The general perception of contributors is that the term of the contract is not a source of discrimination in current PPP practice, as long as it is clearly spelt out in the descriptive documents. Various stakeholders contend that an extension of the contract which is not provided for in the initial contract requires a new public procurement procedure.
Several contributors comment on the statement in the PPP Green Paper that the duration of the partner relationship must be set so that it does not limit open competition beyond what is required to ensure that the investment is recouped and there is a reasonable return on invested capital.11 It is argued that the term of the contract should be principally determined by the life of the infrastructure assets, rather than by the amortisation of a project. Other issues to be considered when deciding on a reasonable term for a PPP are - according to some stakeholders - technical continuity, security of supply, optimisation of maintenance and renovation of infrastructure. It is also contended that training personnel requires a certain length of time, to enable the private contractor to fully benefit from his investment in such training. In addition, frequent competition procedures resulting from short-term PPP contracts or concessions are thought to increase the overall costs of a PPP. One stakeholder says that in many cases it is in the public interest to allow service delivery to mature and improve over a longer period, to ensure greater innovation and experimentation to find the best ways of delivering public services. Shorter-term contracts, on the other hand, might encourage the operator to focus on maximising revenue generation before the next competition.
One contributor suggests that it is in any case difficult to set criteria for an acceptable term for PPP projects. Another warns against limiting the length of PPP contracts, which might decrease private interest in such contracts. Conversely, some contributors share the Commission's concern regarding the effects of long-term contracts on competition and equality of treatment.
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