1. Competitive tendering for rail public service contracts – amendment of Regulation 1370/2007
Marek Stavinoha
Legal officer
DG MOVE A4
European Commission
Warszawa, 12 April 2017

2. Purpose of Regulation (EC) No 1370/2007
Regulation defines how competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed.

3. Scope of Regulation (EC) No 1370/2007
Regulation lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators and/or grant exclusive rights in return for the discharge of public service obligations. This Regulation applies to the national and international operation of public passenger transport services by rail and by road.

4. Content of Regulation (EC) No 1370/2007
Mandatory content of public service contracts
General rules under which the Member States may impose tariffs
Award of public service contracts
Compensation for discharging of public service obligations
Reporting on public service contracts
State aid rules

5. Types of award of public service contracts
On the basis of procurement directives if concerning service contracts or public service contracts for public passenger transport services by bus or tram
Direct award to an internal operator
Direct award if the value of the contract or amount of services fall under certain value (de minimis)

6. Types of award of public service contracts
Direct award in case of disruption of the service (emergency award)
Direct award in case the public service contract concerns transport by rail
Award on the basis of a competitive tendering procedure

7. Objectives of the Commission's proposal (2013)
Improvement of the quality of rail passenger services and increase of their operational efficiency.
Introduction of the principle of mandatory tendering of rail public service contracts.
Introduction of additional measures to improve the tendering procedures.

8. What can we expect from competitive tendering
What can we expect from competitive tendering? (from the Commission's impact assessment)
Savings of public funding for tendered rail public service contracts:
NL 20%-50%
DE ca. 20%
SE 20%-30%
Improvements in rail service quality:
DE: transport volume increased by 30% thanks to improved frequency and quality
UK: punctuality increased between despite increasing traffic intensity

9. Regulation 2016/2338
Amending Regulation (EC) No 1370/2007
Outcome of difficult negotiations, balancing out very diverging political positions between the European Parliament and the Council
Concerns primary rail transport but has an impact also on other modes falling within the scope of Regulation (EC) No 1370/2007

10. Main changes brought by Regulation (EU) 2338/2016

11. Definition of public passenger transport services by rail
New definition of "public passenger transport services by rail" excludes passenger transport by other track-based modes, such as metros or tramways.
These modes are therefore not concerned with specific provisions encompassed in the Regulation which are applicable to rail (e.g. performance-based exemption).

12. Specification of public service obligation
Obligation to lay down specifications of public service obligations while respecting proportionality principle.
Possibility to group cost-covering services with non-cost-covering services.

13. Specification of public service obligation and compensation
Specifications and compensation must achieve the objectives of the public transport policy in a cost-effective manner, and
be consistent with the policy objectives stated in public transport policy documents of the Member States.

14. Social rights
Public service operators must comply with obligations applicable in the field of social and labour law established by Union law, national law or collective agreements.
Possible additional social standards or rights of employees subject to transfer between two operators must be included in the tender documents and in the public service contracts.
Mandatory transfer of staff in cases when Directive 2001/23/EC applies.

15. Provision of information in the competitive procedure
The operator must provide the competent authority with the information necessary for the preparation of the tender (e.g. passenger demand, fares, costs and revenues).
Competent authority must provide this information to all interested parties for the preparation of an offer.

16. New conditions of award to an internal operator
In case a group of authorities award a rail public service contract to an internal operator controlled by one them, their area of competence may not be national.
The public service contract awarded in this way may only cover the transport needs of urban agglomerations or rural areas.

17. Introduction of principle of mandatory competitive tendering for all public service contracts
Public service contracts for public passenger transport services by rail must, in principle, be awarded through mandatory competitive tendering.

18. Exemptions from the principle of mandatory competitive tendering
Exceptional circumstances: a competent authorities are already carrying out other tenders, which could have an impact on the number and quality of bids or competent authority wants to change the scope of public service contracts (only railways).
Simplified procedure: The competent authority has received only one bid following the announcement of the award of public service

19. Exemptions from the principle of mandatory competitive tendering
De minimis: value / size of the public service contract is lower than the newly elevated thresholds specified in the Regulation.
Railway infrastructure manager and operator of the public service obligation on its infrastructure are the same entity and the infrastructure is excluded from the scope of the Directive (EU) No. 2012/34 (only railways).

20. Exemptions from the principle of mandatory competitive tendering
Emergency situation in the event of a disruption of services or the immediate risk of such a situation

21. Performance based exemption
Where competent authority considers that the direct award is justified
by structural and geographical characteristics of the market or network, and
if the contract results in an improvement in quality of services or cost-efficiency, in comparison to the previous one.

22. Performance based exemption
Competent authority must define in contract measurable, transparent and verifiable performance requirements and periodically check whether the operator fulfils them.
In case of a failure to fulfil the requirements, the competent authority must take deterrent measures, including suspension or termination of the contract.
The decision of competent authorities may be assessed by an independent body.

23. Limitation of number of contracts awarded to the same operator
Competent authorities may decide that contracts for public passenger transport services by rail covering parts of the same network or package of routes are to be awarded to different railway undertakings.
To this end, the competent authorities may, decide to limit the number of contracts to be awarded to the same railway undertaking.

24. Access to the rail rolling stock
With a view of competitive tendering, competent authorities must make public an assessment whether it is necessary to take measures to ensure effective access to rail rolling stock.
Competent authorities may take measures to ensure such an access:
acquisition of rolling stock, guarantees for the financing of rolling stock, commitment to takeover rail vehicles after the contract finishes, creation of rolling stock pool

25. Transition arrangements
2017: (24.12.) entry into force of new Regulation
2019: Application of the principle of competitive award and of new performance based exemption next to possibility of direct award
2023: Expiry of application of direct award possibility
max. duration of existing rail PSC of 10 years
direct award only in exceptional cases (exemptions)

26. Implementing the new law: Consequences for market stakeholders
Member States:
To decide whether to prohibit exemptions to competitive award
Competent authorities:
To acquire administrative competence and resources to prepare and organise competitive award procedures
To create trust in their capacity to ensure non- discriminatory award conditions (e.g. rail rolling stock)
To decide whether transfer of staff is needed to facilitate competition

27. Implementing the new law: Consequences for market stakeholders
Railway undertakings
To undertake activities in accordance with new rules
Rail Regulatory Bodies
To fully use their competencies to facilitate effective market opening
European Commission
to reap synergies between enforcing rail legislation on market opening and applying EU competition rules
Passengers will be able to benefit of competitive rail transport services

28. Thank you for your attention!