Letter from the DAJ – A Contractual Arrangement Comprising a Grant Agreement and a Promise to Purchase for the Purpose of Carrying Out Work Constitutes a Public Works Contract
November 5, 2024
Paris, France – The French Ministry of Economy and Finance’s Legal Affairs Directorate (DAJ) has issued a letter clarifying that a contractual arrangement comprising a grant agreement and a promise to purchase for the purpose of carrying out work constitutes a public works contract.
The DAJ’s letter was issued in response to a request for clarification from a contracting authority. The contracting authority was planning to enter into a contractual arrangement with a private entity to carry out work on a public building. The arrangement would have involved the contracting authority providing a grant to the private entity to cover the costs of the work, and the private entity promising to purchase the building upon completion of the work.
The DAJ concluded that the contractual arrangement would constitute a public works contract, even though the contracting authority would not be the owner of the building upon completion of the work. The DAJ based its conclusion on the fact that the contractual arrangement would involve the contracting authority providing a grant to the private entity to cover the costs of the work, and that the private entity would be obligated to carry out the work in accordance with the terms of the grant agreement.
The DAJ’s letter is significant because it provides clarity on the application of public procurement law to contractual arrangements that involve both a grant and a promise to purchase. The letter will help contracting authorities to ensure that they are complying with public procurement law when entering into such arrangements.
Additional Information
- The DAJ’s letter is available on the website of the Ministry of Economy and Finance (in French): www.economie.gouv.fr/daj/lettre-daj-ensemble-contractuel-comprenant-contrat-subvention-promesse-achat-vue
- Public procurement law in France is governed by the Public Procurement Code (Code des marchés publics).
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