Last edited 09 Jul 2019

Concession Contracts Regulations

Contents

[edit] Introduction

A concession contract is a contract between a company and a government; or between a contracting authority/utility company and an economic operator/other property owner to operate a business in a particular location.

A ‘contracting authority’ is defined as a ‘state, regional or local authority’ while a utility is defined as an entity that pursues one of the activities listed in Schedule 2.

Payment (or consideration) may come from the contractor exploiting the contractual right to profit from the arrangement or else by exploiting the contract for profit plus a payment from the contracting authority.

Under such contracts, the operating risk of exploiting the contract falls on the contractor, i.e. they must face the vagaries of the market whether connected to demand or supply or both. Any losses incurred by the concessionaire in these respects must be accepted. Furthermore, it is understood from the outset that there is no guarantee they will recoup their investments or the costs involved in operating the concession under normal operating conditions.

A typical example of a concession that might be the subject of a contract is a car park built on local authority-owned land, where the contract will be between the local authority (contracting authority) and the car-park operator. Either of these may involve a transfer of ownership to the contracting authority at some point in the future.

[edit] The Regulations

The Concession Contracts Regulations 2016 (“CCR 2016”) came into force on April 18 for concessions advertised in the Official Journal of the European Union (OJEU) (this may change after the UK leaves the EU). The regulations cover England, Wales and Northern Ireland, and regulate the process of procuring concessionscontracts, with reference to contracts advertised in the journal by contracting authorities and utilities (e.g water companies power suppliers etc). They do not cover projects started before April 18 2016.2

Regulation 8 of the CCR 2016 suite of regulations stipulates a maximum threshold of €5,225,000. The regulation contains a defined procedure that sets out how to calculate the potential value of the concession. The value is determined by the contracting authority estimating the total amount turned over by the contractor/concessionaire over the contract term by operating the services that are the subject of the contract.

[edit] The two types of concession contract:

[edit] Arrangements not considered concession contracts include:

The full list of what is not regarded as a concession contract can be found here:

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