective elements, the allocation of those risks between the parties.
2.The procurement detail may provide for adjustment mechanisms in accordance with Article 125 intended to re-allocate or mitigate the risks between the parties where necessary, having regard to the nature of those risks. The existence of such mechanisms shall not, in itself, preclude the qualification of the contract as a concession, provided that the concessionaire continues to bear the operating risk inherent in the exploitation of the works and services.
Article 121
Parameters for assessing performance
1.Public buyers shall include in concession contracts provisions aimed at ensuring the long-term efficiency of the works or services, including by promoting environmental sustainability and technological innovation throughout the duration of the concession.
The provisions referred to in the first subparagraph shall be directly linked to the performance of the concession and may in particular include requirements relating to the contribution to the environmental and climate-related objectives pursuant to Article 50 or to promote technological development and innovation as well as the continued improvement of services.
2.Public buyers shall, where relevant, include in concession contracts provisions aimed at ensuring the security, resilience and continuity of the works or services throughout the duration of the concession.
Those provisions shall be directly linked to the performance of the concession and may in particular include requirements ensuring the continuity of essential services under conditions of disruption, obligations to manage risks affecting the security and operational resilience, and measures to protect critical infrastructure, systems or data, or cybersecurity safeguards.
3.Public buyers shall include in concession contracts provisions requiring concessionaires to maintain adequate records for five years from the date of the award and reporting mechanisms enabling the public buyer to monitor the performance and implementation of the concession, to verify compliance with contractual and legal obligations, and to enable verification of compliance by competent supervisory, audit and review bodies.
Those provisions may in particular relate to the completeness, accuracy and integrity of the records, periodic performance information, and the timely notification of incidents affecting the performance or compliance with legal, safety or environmental requirements.
4.Where the performance of the concession involves rights over assets, infrastructure or public property necessary for the operation of the concession, public buyers shall ensure that the contractual, property or occupancy, arrangements governing the transfer, return or takeover of those assets upon expiry or termination of the concession are clear, proportionate, non-discriminatory and are specified in the procurement detail. Those arrangements shall not create unjustified barriers to competition or unduly favour the incumbent concessionaire and shall ensure that the successor operator is able to continue the performance of the concession under effective and non-discriminatory conditions.
The procurement detail may in particular specify the conditions governing the use, transfer or return of the assets upon expiry or termination, including for any compensation payable, and conditions relating to the transfer or takeover of personnel.
Article 122
Duration of concessions
1.The duration of a concessions shall be limited to the period necessary for the concessionaire to recoup the investment made for operating the works or services, together with a return on invested capital under normal operating conditions, taking into account the investments required to achieve the specific contractual objectives.
2.The duration of a concession shall be determined having regard to the subject-matter of the concession and to the public interest in preserving competition and market access.
3.In determining the duration of a concession, the public buyer shall take into account:
(a)the investments required for the performance of the concession, both initially and throughout the duration of the concession, including investment in infrastructure, equipment and intellectual property;
(b) the operating and maintenance costs associated with the exploitation of the works or services;
(c)the allocation of risks between the parties, provided that the duration of the concession does not result in the elimination of the operating risk born by the concessionaire;
(d)the mandatory conditions governing the performance of the concession;
(e)the expected revenues and the period reasonably necessary for the concessionaire to recover the investments and operating costs together with a reasonable return;
(f)the need to ensure periodic exposure to competition.
Where appropriate, the duration of the concession shall also take into account the expected technological, regulatory, and environmental lifecycle relevant to the subject-matter of the concession.
The determination of the duration of the concession shall not result in a guarantee that the concessionaire will obtain a predetermined or minimum return on invested capital. A concession may be awarded for a duration shorter than that required for the recovery of investments, provided that any financial arrangements linked to that duration, including compensation or guarantees, do not eliminate or substantially reduce the operating risk borne by the concessionaire.
4.The public buyer may determine the duration of the concession in the procurement detail or may provide that the duration forms part of the tender.
