This section is intended to discuss the benefits and drawbacks of P3s, including criticisms voiced by various groups. The objective is to dispel any misconceptions about the PPP procurement process.
Question 2-Can the procurement of an asset (i.e., construction, maintenance) through a P3 provide significant efficiencies (or net benefits) for the public sector owner of the asset as compared to a conventional procurement of the same asset? If so, please explain why or under what conditions (e.g., cost-effective allocation of risks between the public and private sector; synergies between design, construction, and facilities management or operation private consortium is the project steward in a P3.)
Question 2a-Can you provide examples or evidence of efficiencies (or inefficiencies) specific to any P3 projects (compared with conventional projects)?
Question 3-One of the arguments made in favour of P3s is that these types of procurements are more likely to be on time and on budget and if budgets or milestones are not met, the private consortia bears the costs (or penalties). Can you provide any evidence-on a project-by-project basis-of whether or not major budget, scheduling, and delivery milestones were met?
Question 4-Have there been any P3 projects that have exceeded the original budgets or timelines (or where the assets were not delivered as specified in the contract) and where the associated cost overruns were borne by the public sector? If so, please explain the circumstances (e.g., post-closing revisions ordered by the public sector).
Question 5-Some critics claim that service levels have suffered under P3s Is there any evidence that service levels stipulated in the operational or maintenance phases of P3 contracts have not been met? Or that the service levels stipulated in the contracts are inferior to those observed through conventional delivery of services? If so, please explain.
Question 6-In contrast, some have argued that P3s are a way to ensure that the public sector pre-commits to maintaining a minimum level of service (e.g., facilities maintenance) during the whole life of the contract, as compared with conventional service delivery, which has been more erratic. Please comment and provide examples if you agree.
Question 7-One criticism of P3s is that the cost of the private financing, particularly debt financing, in these deals is greater than the cost of public sector borrowing. Please discuss the role of private financing in P3s; whether there are any benefits or savings that offset the higher financing costs; and what guarantees there are, if any (e.g., value-for-money tests), that the benefits exceed the costs.
Question 8-P3s are relatively complex, long-term contracts and it is often argued that the transaction costs of preparing, negotiating, finalizing, and possibly even managing these contracts are greater than the transaction costs for conventional procurements of equivalent assets and services. Do you agree? Are there any offsetting benefits (e.g., due diligence)? What are the implications (e.g., minimum deal size thresholds)? Please comment.
Question 9-Labour unions have argued that P3 efficiencies are achieved at the expense of workers' pay and working conditions, especially if the operational or service delivery phase involves nonunion staff while comparable services are normally delivered by union staff. Is there any evidence of such sources of savings in Canadian P3s? Are there any safeguards in your jurisdiction requiring private sector P3 consortia to hire existing public-sector employees at the same terms and conditions stipulated in their respective employment contracts?
Question 10-If P3 savings during the operational or service delivery phase are achieved through fewer hours worked, has this materially affected service levels or were these savings achieved through smarter work practices and more flexible working arrangements? Please provide examples.
Question 11-Cost implications of contract revisions
P3s are long-term contracts, but public policy and governments are subject to change and this can entail changes in the public sector's requirements under P3 contracts. In principle, these changes can usually be achieved through contract revisions or, at the limit, through the termination of the P3 contract. Is there any evidence that revisions under P3 contracts are more (or less) costly to achieve than under conventional service delivery contracts? Or are contract revisions more (or less) likely to arise under P3 contracts, since these are longer-term contracts?
Question 12-Are P3s a procurement device for reducing public sector deficits? While some early Canadian P3 deals were off-balance-sheet transactions, please indicate when (i.e., what year?) P3 transactions in your jurisdiction became fully recognized in public accounts.
Question 13-Some opponents liken P3s to privatization in disguise, especially in the health sector. Does this claim have any merit? Discuss in terms asset ownership, service delivery, and public policy responsibilities.