The new concession’s discipline and the role of public contracts within “Europe 2020 Strategy”

by Ilaria Madeo


On March the 28th 2014, in the Official Gazette, were published the new directives regarding public contracts: the Directive 2014/23/EU concerning licenses, the Directive 2014/24 /EU about contracts in ordinary sectors, which replaced the Directive 2004/18/EC, and the Directive 2014/25/EU, which substituted the Directive 2004/17/CE and included subjects that were previously excluded (energy, water, transport and postal services).

The new legislation clarified the previous legislation, simplifying the existing rules in order to facilitate the entrance in the market of small and medium-size companies.

It is, indeed, a very significant reform, since, according to the Commission, public contracts, due to the dimension they are assuming (they make up approximately 19% of GDP) play a vital role, both for the completion of the single market and for the realization of some important purposes, such as environmental protection, employment and technological innovation.

The reform of public contracts must be located within the so-called “Europe 2020”. It is a sustainable growth strategy launched by the European institutions for the current decade; the goal is to achieve a certain type of growth. A smart growth, through more effective investments in education, research and innovation; a sustainable one, due to the decisive choice in favor of an economy with low CO2 emissions; and a supportive one, focused on creating jobs and reducing poverty.

Essentially, public authorities, could use their purchasing power through out the market in order to be also able to guarantee the pursuit of these purposes.

One of the main innovation introduced by the reform of public contracts, concerns the creation of an ad hoc regulation on concessions. By doing so, the legislator filled a gap that went on for a very long time and that prohibited the development of this tool.

The delay was probably caused by a kind of “reluctance” from some of the most influential member states, to “suffer” the interference of the European legislature in such a sensitive matter. However, after numerous difficulties of interpretation, confirmed by frequent statements of the Court of Justice on the question, the European institutions have become aware of the importance to “fill this gap”.

Moreover, in the last years, after the economic crisis and budget restrictions, the interest on the concessions and in general on all forms of public-private partnership has greatly increased, since, the cooperation between the public and private sector is the most efficient solution. In fact, the use of concessions, especially for the construction of major infrastructure, such as roads and railways, is, today, the best choice.

The new Directives, in addition to providing many exclusions, first of all, only apply to concessions that exceed the value decided by the European community (which amounts to approximately 5,186,000 euro); also the criteria for calculation of the value of concessions have been changed so that the estimate may also include the value of management and not only the value of the work (to simplify, before they would only calculate the value of the “built”).

It is then proposed a new definition of concession, a clearer one. An element that characterizes this contracts is the operational risk, the risk of the dealer in not being able to recover the investments made or the costs incurred in creating the works or services, so that the management of work or service is not, at the end, gainful. It includes both, the risk on the demand side, the risk in the supply side or on both.

The concession’s discipline is a “light” one, characterized by its flexibility and is, therefore, much less detailed than the one on the public procurement. The Directive establishes, in fact, that member states must take into account the specific nature of this matter because, it can not be forgotten, that this kind of contracts are normally long-term contracts, relating to performance of hopefully good quality services towards citizens and users. For this, it has been spent much more attention to both the award stage, but mainly to the phase of execution of the contract.

This new regulation has been implemented in our new Code of Contracts and Concessions, which in addition to reform, then the whole context of public gaining, in line with the Community framework, it contains for the first time, finally, an organic and unitary specific legislation on concessions, but also on public-private partnership.

 This is a fundamental reform for our country aimed at boosting investment in the entire public sector contracts, to facilitate the entry in the market, including small and medium-size societies and to prevent and fight the wide spread corruption.

Obviously, the transposition was not at all simple and involved a number of compatibility issues, coordination and adaptation of the national legislation and the same mentality of the industry.

The opinions about the new Code are discordant: many exalt the new legislation, other criticizes it regardless. However, although it is perhaps too early to make a comment, the first impression is that this is overall a good reform. The premises placed by the legislature seem quite valid, therefore, rightly, it is hoped that the originally goals are achieved. Now a decisive role belongs to all operators in the industry.