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

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Local and regional governments as service providers

Public-private partnerships - 19.05.2004

CEMR questions Commission's proposals on public-private partnerships and state aids
State aids for services of general interest (SGI) and the green paper on public-private partnerships were the two main issues of CEMR's "Services and public procurement" meeting in Brussels on 17 May 2004.
Delegates discussed the obligation for municipalities to inform the Commission of all funding for the provision of public services over a threshold prior to allocating such funding.
Several CEMR national associations believe that this proposal, included in the "Monti package", might turn out to be too restrictive for big cities. If the threshold were to be too low, some municipalities would be forced to systematically inform the Commission of any funding to companies for the provision of public services.
A European Commission representative replied that such compensation thresholds should not create too many constraints for public services : "We merely check that transparency and competition principles are respected. If public authorities do not over-pay companies, there shouldn't be any problem or any added constraint".
Some CEMR associations also questionned the Commission's approach : "Why should we have to prove that we are not over-funding our services of general interest ? It would not be in our interest to overpay external service providers. "
PPP: a calls for tenders procedure too heavy?
CEMR secretary general, Jeremy Smith, questionned the constrains the Commission is proposing on calls for tenders involving joint-ventures. Jeremy Smith called for the Commission to clarify its position on the "two-tier tendering procedure". The first tender would be about finding a private partner to set up the joint venture while the second would be about finding a partner to assigning certain tasks to the joint venture. Jeremy Smith believes this double procedure "requires a heavy investment in time and financial resources from public actors".
The commission's proposal to impose the tendering procedure for any service of general interest provided by a company that is not 100% "in-house" is equally deemed too restrictive.
CEMR believes that the internal market rules should not interfere with the management of local public services. Such public services do not affect the principle of competition.
CEMR's position paper on this issue will be available in a few weeks.
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