Concession Contracts Regulations 2016

The Concession Contracts Regulations 2016 (CCR 2016) came into force on 18 April 2016, implementing EU Directive 2014/23/EU into UK law. They established for the first time a dedicated and coherent legal framework governing the award of works and services concessions, a contract type previously regulated only loosely at EU level.

What are the Concession Contracts Regulations 2016?

A concession contract differs fundamentally from a standard public contract. In a standard public contract, the contracting authority pays the supplier a price for goods, services, or works. In a concession, payment comes primarily from the right to exploit the concession itself, typically by charging users directly. Crucially, the concessionaire must bear a genuine operating risk: if demand falls or costs rise, the concessionaire bears the financial consequences. If the contracting authority guarantees revenue or removes demand risk, the arrangement is not a concession and falls under the Public Contracts Regulations 2015 instead.

CCR 2016 applies to works concessions (for example, a private company building and operating a toll road) and services concessions (for example, a company operating a car park or a leisure centre under a right to collect user fees). The regulations set out a lighter-touch procedural regime than that applicable to standard public contracts. There is no prescriptive list of procedures that must be followed. Instead, contracting authorities must advertise the concession above the relevant threshold, set out selection and award criteria, and observe equal treatment, transparency, and proportionality principles. The precise process is left largely to the contracting authority's discretion, provided these principles are respected.

CCR 2016 was retained in UK domestic law after the UK's departure from the EU. The Procurement Act 2023 introduces new rules for concessions that will eventually replace CCR 2016 for new awards. During the transition period, understanding CCR 2016 remains essential for any supplier pursuing infrastructure, leisure, parking, or similar concession opportunities.

The regulations include standstill obligations before contract signature and require publication of a contract award notice. They also impose exclusion grounds broadly comparable to those in PCR 2015 and the Utilities Contracts Regulations 2016.

Why it matters for bidders

Concessions are a major route to market for infrastructure and facilities operators. The more flexible procedural framework under CCR 2016 means that negotiations can be structured in ways not available under standard procurement law. However, the operating risk requirement is a real constraint: a bidder must genuinely price and manage that risk, or the economics of the concession will not work.

Understanding CCR 2016 helps bidders assess whether an opportunity is genuinely structured as a concession or is in substance a disguised public contract. If the authority has structured a contract as a concession to avoid the stricter procedural requirements of PCR 2015, that structure may be legally challengeable.

Example

A local authority grants a 25-year concession to operate a municipal leisure centre. The operator charges users directly for gym membership, swimming, and classes. The authority makes no revenue guarantee. If membership numbers fall below projections, the operator absorbs the loss. This genuine transfer of demand risk makes it a services concession under CCR 2016. The authority publishes a concession notice, runs a competitive selection process with defined award criteria, and signs the concession agreement after a standstill period.

Frequently Asked Questions

What is the operating risk test and why does it matter?

Operating risk is the defining feature of a concession. It comprises demand risk (fewer users than expected) and supply risk (higher costs than anticipated). The European Court of Justice and UK courts have confirmed that at least a significant share of demand or supply risk must transfer to the concessionaire. If the authority guarantees a minimum payment or indemnifies the operator against losses, the operating risk has not genuinely transferred and the contract must be procured under the standard public contracts rules instead.

Is there a financial threshold below which CCR 2016 does not apply?

Yes. CCR 2016 applies only to concessions whose estimated value exceeds the relevant threshold, which is significantly higher than the thresholds applying to standard public contracts. Below this threshold, the general principles of transparency and equal treatment still apply under common law and the public law duty of good administration, but the full CCR 2016 procedural framework does not.

How does CCR 2016 interact with the Social Value Act?

The Public Services (Social Value) Act 2012 requires contracting authorities to consider social value in procurement decisions. While CCR 2016 does not mandate specific social value criteria, a contracting authority may include social value as an award criterion provided it is linked to the subject matter of the concession and disclosed in advance.