On 5 February 2008, the European Commission published an interpretative Communication on the application of Community law on Public Procurement and concessions to Institutionalised Public-Private Partnerships (IPPPs).

Stakeholders had indicated a need for clarification on the application of the Community rules on Public Procurement and Concessions.

The aim of the interpretative Communication is to enhance legal certainty and to clarify the EC rules that apply when an IPPP is set up and the private partner is chosen.

Whilst there is no legal definition of IPPP in Community law, the Commission describes it as "a co-operation between public and private parties involving the establishment of a mixed capital entity which performs public contracts or concessions. The private input to the IPPP consists – apart from the contribution of capital or other assets – in the active participation in the operation of the contracts awarded to the public-private entity and/or the management of the public-private entity."

If the task assigned to the public-private entity is a public contract fully covered by the Public Procurement Directives, the procedure for selecting the private partner is determined by these Directives. If the task is a works concession or a public contract that is only partially covered by the Directives, the fundamental principles derived from the EC Treaty apply in addition to the relevant provisions of the Directives. Finally, if it is a service concession or a public contract not covered by the Directives, the selection of the private partner has to comply with the principles of the EC Treaty.

The principles of equal treatment and non-discrimination imply an obligation of transparency which consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the market to be opened up to competition. In the context of the founding of an IPPP, this obligation implies, in the view of the Commission, that the contracting entity should include in the contract notice or the contract documents basic information on the following:

• The public contracts and/or concessions which are to be awarded to the future public-private entity;
• The statutes and articles of association;
• The shareholder agreement and all other elements governing the contractual relationship between the contracting entity and the private partner on the one hand, and the contracting entity and the future public-private entity on the other hand.

The Commission does not consider a double tendering procedure – one for selecting the private partner to the IPPP and another one for awarding public contracts or concessions to the public-private entity – to be practical.

The interpretative Communication as well as a FAQ list is available for download on the right-hand side of the screen.

For more information, please contact Sander Scheurwater at sscheurwater@rics.org