Concession in Procurement Law 2026

Concession in procurement law: a contract by which a public contracting authority transfers to an undertaking the right to perform a service and thereby to bear the operating risk.

Definition: In procurement law, a concession is a contract for pecuniary interest by which one or more public contracting authorities entrust the performance of works or service concessions to one or more economic operators, the consideration consisting either solely or principally in the right to exploit the works or the services, and the operating risk passing to the concessionaire.

Last updated: January 2026 · Legal status: Directive 2014/23/EU; BVergG 2018 §§ 188 et seq.; GWB §§ 105, 149 et seq.; KonzVgV

What is a concession?

The concession is an autonomous legal institution within public procurement which differs from the classic public contract in that the concessionaire does not receive payment directly from the contracting authority but acquires the right to exploit the service commercially, and thereby bears the economic operating risk. The concession thus combines the elements of performance of the service and assumption of risk.

The procurement-law definition of a concession is narrow and is laid down at EU level. The CJEU and, subsequently, Directive 2014/23/EU have refined the concept: what is decisive is the transfer of the substantial operating risk to the concessionaire. Where the risk is only marginal (e.g. because of guaranteed minimum offtake or compensation payments), there is no concession.

Types of concession

Procurement law distinguishes between two main types of concession: works concessions and services concessions.

Works concession

With a works concession, the contracting authority entrusts the concessionaire with the execution of works and, in return, with the right to operate and exploit the works built (e.g. toll roads, car parks, bridges).

Services concession

With a services concession, the contracting authority entrusts the concessionaire with the right to provide a service that is addressed to third parties (e.g. the general public), for example the operation of parking meters, canteens, swimming baths, telecommunications infrastructure.

Operating risk as the distinguishing feature

Operating risk is the central distinguishing feature between a concession and a public contract. Under Article 5(1) of Directive 2014/23/EU, operating risk comprises demand-side risk, supply-side risk, or both:

Demand-side risk: uncertainty as to how many users will take up the service
Supply-side risk: uncertainty as to the cost of providing the service

Where the contracting authority guarantees the concessionaire, through compensation payments, that the concessionaire will always recover its investment and operating costs, the economic risk is borne not by the concessionaire but by the contracting authority – the contract is then a public contract and not a concession.

Threshold and procurement procedure

Concessions are subject, from a threshold of EUR 5,538,000 (as at 2024/2025), to the requirements of Directive 2014/23/EU and the national transposing legislation.

In Germany: KonzVgV (Concession Award Regulation) In Austria: BVergG 2018 §§ 188 et seq.

The concession award procedure is more flexible than the classical procurement procedures; the contracting authority can largely design the procedure itself, but must observe the basic principles (transparency, equal treatment, competition).

Distinction between concession and privatisation

A concession transfers only the right to operate, not ownership of the infrastructure or of the area of service. The contracting authority remains the owner and retains influence over the quality of the service. By contrast, privatisation transfers ownership itself.

Related terms

FAQ

What is the difference between a concession and a permit? A permit allows a person to engage in a particular activity; a concession, in addition, actively transfers the right to exploit a public service or infrastructure commercially and is generally accompanied by obligations of the concessionaire towards the grantor of the concession.

Does concession law also apply to the supply of water? Article 12 of Directive 2014/23/EU excludes water concessions from the scope. Special national rules apply to the supply of water.

How long may concessions run? A concession may be limited to no longer than is reasonably required in order for the concessionaire to recoup its investment and earn a reasonable return. Article 18 of Directive 2014/23/EU limits the duration to what is reasonably necessary; for concessions of more than five years, particular reasons must be given.

Last updated: January 2026 All information is provided without warranty. For legally binding advice, please consult a law firm specialising in procurement law.