European Commission issues procurement guidelines for public private partnerships

The Commission has issued guidance on how government agencies and private companies should put together deals to build public services. It has said that the conduct of public private partnerships and procurement processes should be transparent and should treat all parties equally.

Commissioner for internal markets and services Charlie McCreevy said that he hoped that the guidance would result in more competition from the private sector to take part in such schemes.

"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 (IPPP)," he said. "I expect that legal certainty in this area will contribute to increased competition for IPPP. Increased competition could improve the quality of IPPP and ultimately lead to saving taxpayer's money."

IPPP are projects undertaken by the public and private sectors jointly, usually to provide local public services. The Commission has issued an 'interpretative communication' on how these should operate. The communication is based on a European Court of Justice (ECJ) ruling on how such schemes should operate. The ruling was in a case involving public authority Stadt Halle, which had begun an IPPP without a public tender and was censured by the ECJ.

"The Stadt Halle case requires transparent and competitive award procedures whenever public contracts or concessions are awarded to public-private partnerships," said the Commission. "The guidance clarifies the EC rules that apply when an IPPP is set up."

The communication from the Commission insists that equal treatment be given to all potential bidders for IPPP contracts, and that open tendering processes take place.

It says, for example, that the fact that a public authority might have a stake in an IPPP company does not mean that it can treat a contract award as an 'in house' matter, thereby avoiding full, public procurement processes.

It is not viewed as being a radical change to existing practice in the UK and Ireland, where significant numbers of public-private partnerships have been undertaken.

"Anyone looking to the communication for new ideas or approaches to IPPP will be disappointed," said Ruth Smith, head of public procurement at Pinsent Masons, the law firm behind OUT-LAW.COM. "It contains no real surprises and endorses the approach to IPPP which has been in use in the UK and Ireland for a number of years under initiatives such as NHS Lift and Building Schools for the Future."

"The need for transparency and equal treatment is a repeated theme throughout with some useful practical tips on how to ensure these principles can be observed," said Smith.