What is a public service contract?

Most of the car parks operated by VINCI Park in France fall within the legal framework of outsourced public services: concession or service concession (affermage) contracts.

Under a public service contract, a public authority awards a company all or part of an assignment to design, build, finance and operate the infrastructure needed for a public service for a specified period.

The company signs such a contract at its own risk because it assumes both the investment risk and the occupancy or usage risk. The company pays the public authority a fee as defined in the contract. A public service contract can cover one or more car parks; sometimes it includes tasks associated with managing on-street parking spaces such as installing and maintaining meters, collecting and counting the takings, etc.

The period covered by the public service contract is calculated on the basis of the size of the investment to be made and the time it will take to amortise it, as well as the estimated revenue the service will generate. The contract is known as a concession when significant investments are involved; it is referred to as a service concession contract (affermage) when the investment is lower or non-existent and the company is responsible only for the operating costs.