Concession Award in Procurement Law

Concession award: the award of works and services concessions with operating risk on the concessionaire. Threshold EUR 5,538,000, Directive 2014/23/EU.

Definition: Concession award refers to the procedure by which public contracting authorities or utilities contracting entities grant a works or services concession to one or more concessionaires, the consideration for the services performed consisting in the right to exploit the works or the services commercially, with the operating risk passing to the concessionaire (Article 5 of Directive 2014/23/EU).

Last updated: January 2026 · Legal status: Directive 2014/23/EU, §§ 175 et seq. BVergG 2018, §§ 148 et seq. GWB, KonzVgV

What is a concession award?

Concession award is the umbrella term for the full range of procedures and rules under which public bodies grant works or services concessions – an autonomous legal regime which differs from classical procurement law by virtue of greater procedural flexibility and the mandatory passing of operating risk. While, in the case of a classic public contract, the contracting authority pays consideration in the form of remuneration, the consideration for a concession consists in the right to exploit the service commercially – typically by levying user charges from third parties.

Since 2014, concession award has been harmonised at EU level by Directive 2014/23/EU. That directive established for the first time a uniform framework for a field of law that had previously been shaped only by the principles of primary law under the TFEU and by case-law of the Court of Justice of the European Union (CJEU). The directive applies both to works concessions (Article 5(1)(a)) and to services concessions (Article 5(1)(b)).

Purpose and significance

Concession award enables public contracting authorities to deliver infrastructure and services of general interest with the involvement of private capital and entrepreneurial risk, without the contracting authority bearing the economic operating risk. Concessions are a central instrument of public-private cooperation and are particularly suited to long-term projects with significant investment needs, such as toll roads, car parks, water supply installations and passenger transport services.

The concession model gives the private concessionaire an incentive to be efficient and innovative because it benefits directly from the economic success of the project. For the public sector, it reduces strain on the budget and allows the use of private know-how. The flip side lies in the complexity of contract design and the long binding effect of such contracts.

Types of concession award

EU law on concession awards distinguishes between two main types of concession, which – depending on the subject-matter – follow different rules.

Works concession

The works concession (Article 5(1)(a) of Directive 2014/23/EU) concerns contracts for the execution, or for the design and execution, of works, where the consideration consists either solely in the right to exploit the works built or in that right together with payment. The best-known example is the concession-based construction and operation of a toll road or a tunnel.

Services concession

The services concession (Article 5(1)(b) of Directive 2014/23/EU) concerns contracts for the provision and management of services. Typical examples are the concession-based operation of car parks, swimming pools, canteens or passenger transport services. The concessionaire is financed primarily through user charges from the end users.

Operating risk

Operating risk is the decisive distinguishing feature compared to classic contracts – without a genuine and substantial transfer of risk, the case-law of the CJEU treats the arrangement as an ordinary contract rather than as a concession.

Under Article 5(1) of Directive 2014/23/EU, operating risk comprises demand-side risk (the risk of falling user numbers), supply-side risk (the risk of rising operating costs) or both. The transfer of risk must be substantial; purely theoretical or minimal transfers of risk are not sufficient. The CJEU has emphasised in its case-law (including Cases C-382/05 and C-458/03) that the risk must be "real" and must comprise genuine potential for loss.

Threshold

The EU-wide threshold for concession awards has, since 1 January 2024, been a uniform EUR 5,538,000 (net) and applies both to works concessions and to services concessions.

This threshold is reviewed and, where appropriate, adjusted every two years by the European Commission. Above the threshold, the requirements of Directive 2014/23/EU and the national transposing legislation are mandatory. Below the threshold, the primary-law principles of the TFEU (transparency, equal treatment, non-discrimination) apply where there is cross-border interest. The deliberate splitting of concessions in order to fall below the threshold is prohibited.

Specific features of the procedure

Compared to classical procurement procedures, concession awards are characterised by considerably greater procedural flexibility – the grantor of the concession can largely design the procedure itself, provided it complies with the minimum standards under procurement law.

Directive 2014/23/EU prescribes the following minimum requirements:

Duty to publish: concessions above the threshold must be published in the Supplement to the Official Journal of the EU (TED).
Minimum time limit: the time limit for submission of bids or requests to participate is at least 30 days from the date of publication.
Selection criteria: the grantor of the concession must publish selection criteria and may only design the procedure on the basis of objective and non-discriminatory criteria.
Award criteria: the contract is awarded to the most economically advantageous bid (Article 41 of Directive 2014/23/EU).
Negotiations: the grantor of the concession may negotiate with candidates and bidders; minimum requirements may not be altered in the course of negotiations.

