Insights
How concession procurement works and differs from classic contracts. A guide to the process under the KonzVgV with 4 phases for bidders.
Felicitas von Rauch
Marketing & Sales
Key Takeaways
Operating risk as the central distinguishing criterion from a classic public contract
Threshold for concessions in 2024/2025 is 5,538,000 euros
Process flow under the KonzVgV offers procurement offices more flexibility
Profitability calculation largely determines the contract award
Introduction
The threshold for EU-wide concession procurements in 2024 and 2025 is exactly 5,538,000 euros (Source: European Commission, 2024). For you as a bidder, this means: From this contract value upwards, strict European regulations apply that structure the competition.
Concession procurement is a special procurement procedure where the contracting authority does not pay a company directly for a service, but transfers the right to exploit the works or services to them. The economic operating risk transfers entirely to the contractor. This guide is for Bid Managers and managing directors who want to understand how to successfully bid on these lucrative but risky operator models. Those who master the legal framework and the procedural flow secure long-term contracts in the public sector.
Contents
What Distinguishes Concession Procurement from a Public Contract?
Which Thresholds Apply in Concessions Procurement Law?
The Concession Procurement Process in 4 Phases
Checklist: Successful Bidding for a Concession
How Forgent Approaches This
Frequently Asked Questions About Concession Procurements
What Distinguishes Concession Procurement from a Public Contract?
The decisive difference between a classic public contract and a concession lies in the remuneration and risk distribution. According to § 105 GWB (Act against Restraints of Competition), the consideration for a concession consists of the right to use the facility or to exploit the service, possibly combined with a payment.
For you as a bidder, this fundamentally changes the business model. With a normal service contract, the authority pays you a fixed sum after the service is rendered. In a concession, you refinance your investments through user fees, for example through tolls on a highway or food sales when operating a public cafeteria. You bear the risk of demand fluctuations.
Feature | Classic Public Contract | Concession |
|---|---|---|
Remuneration | Fixed payment by the contracting authority | Right of exploitation (user fees) |
Economic Risk | Borne by the contracting authority | Borne by the contractor (bidder) |
Legal Basis | VgV, UVgO, VOB/A | KonzVgV, GWB |
Contract Duration | Mostly short to medium-term | Long-term (often over 5 years) |
If revenues fail to materialize, you make a loss. Risk assumption is the central feature.
Which Thresholds Apply in Concessions Procurement Law?
Concessions procurement law is divided into two parts. The estimated contract value is decisive for the applicability of European procurement law. According to § 2 of the KonzVgV (Concession Award Ordinance), the procurement office must estimate the total revenue you are expected to generate as the concessionaire during the contract term.
If this value is above the current threshold of 5,538,000 euros (as of 2024/2025, Source: European Commission), the procedure must be tendered Europe-wide. In this case, the strict requirements of the KonzVgV and §§ 97 et seq. GWB apply. For you, this means a high degree of transparency and the ability to file an application for a review procedure with the procurement chamber if the procurement office makes errors (§ 152 GWB).
If the value is below this threshold, there is no specific procedural regulation at the federal level like the UVgO for supplies and services. The procurement is then primarily governed by the budgetary law of the respective municipality or state. This limit defines your scope of action.
The Concession Procurement Process in 4 Phases
The procedure under the KonzVgV offers contracting authorities more flexibility than a classic open procedure. For you as a bidder, this means more room for negotiation, but it also requires more precise preparation. The process is divided into four essential steps.
Phase 1: Analyze the Contract Notice and Suitability Assessment
The process begins with the contract notice in the Official Journal of the European Union. Extract the suitability criteria from the procurement documents immediately. The procurement office checks your economic, financial, and technical capacity here.
Tip: Check the required references immediately. For concessions, procurement offices often require proof of the successful operation of similar facilities for at least three years.
Create a matrix listing every required document. If a proof is missing, this usually leads to immediate exclusion.
Phase 2: Create the Profitability Calculation and Concept
In this phase, you develop your content concept and the business case. Since you bear the operating risk, a robust profitability calculation is mandatory. You must demonstrate how you will fulfill the contractual obligations while operating profitably.
While generic AI like ChatGPT often remains imprecise with complex profitability calculations and specific procurement requirements, domain-specific AI extracts the exact evaluation criteria from the procurement documents. The AI analyzes the hundreds of pages of the concession notice and lists all knockout criteria. The Bid Manager then decides based on this structured data whether the operating risk is acceptable and approves the final concept.
Phase 3: Use the Negotiation Phase Strategically
Unlike standard contracts, § 15 KonzVgV explicitly provides that the procurement office may negotiate the submitted initial bids. The goal is to improve the bids and adapt them to the needs of the contracting authority.
Use this phase actively. Negotiate risk distributions, investment grants, or contract durations. Note, however, that the minimum requirements and the award criteria according to § 15 (3) KonzVgV are non-negotiable. Document all negotiation results in writing.
Phase 4: Prepare for the Contract Award and Operational Transition
After negotiations conclude, the procurement office requests the submission of final bids. The contract award goes to the most economically advantageous bid. According to § 3 KonzVgV, the duration of a concession is limited and may only exceed five years if this is absolutely necessary to refinance the investments.
As soon as you receive the contract award, the implementation phase begins. Hire the staff, procure the necessary infrastructure, and set up reporting to the authority. A structured transition ensures your project success.
Checklist: Successful Bidding for a Concession
A systematic approach minimizes your risks when bidding for a concession. Use these checkpoints for your next procedure:
Check the threshold: Is the estimated contract value above 5,538,000 euros and does the KonzVgV apply?
Conduct a risk analysis: Are all operational and financial risks of the operating model evaluated internally?
Collect suitability proofs: Are all required references for operating similar facilities available?
Calculate profitability: Does the planned user fee cover the investment and operating costs over the entire term?
Determine the negotiation strategy: Which parameters (e.g., investment grants) do you want to adjust in Phase 3?
Before your next participation, check your calculation models for the mapping of long-term operating risks.
How Forgent Approaches This
The manual review of concession documents and the calculation of operating risk often cost bid teams hundreds of hours in Excel and Word. As a domain-specific AI platform for tenders, Forgent covers the entire process: from discovery and evaluation to bidding and management. The AI handles the review of documents with over 10,000 pages and 50 files, allowing you to make the bid/no-bid decision in under 5 minutes instead of hours. You still make the final decision on participation and commercial risk.
In a short demo, you can see how Forgent handles this for your next tender.
Frequently Asked Questions About Concession Procurements
What is the operating risk in a concession?
Operating risk means that the contractor has no guarantee of recovering their investments and costs through the operation of the concession. According to § 105 GWB, the concessionaire must be exposed to the uncertainties of the market. If user demand drops, the company bears the financial loss, not the public sector.
Can a concession also be awarded without an EU-wide contract notice?
Yes, if the estimated contract value is below the EU threshold of 5,538,000 euros (as of 2024/2025). In this case, the KonzVgV does not apply. The procurement is then governed by national budgetary law, although the general principles of transparency and equal treatment must still be observed.
How long does a concession contract usually run?
The duration is limited according to § 3 KonzVgV. It is calculated so that the concessionaire can refinance their investments and achieve a reasonable return. For contracts running longer than five years, the procurement office must explicitly justify the longer duration based on the refinancing requirements of the investments made.
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