A concession resembles a public contract, but legally it is not. The distinguishing feature is the transfer of operating risk: the concessionaire recovers its investment by exploiting the work or service, and bears the risk that revenues fall short of expectations. This has far-reaching consequences for the procedure, the contract structure and the tenderer’s bid strategy.
Concessions in the EU are governed by Directive 2014/23/EU. In Belgium, the transposition law is the Act of 17 June 2016 on concession agreements — a separate act alongside the one on public procurement.
The key concept: operating risk
The difference between a public contract and a concession lies not in the subject (both can involve works or services), but in the consideration.
In a standard public contract, the authority pays the contractor directly for the performance. In a concession, the concessionaire receives the right to exploit the work or service — and bears the risk that the exploitation is not profitable.
Concretely: if a municipality commissions the construction of a swimming pool and pays the contractor for the construction, that is a works contract. If the municipality grants an operator the right to build and operate a swimming pool, where the operator recovers its investment through entrance fees, that is a works concession.
When is there sufficient risk transfer?
The Directive requires that a significant part of the operating risk be transferred to the concessionaire. This risk comprises:
Demand risk. The uncertainty about use or uptake by end users. Fewer visitors to the pool, fewer vehicles on the toll road, fewer cars in the garage — the concessionaire bears the consequence.
Supply risk. The uncertainty about the costs of exploitation. Higher energy prices, unexpected maintenance, staff shortages — the concessionaire bears the additional costs.
The transfer does not need to be total. A partial transfer suffices, provided the concessionaire is genuinely exposed to market fluctuations. If the authority covers all risks through guarantees, minimum fees or automatic compensation, there is no real concession but a disguised contract.
Two types of concessions
Works concession
The concessionaire executes a construction work and receives the right to exploit it. Classic examples: toll roads, parking garages, healthcare facilities with private use, sports infrastructure.
Services concession
The concessionaire provides a service and is paid through the right of use, not by the authority. Examples: operation of a company restaurant, parking management, energy services (ESCO contracts), waste management.
The boundary between the two follows the same logic as for standard contracts: the main subject determines the classification.
The procedure: lighter but not optional
Concessions follow a lighter procedure than standard contracts, but the basic principles — transparency, equal treatment, proportionality — apply in full.
Publication. Concessions above the European threshold (€5,404,000 for 2026-2027) must be published on TED. Below that threshold, national publication rules apply.
Time limits. The minimum time limit for submitting requests to participate is 30 days from publication of the notice. For the submission of tenders there is no fixed minimum — the authority sets a reasonable time limit.
Procedure. The Concessions Directive does not prescribe fixed procedures such as the open or restricted procedure. The authority has more flexibility in designing the procedure, but must respect the core principles. Negotiations are permitted as standard.
Duration. The duration of a concession must be proportionate to the investments the concessionaire needs to recoup. For concessions requiring heavy investments (e.g. infrastructure), durations of 15, 20 or even 30 years can be justified.
Implications for your bid strategy
A concession is a fundamentally different proposition from a standard contract. Your tender contains a business case, not just a price.
Financing. The concessionaire typically finances (part of) the investment itself. Your tender must demonstrate how you structure the financing — own resources, bank loan, project finance — and how you cover repayment from operating revenues.
Risk analysis. Document which risks you accept and how you manage them. Demand risk can be mitigated through market research and flexible pricing. Supply risk can be mitigated through maintenance planning and insurance. A clear risk allocation strengthens your tender.
Operating model. Demonstrate that your operating model is realistic. Use benchmarks, comparable projects and conservative assumptions. An overly optimistic model undermines your credibility; an overly pessimistic model makes your tender too expensive.
Long-term vision. Concessions run for a long time. Your tender must demonstrate that your organisation can deliver the service for the full duration — including personnel management, asset management and quality assurance over decades.
Common mistakes
Misjudging the classification. If the authority retains all risk itself (fixed fee, guaranteed minimum uptake), it is not a concession but a contract. The classification determines which law applies and which procedures govern the process.
Underestimating demand risk. Optimistic projections about visitor numbers, users or customers lead to an exploitation that is not profitable. Work with scenario analyses (base, pessimistic, optimistic) and demonstrate that the model holds up even in the pessimistic scenario.
Not planning the exit. At the end of the concession, the infrastructure typically must be transferred to the authority in good condition. Plan your maintenance investments over the full duration, not just the first years.