Duration

The duration of a concession is not freely choosable but must be limited to the period necessary for the concessionaire to recoup its investment and earn a reasonable return on capital (Article 18 of Directive 2014/23/EU).

For concessions with a term of more than five years, the maximum total term must not exceed what is reasonably necessary, having regard to the level of investment and the economic conditions. Excessively long terms can have a foreclosing effect on the market and are therefore problematic under procurement law. In practice, concession terms frequently lie between 10 and 30 years.

Legal basis

At EU level, concession awards are entirely governed by Directive 2014/23/EU on the award of concession contracts, which entered into force on 18 April 2016.

Key provisions:

Article 5 of Directive 2014/23/EU – definitions (works and services concessions)
Article 8 of Directive 2014/23/EU – threshold
Article 18 of Directive 2014/23/EU – duration
Articles 30–32 of Directive 2014/23/EU – procedural requirements, publication, time limits
Article 41 of Directive 2014/23/EU – award criteria
Articles 43–45 of Directive 2014/23/EU – legal protection

National transposition

Austria (BVergG 2018)

In Austria, concession awards are governed by a separate section of the Federal Procurement Act 2018 (BVergG 2018), in §§ 175 et seq., which reflects the specific features of concession awards in comparison to classical procurement. The BVergG 2018 distinguishes between works concessions (§§ 175 et seq.) and services concessions (§§ 184 et seq.) and fully transposes Directive 2014/23/EU. For concessions below the EU threshold, the general principles of procurement law under the BVergG 2018 and the requirements of primary law apply. Legal protection in procurement matters is afforded by the Federal Administrative Court (BVwG) and the regional administrative courts. Austria has no separate statutory rules on concessions below the threshold; in that area, the general principles of administrative law are decisive.

Germany (GWB / KonzVgV)

In Germany, Directive 2014/23/EU was transposed by §§ 148 et seq. GWB and the Concession Award Regulation (KonzVgV) of 12 April 2016, which gives concrete form to the substantive and procedural requirements. § 149 GWB contains the definitions of works and services concessions. § 153 GWB regulates the threshold. The KonzVgV gives concrete form to the duty to publish, the minimum time limits, the rules on exclusion and self-cleaning and the award criteria. Legal protection in respect of concessions above the threshold is afforded by the federal and state procurement chambers and the procurement senates of the Higher Regional Courts. Below the threshold there is no formalised procurement-law legal protection.

Related terms

FAQ

Which concessions are outside the scope of Directive 2014/23/EU? The directive contains extensive exceptions in Articles 10 to 17, including concessions for certain electronic communications services, concessions on the basis of an international agreement, certain lottery and gambling concessions, and concessions awarded to affiliated undertakings (in-house awards) and to joint ventures in the utilities sector.

How is the value of a concession calculated for the purposes of the threshold? What is decisive is the estimated total turnover of the concessionaire over the entire term of the concession, net of VAT. The estimate is to take account of all revenue, including payments made by the public contracting authority, revenue from third parties and revenue from the sale of items (Article 8(3) of Directive 2014/23/EU).

Can the contracting authority negotiate in a concession award? Yes. Concession awards are distinguished from classical procurement procedures by the express permissibility of negotiations. The grantor of the concession may negotiate with candidates and bidders on all aspects of the concession, with the exception of the conditions and award criteria laid down as minimum requirements (Article 37 of Directive 2014/23/EU).

What are typical durations for concessions? In practice, durations vary considerably depending on the type of concession and the level of investment required. Simple operating concessions (e.g. a car-park canteen) may run for five to ten years, while infrastructure concessions (e.g. toll roads, water supply) frequently cover 20 to 30 years. The duration must always be justified by reference to the amortisation needed.

Do the review procedures for classical procurement apply to concessions? In Austria, yes: § 196 BVergG 2018 refers, for legal protection in respect of concessions, to the general rules on review proceedings; the BVwG and the regional administrative courts have jurisdiction. In Germany, the procurement chambers and the procurement senates of the Higher Regional Courts have jurisdiction in respect of concessions above the threshold (§ 155 GWB). Article 43 of Directive 2014/23/EU obliges the Member States to ensure effective legal protection.

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