Public service delegation

contracts in Hauts-de-France

Executive summary

2022 Annual Public Report

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Local authorities and their institutions can appoint third-party operators to construct

facilities and manage fully or in part of their public services. This kind of agreements is now

widely used in many areas such as water distribution, waste collection and treatment, and the

management of urban transport networks.

Stakeholders in public service delegation contracts

Source: Court of Accounts

Without waiting for the end of the Covid crisis, the financial courts wanted to analyze the

arrangements made by contracting authorities and their delegatees in response to the

shutdown of their activities and/or the health restrictions, and measure their impacts on users.

The survey was carried out on a sample of municipalities and local public institutions in Hauts-

de-France representative of the diversity of rural and urban areas. It in no way calls into

question the responsiveness of local authorities regarding the population, which is

unanimously emphasised.

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Priority given to protecting delegat

ees’

financial interests

With the covid crisis, the delegated services checked have experienced a drop in use:

between 15% and 20% for transport networks, between 40% and 80% for entertainment and

conference venues, and more than 60% for swimming pools and water parks. This resulted in

a significant decrease in their revenues.

On their own initiative or at the request of the delegatees, some local authorities, anxious

to preserve public services, decided to grant support to their outsourcers in the form of financial

compensation, exemptions from fees for operating a public concession, cash advances or

discounts applied to penalties due. These measures were taken without any real prior analysis

of the actual situation of the concerned delegatees.

Thus, in this sample the local authorities maintained payment of financial compensations

in return for public service obligations, despite the fall slump in the delegated activities, while

the cessation or reduction of operations because of Covid restrictions led to a reduction in the

cost of these obligations and should therefore have led to a revision of the amount paid.

These payments, combined with central government support mechanisms, have helped

to maintain the profitability of operations and protect

delegatees’

interests and, where

applicable, those of their parent companies, while users suffered from a reduced

service.

The Covid crisis has once again shown that local authorities do not sufficiently

understand the economic mechanisms of public sector delegation contracts. They impose few

requirements on delegatees to report reliable and complete financial data, which restricts the

information available to the deliberative assembly and citizens.

Failing of being able to grasp the magnitude of the fall in revenue, the savings made by

stopping or limiting services, and the full amount of central government aid, local authorities

have not been able to assess their

delegatees’

real situations.

However, good practices have been identified and should make it possible to establish

a more balanced relationship between the two contract partners in the future. Some local

authorities have consequently negotiated review clauses and have been or will be in a position

to demand repayment of sums unduly paid.

The preponderant role of delegatees to meet the imperatives of public

service continuity

Compliance with the principles of continuity and adaptability of public service is the joint

responsibility of the contracting authority and its delegatee. The first defines and directs the

service strategy. The second implements it in compliance with the contractual provisions.

However, with the health crisis, total or partial closedowns, combined with health distancing

measures, severely disrupted the continuity of public service.

The survey showed that the prospect of a deficit in public service delegation had led

contracting authorities to intervene with financial support for delegatees without always

defining a strategy for service continuity and adaptation, essential in such a situation.

The procedures for implementing service continuity clauses are all too rarely explained

in the contracts. The absence of common procedures for managing disruptions in activity is

harmful if an exceptional event occurs, as the pandemic has demonstrated. Too often,

continuity plans have been designed and implemented at

delegatees’

initiative.

The Covid crisis revealed the importance of providing high quality responses to users.

However, local authorities have made few demands in this regard. However, the situation

offered them the opportunity to re-

examine with their partner the contract’s suitability with

regard to the scope of the activities proposed as well as against the yardstick of achievement

of the objectives set and the quality of the service provided.