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Brussels, 18 February 2008

Public procurement: Commission issues guidance on setting up Institutionalised Public-Private Partnerships (See MEMO/08/95)

The European Commission has published guidance on the founding of Institutionalised Public-Private Partnerships (IPPP). IPPP are undertakings jointly held by public and private partners and are usually set up to provide services for the public, in particular at the local level. The Commission's guidance is based on a ruling of the European Court of Justice (C-26/03 "Stadt Halle"). The Stadt Halle case requires transparent and competitive award procedures whenever public contracts or concessions are awarded to public-private partnerships. The guidance clarifies the EC rules that apply when an IPPP is set up. In so doing, it provides greater legal certainty not only for the public sector but also for private investors in the area of Public-Private Partnerships (PPP).

Internal Market and Services Commissioner Charlie McCreevy said: “Broad public consultation has shown the need for clarification of how Community Law on public contracts and concessions applies to the founding of Institutionalised Public-Private Partnerships. The Communication released today responds to this demand: It provides practical guidance and thereby increases legal certainty to the benefit both of the public and of the private sector. I expect that legal certainty in this area will contribute to increased competition for IPPP. Increased competition could improve the quality of PPP and ultimately lead to saving taxpayer's money."

Private capital for public undertakings and the transfer of know-how from the private to the public sector are drivers for public bodies to found IPPP. New business opportunities in areas traditionally reserved for the public sector constitute key benefits of these partnerships for the private sector. IPPP are of particular importance at times where there is a lack of significant investment in the public infrastructure and services of general interest all over Europe. To reap the full benefits of such partnerships it is, however, essential that private partners are selected on the basis of a fair and transparent procedure. Fair and transparent selection procedures also minimise the risk of undue advantages of the selected private shareholders over their competitors.

The public consultation on the PPP Green Paper (IP/04/593) showed that there was considerable need for clarification on the application of the Community rules on Public Procurement applying to the setting up and operation of IPPP (see also the policy conclusions on this consultation IP/05/1440). In the light of the results of the consultation, the Commission concluded that perceived lack of legal certainty in relation to the involvement of private partners in IPPP risks undermining the success of such projects or even discouraging public authorities or private parties from entering into IPPP at all. The Interpretative Communication aims to provide legal certainty and assuage the concerns that potential private investors might have about their role in IPPP. The guidance explains the EC rules that apply when private partners are chosen for an IPPP.

Depending on the nature of the task (public contract or concession) to be attributed to the IPPP, either the Public Procurement Directives or the general EC Treaty principles apply to the selection procedure of the private partner. The Interpretative Communication expresses the view of the Commission that under Community law one tendering procedure suffices when an IPPP is set up. Accordingly, Community law does not require a double tendering — one for selecting the private partner to the IPPP and another one for awarding public contracts or concessions to the public-private partnership — when an IPPP is established.

The Communication also affirms that, as a matter of principle, an IPPP must remain within the scope of its initial object, i.e. the original contract awarded, and cannot obtain any further public contracts or concessions without another procedure in accordance with EC public procurement rules. However, it is acknowledged that IPPP are usually set up to provide services over a fairly long period and must, thus, be able to adjust to certain changes in the economic, legal or technical environment. The Communication explains the conditions under which these developments could be taken into account.

The Interpretative Communication issued today follows the Commission's commitment to provide legal guidance in the area of services of general interest as expressed in the Communication on services of general interest, including social services of general interest of 20 November 2007.
The text of the Interpretative Communication is available at:

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