In shifting from more traditional methods of service provision, governments need to adapt both their skills and their processes to ensure that PPP programs deliver what is expected of them. The cornerstone of this is ensuring that PPPs that proceed are those which represent priority projects and are best done through the PPP route rather than through traditional public procurement. Governments embarking on PPP programs have often developed new policy, legal and institutional frameworks to provide the required organizational and individual capacities. New agencies are sometimes created to bring in financial and contract design skills not present in the government, and existing processes, for example in planning and budgeting, need to be adapted.
Although not all countries have developed specific new PPP legislation, nearly all have felt it necessary to amend existing legislation, if only to clarify that public entities have the needed powers to contract out services under PPPs. Comprehensive cross-cutting PPP legislation has been used more extensively in countries that operate under the civil code. Where used, it often covers aspects such as specifying which sectors PPPs can operate in, how tariffs for PPPs are set and adjusted, the role of different institutions in a PPP program, procurement of PPPs, and dispute resolution procedures. Even where not necessary, such legislation can consolidate existing provisions into one act, clarify processes for approving and procuring PPPs, and create new institutions that will play a key role in the PPP process.
Most countries engaged in a broad-based PPP program have felt the need to develop a cross-sectoral pool of expertise in a dedicated PPP unit to supplement capacities in the line agencies that contract for PPPs. These fulfill different roles depending on the needs of the situation. In some cases their role is limited to disseminating information on PPPs and providing broad guidance on good practices. In others they have an active role in helping line agencies and ministries successfully contract for PPPs, and in yet others they play a role in approving PPPs developed by other government agencies. Where they exist, these cross-sectoral units are often located in, or attached to, the Ministry of Finance or Treasury which may reflect concerns about the need to strengthen understanding and monitoring of the fiscal costs of PPPs. The functional nature of these units also reflects their roles. Units whose main focus is transactions are often established as companies, in some cases jointly owned by the government with the private sector. Those that provide information and guidance on PPP programs can function adequately as units within an existing government department.
There are risks of a conflict of interest in cross-sectoral PPP units that have multiple functions, even where these are purely public sector agencies, for example where a unit has a strong mandate to promote PPPs and increase deal flow, while at the same time having the responsibility for screening projects. The potential for conflicts of interest may be higher with respect to PPP units that are public-private joint ventures, and where success fees incentivize the closing of transactions. These have to be recognized and dealt with.
The role of national agencies relative to sub-national ones is often driven chiefly by basic legal and fiscal relations between these levels of government, which are often set out in the constitution. In Australia, the national government has virtually no role in state level PPPs. In Canada, the Federal Government's P3 Office acts as a resource center and promoter of the benefits of rationale for using PPPs, rather than acting in an advisory role. Other countries which are more centralized have seen a stronger role for national level agencies, for example in South Africa where the Treasury's PPP Unit plays a role in both guidance and approval. Brazil intends to establish capacities at the national level to offer detailed guidance to the states in the development of PPPs.