5.Where the duration forms part of the tender, the procurement detail shall specify:
(a)the method for determining the duration of the concession, including any minimum or maximum duration or permissible range;
(b)the rules governing the evaluation and verification of the duration proposed by tenderers, including the relationship between that duration and:
(i) the investments to be made;
(ii) the financial structure of the concession;
(iii) the allocation of risks;
(iv) the economic balance of the concession;
(c)the extent to which the proposed duration constitutes an award criterion.
6.The public buyer may include in the procurement detail provisions allowing for the potential adjustment, extension, reduction or contingent determination of the duration of the concession.
Any mechanism permitting the adjustment, extension, reduction, or contingent determination of the duration of the concession shall comply with the following requirements:
(a)be set out in a clear, precise, and unequivocal manner in the procurement detail;
(b)specify the conditions under which such adjustments may occur, the applicable methodology and the maximum duration of the concession, having regard to the factors referred to in the paragraph 3.
Any adjustment to the duration of the concession that is not provided for in the procurement detail or is not implemented in accordance with the methodology and conditions set out pursuant to the second subparagraph, point (b), shall constitute a modification of the concession and shall be subject to Article 125
Article 123
Procedures for the award of a concession
1.Public buyers shall award concessions in accordance with the procedures provided for in this Regulation.
2.The public summary of competition for the award of the concession pursuant to Article 34 shall, in addition, include a summary of the following information:
(a)the main components of the estimated value of the concession, including the estimated investment costs and operating revenues;
(b)the allocation of the key risks, including, where applicable, the demand, construction, and regulatory risks.
Title III – Management of concessions
Article 124
Adjustment mechanisms
1.Public buyers may include in the procurement detail clauses establishing mechanisms for the adjustment of the conditions of the concession throughout its duration, provided that those mechanisms:
(a)are objectively justified having regard to the nature, duration and risk profile of the concession;
(b)maintain the economic balance of the concession;
(c)preserve the transfer of an operating risk to the concessionaire;
(d)the clauses are clear, precise and unequivocal.
2.The adjustment mechanisms referred to in paragraph 1 may, in particular, relate to:
(a)predefined rules for the adjustment of revenues, including variations linked to demand or usage levels;
(b)indexation mechanisms, including those linked to objective economic indicators, such as price indices, inflation rates or volatility of input costs such as for key materials;
(c)performance-based payment adjustments, linked to the achievement of qualitative or performance objectives relating to the supply of works or services;
3.Adjustments of a contract based on such clauses shall not be considered modifications pursuant to Article 125.
Article 125
Modifications of concessions during their term
1.Public buyers may modify concessions during their term without a new procurement procedure, provided that the modification is not substantial within the meaning of paragraph 3 or falls within one of the cases referred to in paragraph 4. Any such modifications shall respond to objective needs arising during the performance of the concession, be limited to what is necessary and appropriate to ensure its performance and continuity and does not alter the initial economic balance of the concession in favour of the concessionaire.
2.Modification, the value of which does not exceed 15 % of the value of the initial concession shall be considered non-substantial and may be made without a new procurement procedure, provided that the modification does not alter the initial economic balance of the concession.
Where several successive modifications are made, the thresholds shall be assessed on the basis of the net cumulative value of the successive modifications.
3.A modification shall be considered substantial where it introduces terms which, had they been part of the original procurement procedure, would have changed the condition of competition, or where it changes essential terms or condition of the contract, such as the scope of the concession, , the contractual obligations laid down in accordance with Article 119, the initial economic balance in favour of the concessionaire, or the identity of the original concessionaire, in cases other than those referred to in paragraph 4, point (c).
