EN Official Journal of the European Union C 71/19

Opinion of the Committee of the Regions on the Green Paper on public-private partnerships and Community law on public contracts and concessions

(2005/C 71/05)

THE COMMITTEE OF THE REGIONS

Having regard to the European Commission's Green Paper on public-private partnerships and Community law on public contracts and concessions (COM(2004) 327 final);

Having regard to the Commission's decision of 30 April 2004 to consult it on this subject, under the first paragraph of Article 265 of the Treaty establishing the European Community;

Having regard to the decision of its President of 26 May 2004 to instruct the Commission for Economic and Social Policy to draw up an opinion on this subject;

Having regard to the its opinion on the Proposal for a Directive of the European Parliament and of the Council on the co-ordination of procedures for the award of public supply contracts, public service contracts and public works contracts and the Proposal for a Directive of the European Parliament and of the Council co-ordinating the procurement procedures of entities operating in the water, energy and transport sectors; (COM(2000) 275 final – 2000/0115 COD and COM(2000) 276 final – 2000/0117COD – CdR 312/2000 fin) (1);

Having regard to its opinion on the Green Paper on Services of general interest in Europe (COM(2003) 270 final – CdR 149/2003 fin) (2);

Having regard to its opinion on the Mid-term review of the Lisbon Strategy. Having regard to the Communication from the Commission on Strengthening the implementation of the European Employment Strategy. Having regard to the proposal for a Council Decision on Guidelines for the employment policies of the Member States; Having regard to the Council recommendations on the implementation of the Member States' employment policies; (COM(2004) 239 final – CdR 152/2004 fin);

Having regard to its draft opinion (CdR 239/2004 rev. 1) adopted on 4 October 2004 by the Commission for Economic and Social Policy (rapporteur: Ms Segersten Larsson, Chair of Värmland County Council Executive Committee (SE-EPP);

adopted the following opinion at its 57th plenary session on 17 and 18 November 2004 (meeting of 17 November):

1. The Committee of the Regions' views

THE COMMITTEE OF THE REGIONS

1.1 welcomes the Commission's Green Paper on public private partnerships and EU law on public procurement and concessions, since cooperation between municipalities/regions and the business world has become increasingly important in the European Union. Growth, cohesion and competition issues can be tied in with one of the most important aspects of the Lisbon Strategy: improving the climate for the smooth operation of the Internal Market. At the same time, the Committee would highlight the considerable discrepancies between the Member States and between different action areas in terms of cooperation forms and the extent of these;

1.2 notes that the Green Paper contains no concrete proposals. It does, however, aim to show the extent to which Community rules apply to the phase of selection of the private partner and to the subsequent phase, with a view to identifying any uncertainties, and to analyse the extent to which the Community framework is suited to the imperatives and specific characteristics of PPPs. The Green Paper also asks a number of questions, the answers to which are expected to be very important for the Commission's future work;

1.3 considers that a public-private partnership cannot be seen as a purely technical, legal matter; it must be extended and illustrated from a political perspective;

1.4 hopes that all issues connected with partnerships, procurement and services of general interest will be addressed holistically;

1.5 believes that the local and regional authorities, i.e. those closest to citizens, are best placed to decide whether they should provide services themselves, contract them out or run them in cooperation with other partners. The Committee would stress the political assemblies' crucial role in assessing who is to run publicly funded services;

1.6 takes the view that the local and regional authorities are often best placed to assess how services should be funded;

1.7 would emphasise the different roles played by the municipalities and regions, since in addition to organising, managing and monitoring operations, they also run services in-house;

1.8 does not believe that partnerships should be seen as a miracle solution; the potential added value of a public-private partnership must be assessed on a project-to-project basis;

1.9 agrees with the Green Paper's assertion that the public partner must be able define the objectives to be attained in terms of public interest, quality of services provided and pricing policy, and it takes responsibility for monitoring compliance with these objectives.

Development of the public-private partnership

THE COMMITTEE OF THE REGIONS

1.10 notes that ‘partnership’ has come to be interpreted much more broadly than originally intended;

1.11 suggests that ‘public-private partnership’ should in future be defined more restrictively, to denote extended relationships, joint risk-taking, and major financial commitment;

1.12 considers that it is, consequently, extremely important to better define the concept of public-private partnership, in order to provide for an appropriate debate regarding any future Community initiatives;

1.13 observes that partnership/cooperation is usually perceived as a wider phenomenon than just public-private partnership. Municipalities and regional authorities also work with many other players, such as other local and regional authorities, universities, trades unions, religious communities, associations, social and professional interest groups, voluntary organisations, and private individuals. These partners can also be expected to gain in importance in the future;

1.14 notes that traditional forms of procurement, in which the parties aim for closer cooperation and joint responsibility, are also sometimes referred to as public-private partnerships or ‘contractual public-private partnerships’;

1.15 considers that closer cooperation is also important in traditional procurement procedures, particularly during the implementation phase;

1.16 points out that, in a joint-partnership or ‘institutional’ public-private partnership, ultimate responsibility often lies with the public authority. The value-added results from more responsibility being shouldered by the private sector, and from joint-financing, new ideas and approaches, and the establishment of a long-term relationship;

1.17 emphasises that multiple controls on the provision of services of general economic interest, as well as on partnerships involving the public authorities already exist. It should not be forgotten that economic and political decisions are subject to a multiple democratic voting procedure and therefore to advance controls, and to scrutiny by their own supervisory bodies. All these guarantee qualified publicity.

