What is meant by a "joint venture"?
1.10 The term joint venture can describe a range of different commercial arrangements between two or more separate entities. Each party contributes resources to the venture and a new business is created in which the parties collaborate together and share the risks and benefits associated with the venture. A party may provide land, capital, intellectual property, experienced staff, equipment or any other form of asset. Each generally has an expertise or need which is central to the development and success of the new business which they decide to create together. It is also vital that the parties have a 'shared vision' about the objectives for the JV.
1.11 It is important to distinguish the formation of a JV entity from purely contractual arrangements, such as contracts for the provision of goods or services or a concession, whereby a public sector body gives a third party (the "concessionaire") the right to provide services to the public in consideration of payment, e.g., tolls payable to cross a bridge forming part of a public highway.
1.12 A JV involves risk sharing; it is suitable where a jointly owned and managed business offers the best structure for the management and mitigation of risk and realisation of benefits whether they involve asset exploitation, improved public sector services or revenue generation. It should not be seen as a delivery model in which the public sector seeks to transfer risk to the private sector through the creation of an arm's length relationship.
1.13 Table 1.A below provides further explanation of different forms of JV structure and highlights those covered specifically by this Guidance.
Table 1.A: Summary of JV models and extent to which they are included in this Guidance
| Type | Included? | Comment |
| Contractual partnering including the Private Finance Initiative (PFI) and concession arrangements with no corporate status |
key characteristics described in Chapter 2 for comparison | Whilst there are many examples of contractual PPPs and concession arrangements involving a wide range of public sector bodies these are not the focus of this Guidance; the most common form of PPP is the Private Finance Initiative8. |
| Non-profit-distributing e.g. company limited by guarantee (CLG) and industrial and provident societies (IPSs) |
key characteristics described in Chapter 2 for comparison | These are common amongst housing associations, and in the leisure and third sectors. Many local authority non-regulated companies are CLGs9. Community interest companies (CICs) and charities also fall under this category. |
| Company limited by shares (CLS) |
| This is the most common form of JV entity. Limited companies have also been used as an intermediary for stand-alone partnering contracts or 'programme delivery partnerships', e.g. the NHS LIFT Co and BSF LEP models10. |
| Limited partnership (LP) |
| Here partners share directly in profit or losses in the proportion in which they invest their capital. LPs permit the existence of Limited Partner(s) and a general partner normally with unlimited liability. |
| Limited liability partnership (LLP) |
| This is a relatively new form of JV - introduced in 2000; it is a hybrid combining the flexibility of a partnership with the safeguard of limited liability. |
| Other forms of 'public: public' partnership |
| Guidance for local authority consortia, pooled budget and joint commissioning arrangements are set out in more detail in various CLG documents. |
1.14 Other PPP procurement approaches not covered by this Guidance include the "Integrator" approach, "Alliancing" and other "Hybrid" models such as project MoDEL11 and ProCure2112. These approaches are described in more detail in HM Treasury's "Infrastructure procurement: delivering long-term value".
1.15 This Guidance assumes, for simplicity, that the JV entity will have two participants: one public sector and one private sector participant, though much of the material is still relevant if there are further public or private sector participants.
1.16 Annex A provides a sample of public sector JVs in addition to the specific case studies appearing in the main body of the Guidance.
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8 www.hm-treasury.gov.uk/ppp_index.htm.
9 Other examples of local authority JVs include public:public development associations, tourism bureaux, sports stadia, airports, transport companies and waste.
10 See Chapter 2 for more details on NHS LIFT and BSF Local Education Partnerships (LEP).
11 An MOD programme integrating the disposal of a number of surplus sites and the delivery of a construction programme in a self-funding contractual partnership.
12 The DoH's procurement framework which seeks to guarantee maximum price and share savings using an open book and pro-active risk management approach.