4.Provided that they do not alter the initial economic balance of the concession in favour of the contractor, substantial modifications shall be permissible, within the meaning of paragraph 1, in the following cases:
(a)where additional works, services, or supplies become necessary during the performance of the concession, provided that a change of concessionaire is not technically or economically feasible, including due to the interdependence of the existing works or services or because it would result in substantial increase in costs;
(b)where the modification is necessary due to circumstances which could not reasonably have been anticipated by a diligent public buyer at the time of the launch of the procedure for the award of the concessions, and which significantly affect the performance or feasibility of the concession, including:
(i) substantial changes in the applicable regulatory or legal framework;
(ii) significant technological developments;
(iii) disruptions, emergencies or crises having a significant economic, societal or operational impact;
(c)where the original concessionaire is replaced by another entity due to:
(a)a merger, takeover, acquisition, insolvency or other corporate restructuring, where another economic operator succeeds, wholly or partly, to the rights and obligations of the initial concessionaire, provided that the new entity fulfils the original qualitative selection criteria; that no other substantial modifications are made to the concession and that the replacement is not intended to circumvent the application of this Regulation;
(b)the public buyer assuming the main concessionaire’s obligations towards its subcontractors where that possibly is provided for under national law.
5.Before modifying a concession, the public buyer shall establish, on the basis of objective and verifiable elements, that the conditions set out in paragraph 1 are satisfied. Public buyers shall maintain detailed written records of the essential elements of the modification, including its justification, its necessity or appropriateness, and its impact on the economic balance of the contract, in particular on the allocation of economic advantages and operating risks under the concession, in order to justify the decisions to modify the concession and to enable verification of compliance with this Article by competent supervisory, audit and review bodies.
6.Before any modification of a concession that exceeds 50 % of the value of the initial concession, the public buyers shall publish a public summary of modification to that effect. That public summary shall contain the justification for the modification without a new procurement and the information set out in Article 110. Successive modifications shall not be aimed at circumventing this Regulation.
By way of derogation from the first subparagraph of this paragraph, the prior publication obligation does not apply where urgency resulting from an emergency determined in accordance with Article 48 does not allow for prior publication of the public summary of modification. In such a case, public buyers shall publish a public summary of modification in accordance with paragraph 7 of this Article.
7.Where public buyers substantially modify a concession under the conditions set out in paragraph 5, and the modification does not exceed 50 % of the value of the initial concession, they shall publish a public summary of modification containing the information set out in Article 110 within 20 days from the date on which the modification was made. Where several successive modifications are made that do not exceed 50 % of the value of the initial concession, this obligation shall apply to each modification. Consecutive modifications shall not be aimed at circumventing this Regulation.
8.Where the improper performance of the concession or the failure of the concessionaire to provide the works or services threatens the continuity of an essential service provided under the concession and defined in the concession document, the public buyers may adopt or require strictly necessary temporary measures to ensure the uninterrupted provision of that service. The public buyers shall ensure that those measures are limited to what is objectively necessary to maintain the continuity of the essential service, are proportionate to the seriousness of the disruption, and do not result in a modification of the economic balance of the concession or in a transfer of operating risk from the concessionaire to the public buyers, except to the extent strictly necessary to ensure the temporary continuation of the essential service.
9.For the purpose of the calculation of the value referred to in paragraphs 2, 6 and 7 the updated value shall be the reference value when the contract includes an indexation clause. If the contract does not include an indexation clause, the updated value shall be calculated taking into account the average inflation in the Member State of the public buyer.
10.Modifications of a concession contract shall not be used to remedy deficiencies in the performance of the concessionaire that are not justified by circumstances beyond its control, except under condition laid down in paragraph 8.
Article 126
Termination of concessions
1.In addition to Article 107, public buyers may terminate a concession contract before its expiry, where provided for under Union or national law and where such termination is justified by overriding reasons of public interest.
2.Any termination pursuant to paragraph 1 shall:
(a)comply with the principles of proportionality and equal treatment;
(b)be duly reasoned and based on objective and verifiable grounds;
(c)be exercised only where the objective pursued cannot reasonably be achieved by less restrictive measures, including by modifying the concession in accordance with this Regulation.
3.In the event of termination under this Article, the concessionaire shall be entitled to appropriate compensation.
4.The justification for the termination and the compensation shall be duly documented and made available for verification by competent supervisory, audit and review bodies for a minimum of five years.