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Concessions

Plain-language definitions of every Concessions term that shows up in government tender work.

Concessions

Availability Risk

Availability risk in concession contracts is the exposure of a concessionaire to financial deductions or penalties when the asset or service fails to meet the required availability, quality, or performance standard, with the operator bearing the cost of shortfalls in output rather than the contracting authority.

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Concessions

Concession Award Procedure

A concession award procedure is the process by which a contracting authority selects a concessionaire, characterised by significantly greater procedural flexibility than standard public procurement, requiring a published notice and adherence to transparency and equal treatment principles while allowing the authority to design its own selection and evaluation method.

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Concessions

Concession Contract

A concession contract is a public procurement arrangement in which a contracting authority grants an operator the right to exploit works or services, transferring the substantial operating risk to the concessionaire, who recovers costs primarily through revenues from users or performance-based payments.

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Concessions

Concession Duration

Concession duration is the contractual term for which a concessionaire holds the right to exploit a works or service, limited under Directive 2014/23/EU to the period a diligent operator would reasonably need to recoup its investment and earn a reasonable return on invested capital, with unusually long terms requiring specific justification.

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Concessions

Concession Modification Rules

Concession modification rules are the legal provisions in Article 43 of Directive 2014/23/EU that define the circumstances in which a contracting authority may vary an awarded concession contract without triggering the requirement for a new award procedure, protecting market competition while allowing necessary adjustments over long concession durations.

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Concessions

Concessions Directive (2014/23/EU)

Directive 2014/23/EU is the EU legal instrument that establishes for the first time a dedicated harmonised framework for the award of concession contracts across EU member states, setting transparency, equal treatment, and operating-risk-transfer requirements while granting contracting authorities wider procedural freedom than standard procurement directives.

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Concessions

Demand Risk

Demand risk in concession law is the exposure of a concessionaire to the possibility that actual usage of the works or service will be lower than projected, directly reducing revenues and potentially preventing the operator from recovering its investment or costs over the concession period.

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Concessions

Mixed Concession Contract

A mixed concession contract is an arrangement that combines elements of different contract types, such as works and services components, or concession and standard procurement elements, requiring careful legal analysis to determine which procurement regime governs the whole contract and whether the arrangement can lawfully be bundled into a single award.

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Concessions

Operating Risk Transfer

Operating risk transfer is the defining legal criterion for a concession contract under EU law, requiring that the concessionaire bears genuine exposure to the uncertainties of the market, including demand-side variability or supply-side cost fluctuations, such that there is a real possibility it will not recoup its investment or operating costs.

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Concessions

Revenue from Users

Revenue from users is the income collected by a concessionaire directly from the individuals or entities who use the works or service, forming the primary or supplementary payment mechanism that creates demand-side operating risk and distinguishes a concession contract from a standard public procurement arrangement.

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Concessions

Services Concession

A services concession is a concession contract in which a contracting authority grants an economic operator the right to provide and manage a service to the public, with substantial operating risk transferred to the concessionaire, who recovers costs primarily through charges levied on service users rather than direct payments from the authority.

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Concessions

Works Concession

A works concession is a type of concession contract in which a contracting authority grants an operator the right to construct and subsequently exploit a works output, with the concessionaire bearing substantial operating risk and recovering costs primarily through user revenues or availability-based income over the contract term.

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