Blog | Special sectors require a specific approach (issue 1)
Blog series written by Pieter Smid, offering insights on procurement under Part 3 of the Public Procurement Act.
A lot is happening in the world of special sector companies
Schiphol faces challenges regarding downsizing or investing, public transport companies are actively implementing the European Rail Traffic Management System (ERTMS), new networks, and concessions. The Port of Rotterdam is requesting government support to maintain its unique position. Additionally, the energy transition, shortages, and sustainability of electricity and gas are frequently discussed in political and social debates. These developments highlight the ongoing dynamics within these vital sectors.
Plenty of reason to take a closer look at the position, challenges, and developments of special sector companies (SSCs) from a procurement law perspective. In the coming period, I will explore several topics relevant to special sector companies in a series of blog posts.
To kick things off: When is an organization considered a special sector company? And why does procurement law apply to them, but not necessarily in the same way as it does to contracting authorities that are not special sector companies?
What defines an organization as a special sector company?
A company qualifies as a special sector company (SSC) if it meets the definition outlined in Article 1.1 of the Dutch Public Procurement Act 2012 (Aanbestedingswet 2012 – Aw). In short, an organization is considered an SSC if it is:
- A contracting authority, which, according to Article 1.1 Aw, includes entities classified as a ‘public law institution’; or
- A state-owned enterprise, which applies if it meets the definition of a state-owned enterprise in Article 1.1 Aw and is significantly influenced by public authorities, such as municipalities (Article 1.2 Aw); or
- A company with a special or exclusive right as defined in Article 1.1 Aw.
Additionally, the organization must be engaged in a ‘relevant activity’ as described in Articles 3.1 to 3.6 Aw, such as gas and heating, electricity, drinking water, public transport, airports, seaports, inland ports, or postal services.
Special sector companies: major players in the procurement market
These special sectors involve natural and legal monopolies that operate under government influence. As a result, it is essential to prevent inefficient and/or discriminatory procurement policies, particularly to ensure effective market competition and the development of the internal market. Special sector companies (SSCs) are therefore also required to conduct procurement, and they do so on a large scale.
More than 70% of public tenders issued by SSCs have a contract value exceeding €1 million. According to TenderNed, these tenders account for approximately 40% of the entire procurement market.
This makes SSCs a significant force in the total volume of procurement contracts, reinforcing not only their vital role in essential industries but also their major impact on the procurement landscape.
Procurement law for special sector companies
The differences between general procurement law and the procurement law for special sector companies (SSCs) stem from several factors, including:
- Contracting authorities in traditional sectors do not always fulfill a specific economic or industrial function, whereas SSCs do;
- SSCs often operate within a highly complex and specialized infrastructure;
- Greater flexibility is required in these sectors to ensure effective procurement policies.
As a result, SSCs are not automatically subject to the same obligations as contracting authorities in traditional sectors, and in some areas, only a set of minimum rules applies. This is particularly relevant for aspects such as exclusion grounds and suitability criteria, where more flexibility is permitted.
More flexibility provides more opportunities to make good choices that lead to an effective, tailored approach.
With the ultimate goal of delivering the best execution of a tender issued in the market.
In the coming period, I will elaborate in my blogs on this flexibility and the possibilities when launching new tenders for SSCs.
Blog series 'Special sectors require a specific approach'
Pieter Smid is a lawyer specializing in procurement law. He has extensive experience and expertise in procurement-related issues concerning special sector companies. In the blog series 'Special Sectors Require a Specific Approach,' he addresses various topics relevant to special sectors.
