The private sector has been involved in the delivery of public infrastructure and supporting services for a long time. The UK established the (modern) PPP model, through the development of the Private Finance Initiative (PFI) in the 1990s, drawing on its own experiences of privatisation and contracting out some public services, and the Australian experience of full private sector delivery of some public services such as hospitals, prisons and toll roads. Australia refined its own model resulting in the establishment of the Partnerships Victoria policy and guidelines in 2000, the Working with Government Guidelines for Privately Financed Projects in NSW and similar policies in other jurisdictions. Increasingly, many more countries have started using PPPs, including France, Germany, Ireland, Portugal, Spain, South Africa and Canada. Many countries initially developed PPPs in the transport sector and later extended their use to other sectors such as education, health, Government accommodation, water and waste treatment.
One consequence of the rapid growth of infrastructure PPPs is that countries remain at vastly different stages of understanding and sophistication in using these innovative partnership models. The UK and Australia are the most mature adopters of the PPP model. In terms of deal flow, the top countries (both in terms of number and value of social infrastructure3 and transport projects closed since 2005) are the UK, followed by France, Australia, Spain, the US and Canada.
PPP maturity and deal flow vary across countries due to differences in:
• legal and procurement frameworks
• institutional arrangements
• the level of political commitment and public acceptance
• experience and competence levels
• procurement approaches adopted.
The UK, Canada and Australia use broadly the same multi-stage procurement process, consisting of an EOI stage, an RFP stage involving interaction with bidders, selection of a preferred bidder and pre-award contract negotiations. In comparison, Portugal short-lists bidders (to two) and selects a preferred bidder (mainly on price) with limited negotiations (using a quasi-fixed contract framework). In Spain, there is a single stage process with no short-listing or pre-qualification: multiple bidders submit binding bids and the Government selects a winner mainly on price, with no contract negotiations.
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3 For the purposes of this report, social infrastructure refers to all sub-sectors excluding transport and housing but including water and sewerage