Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Local and regional governments as employers

Internal market - 17.09.2004

CEMR's response to the Green Paper on public-private partnerships: more freedom for regional and local government
The Council of European Municipalities and Regions (CEMR) has published its response to the European Commission's Green Paper on public-private partnerships (PPP) and community law on contracts and concessions.
CEMR disagrees with the Commission's statement that the development of PPPs is part of the more general change in the role of the State in the economy, moving from a role of direct operator to one of controller. CEMR believes on the contrary that local and regional authorities have the right to decide democratically the best means of delivering each service, including decisions to use companies they own or control. This idea is strengthened by the recognition of local and regional self-government in Article I-5 of the European Constitution.
CEMR's position includes other points such as :
- CERM queries whether seeking pragmatic solutions to such problems as exist, and actively promoting exchange of good practices weren't the best way forward, at least at the outset, than the new legislation.
- Service concessions should not be subject to the detailed and complex EU procurement regime, since the nature of most concessions requires more flexibility than is possible under current Directive.
- All relevant contracts must be tendered out by local authorities wherever a contract is to be concluded between it and a person legally distinct from the authority. However, the European Court of Justice has allowed one exception: where the authority exercises over the company a control similar to that it exercises over its own departments, and the company carries out the essential part of its activity with its parent authority. Unlike the Commission, CEMR considers that this exception should be expanded to cover companies owned or legally controlled by local authority.
- If the local authority chooses to allocate the concession task to a company it wholly owns, or a mixed public-private entity that it controls, CEMR believes that there is no EU law that requires local services to be tendered.
- CEMR insists that double tendering should be avoided. Therefore, it will avoid an excessive administrative and financial cost and delay.
- CEMR believes that it normally is lawful for the municipalities to entrust local public service tasks to inter-communal structures on the same basis as a single local authority can do in relation to its own company.
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