2. The Committee of the Regions' recommendations

THE COMMITTEE OF THE REGIONS

2.1 stresses that EU Treaty principles on, for example, transparency, equal opportunities, proportionality and mutual recognition must underpin all the different types of partnership projects;

2.2 does not consider it appropriate to introduce any Community partnership legislation at this stage, since the notion of ‘partnership’ has not been clearly defined. The Committee does not believe that public-private partnerships can be incorporated into Community procurement directives, since these do not provide sufficient encouragement for initiative, risk-taking or flexibility. The regulatory framework is insufficiently flexible, since partnerships involve a more active role as a partner rather than as a traditional service provider. While the Commission does indeed seem to have taken on board some aspects of the Committee of the Regions' previous opinions, this is not sufficient;

2.3 emphasises the central role of local and regional authorities in defining, organising, funding and monitoring services of general interest;

2.4 believes that, with reference to their duty to guarantee access to services of general interest, public authorities should be free to choose and experiment with different models as long as certain principles such as transparency, equal treatment, proportionality and mutual recognition are complied with;

2.5 considers that the local and regional authorities are also best placed to decide service type, format and quality requirements, since they are closest to citizens. Moreover, the democratic procedures which the public authorities are subject to in such decisions ensure qualified supervision and transparency;

2.6 considers it important to re-emphasise that these authorities should be free to decide whether to provide services in-house, contract them out or run them in cooperation with other parties;

2.7 stresses the need for local and regional authorities to be able to develop other individual, flexible forms of cooperation;

2.8 stresses the need to focus more on the citizen, since services are provided for citizens;

2.9 asserted in its opinion on the Proposal for a Directive of the European Parliament and of the Council on the co-ordination of procedures for the award of public supply contracts, public service contracts and public works contracts, that public-private partnership projects must be flexible and generally accessible. It also highlighted the need for extensive dialogue between the purchaser and the supplier throughout the procurement procedure;

2.10 noted in the same opinion that ‘it must be established that procurement by regional and local authorities from their own independent legal entities does not fall within the scope of the directives and must be regarded as production carried out under their own management’;

2.11 welcomes the Green paper's assertion that ‘Community law on public contracts and concessions is neutral as regards the choice exercised by Member States to provide a public service themselves or to entrust it to a third party’;

2.12 notes that many countries are developing a kind of partnership in which individual citizens decide who is to provide the service. The public authority's role is more concerned with guaranteeing minimum quality levels and ensuring companies are bona fide. Current procurement rules take no account of these situations where citizens are important players and take the final decision regarding who is to provide the service;

2.13 is as yet unable to say whether Community legislation on service concessions should be introduced, because the expression ‘partnership’ has not been defined. The Committee does not believe that service concessions should come under Community procurement directives, since concessions require a more flexible procedure than procurement;

2.14 notes that current procurement legislation is still complicated and does not encourage flexibility or innovative ideas;

2.15 stresses the need for the decision to transfer a company from the public to the private sector to be an economic policy decision, and consequently, the exclusive competence of the Member States;

2.16 hopes that experience resulting from competitive dialogue will be taken on board before any further measures are proposed. The Committee would also point out that, in its opinion on procurement directives, it expressed reservations about this type of procurement and called instead for greater use to be made of negotiated procurement;

2.17 hopes that the Commission will clarify the legal situation in the light of the Teckal case, as it is interpreted differently in the Member States. The Committee does not believe that activities carried out by a wholly-owned public company should be governed by Community procurement legislation, as they are public-controlled and equivalent to in-house operations. In addition, the bulk of the work is carried out in conjunction with the public authorities that own it;

2.18 would stress the need for local/regional political consensus when concluding long-term agreements;

2.19 would underline the need to take account of democratic requirements, which must reflect citizens' wishes, in addition to the needs of competition;

2.20 intends to return to the matter once the expression ‘partnership’ has been defined;

2.21 finally, would raise some further questions: — How is the democratic element to be safeguarded in partnership projects and procurement? — What is the potential for citizens to exercise political authority? — What economic latitude is available in long-term contracts? — How can political freedom of action be ensured? — How are changing needs and circumstances handled in long-term contracts? — How will citizens be assured of operational transparency? — Is there any assurance the authorities will be able to manage, monitor and guarantee high quality services for citizens? — What is the impact and importance of the Structural Funds in developing public-private partnerships?

Brussels, 17 November 2004 The President of the Committee of the Regions Peter STRAUB

(1) OJ C 144 of 16.05.2001, p. 23

(2) OJ C 73 of 23.3.2004, p. 7