While many organisations will be aware of the need to tender for the opportunity to participate in Public sector contracts, organisations should bear in mind that rules are now in place (Public Concessions Regulations 2016) to ensure a level playing field between organisations looking to participate in public service concessions.
Public service concessions are contracts where the operator is entrusted by a public authority with the provision and management of services, in return for which they have the opportunity to financially profit from the provision of those services rather than simply receiving money directly from the public authority. This means that the operator, not the public authority, retains the operating risk in providing those services, and will have no guarantee of breaking even on investments and costs incurred.
The regulations will primarily impact on larger scale services such as the provision of School Cafeteria services, sports centres or libraries services, or management of public buildings or space; however smaller scale public service concessions such as surf schools, cafes and beach shops operating from publicly owned beaches, parks or car parks may also be affected.
The full force of the Public Concessions Regulations will only apply where the total turnover over the life of the contract is greater than £4,104,394 (net of value added tax) as estimated by the contracting authority, however for concessions valued at below this threshold, EU treaty principles of equal treatment, non discrimination, and proportionality should be applied if it is likely that organisations from other EU member states may wish to undertake the contract. Subject to certain exclusions, this is therefore likely to require many such opportunities be opened to a competitive tender exercise.
Where the full regime applies, the public authority is obliged to comply with detailed arrangements designed to avoid favouritism and encourage competition, which will include the requirement to advertise the opportunity across the EU within the Official Journal of the European Union. It must also comply with detailed technical and functional requirements designed to ensure that it is treating potential bidders in a transparent and proportionate manner, and assess tenders equally and without discrimination. Finally, the regulations also offer a range of remedies where public authorities fail to comply, or otherwise show favouritism.
Businesses looking to become involved in this area should be alert to fact that these types of contracts may be advertised and should bear in mind that, although opportunities in respect of concessions may arise at any time of year, we are now in the second half of the financial year when public authorities may focus on their intentions for the next financial year.
Businesses currently exploiting a concession should bear in mind that, although they may have operated from a particular location for many years, as current arrangements draw to a close the service that they are providing may be advertised for competitive tender. They should, accordingly, be vigilant in ensuring how and when existing arrangements are likely to end so that they can be in the best position to bid for the opportunity if and when it is tendered.
As with any tender process, any organisation submitting a tender will need to ensure that its bid is comprehensive and fully compliant with the tenderer’s requirements.