Concession

A concession is a contract by which a public body entrusts the delivery of works or a service to a company, and pays for it not with a price but with the right to exploit what has been built or run. The concessionaire earns its return from users, through tolls, fares, admission charges or sales, and carries the operating risk.

How it works

Section 8 of the Procurement Act 2023 (verified 2026-09-05) defines a concession contract by two features: part of the consideration is a right to exploit the works or services, and the supplier is exposed to a real operating risk, meaning a foreseeable risk of not recovering its costs arising from matters outside the control of either party. If the authority guarantees the operator's revenue, the arrangement is an ordinary public contract and the full procurement rules apply. Ireland applies the same test under the European Union (Award of Concession Contracts) Regulations 2017.

Concessions cover a wide field: car parks, leisure centres and swimming pools, catering, harbours and marinas, holiday parks, heat networks, ferries, visitor attractions, waste and recycling. When a council hands over a statutory service in this way, the arrangement is usually described as an outsourced public service.

Award follows a lighter regime than ordinary contracts. Above £5,193,000 including VAT in the United Kingdom, or €5,404,000 excluding VAT in Ireland, a concession notice must be published, in the UK through the Central Digital Platform on Find a Tender and in Ireland on eTenders and in the OJEU. Below that there is no Part 6 notice duty, because concession contracts are excluded from the below-threshold regime; the authority advertises proportionately, and Scottish and Welsh buyers use Public Contracts Scotland and Sell2Wales. Buyers may design the procedure themselves and negotiate, and the term must be no longer than is reasonably needed for the operator to recover its investment and earn a return.

What it means for a bidder

A concession is a long commitment, commonly five to thirty years, that requires you to invest and to carry commercial risk. Water and rail concessions belong to large groups, but many local ones are within an SME's reach: a municipal campsite, a marina, a covered market, an outdoor activity centre, a school catering service or a town car park.

Bidding means producing a business plan, not just a method statement: footfall and revenue forecasts, tariffs, capital expenditure, and the fee you will pay the authority. Because negotiation is expected, prepare several scenarios. Check the end-of-term clauses closely: handback condition, ownership of assets you install, and any compensation on early termination.

Example

The coastal town council of Port Alden lets the operation of its 120-pitch municipal campsite for twelve years. Turnover across the term is estimated at £3,600,000, below the concession threshold, so the council advertises on Find a Tender and its own portal. A family company already running two sites in the region wins, invests in ten holiday lodges and pays the council an annual concession fee.

Frequently asked questions

What is the difference between a concession and a public contract?

In a public contract the buyer pays and keeps the demand risk. In a concession the operator is paid by exploiting the service and bears that risk.

Is a concession always advertised?

Above the threshold, yes, through the central digital platform. Below it, the authority chooses proportionate advertising: Part 6 of the Act, with its below-threshold notice duties, does not apply to concession contracts.

Can an SME win a concession?

Yes, particularly for local leisure, catering, parking and visitor facilities, where the required investment stays modest.

Related terms

• Service concession (outsourced public service)
• Public procurement
• Public contract
• Public-private partnership contract
• Procurement notices