What is a Concession Award?
A concession award (German: Konzessionsvergabe) is a special procurement procedure where the contracting authority grants a company (the concessionaire) the right to use or exploit a service. The key feature is risk transfer: the concessionaire bears the economic operating risk in whole or in part.
Distinction from Classical Contracts
| Feature | Public Contract | Concession |
|---|---|---|
| Remuneration | Payment by authority | Right to exploit |
| Economic risk | With authority | With concessionaire |
| Revenue | Fixed price | User fees from third parties |
| Demand risk | Authority | Concessionaire |
| Typical duration | Short to medium term | Long term (5-30 years) |
Types of Concessions
1. Works concession (§ 105(1) No. 1 GWB):
- Transfer of the right to use a construction work
- Examples: toll bridges, parking garages with management rights
- The concessionaire finances, builds, and operates the facility
2. Service concession (§ 105(1) No. 2 GWB):
- Transfer of the right to provide and exploit a service
- Examples: canteen operation, parking management, public transport lines
Legal Framework
- Directive 2014/23/EU (Concessions Directive)
- §§ 105-113 GWB: Concessions in German competition law
- KonzVgV: Concession procurement regulation
- Threshold: €5,538,000 for all concessions
Procedure
The concession award follows a more flexible procedure than classical procurements:
- Publication: Notice in the Official Journal of the EU (TED) and nationally
- Expression of interest: Companies express their interest
- Negotiations: The authority may negotiate with multiple candidates
- Final negotiation: Negotiation of final conditions
- Award: Granting of the concession
The KonzVgV grants more flexibility than the VgV: no fixed procedure types, negotiations always possible, more flexible deadlines.
Risk Transfer as Core Feature
The risk transfer must be real. A contract where the authority fully assumes economic risk (e.g., through revenue guarantees) is not a concession but a public contract. Operating risk includes demand risk, supply risk, and market risk.
Practical Examples
Highway rest area: Concessionaire builds and operates the facility, earning revenue from fuel sales and catering. Risk: traffic volume may decline. Duration: 20-30 years.
Canteen operation: Concessionaire operates a canteen in a government building, earning revenue from meal sales. Risk: demand development, food prices. Duration: 3-10 years.
Exemptions
Not covered by concession rules: water concessions (§ 149 No. 9 GWB), emergency service concessions to non-profit organizations, aviation concessions, and in-house awards.
Patterno hilft
Patterno also monitors concession tenders across all relevant platforms. Our AI automatically recognizes whether a tender is a classical procurement or a concession award, and specifically informs you about concession procedures in your business area.