Mixed Concession Contract

Public projects rarely fit neatly into a single procurement category. A development project might require a builder to construct a facility (works), operate it as a service (services), and receive a mix of user revenues and authority payments (part concession, part standard contract). When these elements combine in a single procurement, the contracting authority must determine which legal regime governs the whole, and whether bundling is lawful at all.

What is a Mixed Concession Contract?

The term "mixed concession contract" does not appear as a defined term in Directive 2014/23/EU, but the directive and its companion directives (2014/24/EU and 2014/25/EU) address mixed contracts through rules that determine the applicable regime.

The primary question in any mixed arrangement is whether the combination includes elements that are genuinely inseparable. If yes, the applicable regime is determined by the main subject matter or by the highest value component. If the elements are separable, they must generally be procured separately under their respective legal frameworks.

Common mixed scenarios include:

Works and services. A works concession almost always includes services: the concessionaire builds something and then operates it. This combination is entirely normal and governed by a single concession framework. What makes a concession "mixed" in the more challenging sense is when it includes elements subject to different legal regimes: for example, when a concession-classified component is bundled with a standard public contract component.

Concession and standard public contract. If a contract transfers operating risk for one component but guarantees cost recovery for another, the risk allocation across the whole contract must be assessed. If the standard contract element dominates by value, the entire arrangement may fall under Directive 2014/24/EU rather than 2014/23/EU.

Utilities and public authority. Where a contracting authority and a utility both have an interest in a project, the applicable directive depends on the nature of each party's involvement. Procurement by a utility sector entity falls under Directive 2014/25/EU; procurement by a public authority falls under 2014/24/EU or 2014/23/EU. Joint procurement across these categories requires careful legal structuring.

Defence and civil. Contracts that include elements subject to Directive 2009/81/EC (defence procurement) alongside civil concession elements must be split if separable, or assessed against the main purpose if inseparable.

Why mixed concession contracts matter for bidders

Bidders encountering mixed contract structures must first understand which procurement regime the contracting authority is applying and why. If the authority has mis-classified the arrangement, the award may be vulnerable to challenge, and participating bidders may face disputes about the legitimacy of the procedure they followed.

More practically, a mixed contract affects the risk profile of the bid. If one component transfers demand risk while another is guaranteed by the authority, the financial model must separately analyse each revenue stream and its associated risk. Debt and equity providers will want a clear map of risk allocation across all components.

Bidders should also understand how concession modification rules apply to each component. Modification of the concession element follows Article 43 of Directive 2014/23/EU; modification of a standard contract element follows the equivalent rules in Directive 2014/24/EU. A change to a mixed contract that crosses the threshold in one component requires a different legal analysis from a change that remains within a single component.

Example

A Danish municipality procures the redevelopment of a derelict waterfront area. The arrangement includes a works concession for a car park (the concessionaire finances, builds, and operates the car park collecting user charges), plus a standard public services contract for maintenance of surrounding public realm (the municipality pays a fixed annual fee). The two elements are legally separable and should be procured in two separate processes: the car park under the Concessions Directive and the public realm maintenance under Directive 2014/24/EU. Bundling them would require the dominant-element test to determine the applicable regime.

Frequently Asked Questions

How is the "main subject matter" determined for a mixed contract?

Where two elements of a mixed contract cannot be separated, EU procurement law directs that the applicable regime is determined by the main subject matter. The main subject matter is assessed primarily by value, but also by the nature of the core obligation. If the concession component is worth EUR 20 million and the standard contract component is worth EUR 5 million, the concession regime likely governs.

Can a contracting authority voluntarily apply a stricter regime to a mixed contract?

Yes. A contracting authority may choose to apply Directive 2014/24/EU to an arrangement that might qualify as a concession, provided it genuinely complies with all of that directive's procedural requirements. This might be done to increase transparency, to match the authority's standard procurement templates, or to reduce the risk of mis-classification challenge. The choice to apply a stricter regime is always open; the choice to apply a lighter one requires clear legal justification.

What if the concession and non-concession elements are genuinely inseparable?

If elements cannot be separated without disproportionate difficulty, Article 20 of Directive 2014/23/EU (and equivalent provisions in 2014/24/EU) directs that the applicable regime is determined by the primary purpose of the contract. This is a fact-specific assessment. Contracting authorities in this position should document their legal analysis carefully, as it may be scrutinised in a challenge by unsuccessful bidders.