1.1 The Government's approach to the procurement of complex public infrastructure through Public Private Partnerships is described in HM Treasury's publication "Infrastructure procurement: delivering long-term value". The publication sets out a range of approaches which have been developed to address the diverse needs of different public sector bodies. Going forward the Government expects that a number of different delivery models may be used by public bodies to deliver infrastructure and public services in conjunction with the private sector. For the purpose of this Guidance references to the private sector include not-for-profit and third sector providers.
1.2 This Guidance is focused on one of those models, namely Joint Ventures (JVs) where both a public sector body and the private sector contribute to a commercial venture and agree to develop and manage that business on a joint basis. As such contractual JVs, public to public JVs and not-for-profit structures are not covered in detail in the Guidance other than for reference and comparison purposes, however, many of the principles and issues set out in this Guidance would still apply to them.
1.3 Many of the issues set out in this Guidance are complex and public sector bodies should ensure they have professional legal and financial advice when setting up a JV. Some public sector bodies will need to seek further advice from other relevant organisations, e.g., issues surrounding statutory powers, classification and financial reporting of local authority JV companies should be raised with Local Partnerships (previously 4ps) or the Department of Communities and Local Government (CLG). Separate guidance is also available from the Department of Health (DOH)1.
1.4 Given the range of possible applications and JV structures, this Guidance does not attempt to describe one "best" way to form a JV nor does it seek to identify all the issues which may arise. Rather, it aims to provide guidance and assistance in considering the setting up of a JV, a framework in which to develop and negotiate a JV and an explanation of key issues which frequently arise.
1.5 This Guidance is structured around the key steps for setting up a JV and as the issues discussed become progressively more technical and complex, accordingly the target audience is expected to become increasingly specialised towards the later Chapters.
1.6 This Guidance is not intended as a tool to determine if a JV is the most appropriate way forward for a public sector body in relation to the range of conventional and private sector solutions available. This should be done through a full business case and assessment of value for money (VfM) based around the principles set out in HM Treasury's Green Book2 and associated guidance such as the 5-case model 3 and OGC's Policy and Standards Framework4.
1.7 This Guidance is also intended to supplement but not replace other framework documents such as HM Treasury's "Managing Public Money", "Consolidated Budgeting Guidance" and "Financial Reporting Manual" and related documents for health, local authorities and the devolved territories. It should be read in conjunction with other JV guidance currently available in the public domain, such as HM Treasury's guidance on Trading Funds5.
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1 Department of Health Transaction Manual, February 2009.
2 HM Treasury Green Book ( www.hm-treasury.gov.uk/d/1(4).pdf).
3 Public Sector Business Cases using the Five Case Model (www.hm-treasury.gov.uk/d/1(3).pdf and www.hm-treasury.gov.uk/d/2(3).pdf).
4 OGC Policy and Standards Framework (www.ogc.gov.uk/procurement_-_the_bigger_picture_policy_and_standards_framework.asp).
5 Guide to the establishment and operation of Trading Funds HM Treasury Central Accountancy Team, January 2001 (www.hm-treasury.gov.uk/d/Guide_to_the_Establishment_and_Operation_of_Trading_Funds.pdf).