Public-Private Partnerships (hereafter PPP) provide a new "model" for infrastructure service delivery, which combines elements borrowed from other legal economic and financial structures. A mixture of elements derived from public procurement, project finance, concession contracts, and policy network theories provides the background for PPPs' structures1. PPPs not only articulate such elements in one product but also constitute separate evolutions of the structures they originate from. In part, PPPs have been created to solve some problems those domains have generated or were not able to solve efficiently. However, PPPs are not meant to replace those domains but to provide alternative options to them. If it is therefore impossible to understand PPPs independently from those disciplines, studying PPPs may also serve to grasp new trends and possible evolutions of the domains they derive from. This is particularly true because PPPs started to influence the same structures they originate form by the same innovations PPPs have introduced. PPPs appear therefore as a familiar, yet behind this buzzword lays a new logic for public investment decision-making and management.
The natures of PPPs are associated with a new contract, procurement and relationship type. For some, a PPP is a new "contract type"2 whose main characteristics - risk sharing between the public and private party; bundling of construction and operation; output base specifications; and long term commitments - serve to define and distinguish the type. Others see PPPs as a "procurement type", alternative to traditional public procurement (including outsourcing), and concession. Fore some others, PPPs constitute new "relationship types" between the Public Administration (PA), private parties and stakeholders involved in an infrastructure service delivery project. Indeed, a PPP is all of the above: a new contract, procurement, and relationship type. The origin of these typological diversities is mainly due to the different perspective legislators, practitioners, and scholars have had toward PPPs.
Different regions have developed a different approach and structures of PPPs, which start to converge in one concept. With a hyper-simplification we may say that the contractual, procurement and relationship type represent a different regional approach to PPPs: the contractual perspective has been that of continental Europe and Civil Law countries; the procurement viewpoint has been that of the most developed Commonwealth and Common Law countries (UK, Australia, and South Africa); and the relationship angle has been that of the United States of America (US). Yet, if the divergent public-policy context argues for the need to understand such PPPs within these regional and national contexts, it also helps to grasp separately how the different features of PPP have evolved around the world to form a new concept that sums all of them.
PPP as procurement [Australian Government, Department of Finance and Deregulation Introductory Guide to Public Private Partnerships - December 2006] A PPP is a method of procurement. It involves the use of private sector capital to fund an asset - that may not be ultimately owned by the public sector - which is used to deliver outcomes for an Australian Government agency. PPPs are used most frequently for major asset and infrastructure procurements. PPPs reconfigure the procurement process by placing emphasis on the service or capability that the public sector requires rather than the asset(s) used to provide them. Typically, the responsibility for delivery of the service or capability is shared between the public and private sectors. Under a PPP, the private sector invests in the creation or acquisition of the asset(s) required to facilitate the delivery of a service or capability. The public sector provides payments to the private sector that are contingent on their performance, allowing them to recover their initial investment. PPP as a contract [France - Ordonnance n°2004-559 du 17 juin 2004 sur les contrats de partenariat. (Modifié par LOI n°2008-735 du 28 juillet 2008) Art.1] I - Le contrat de partenariat est un contrat administratif par lequel l'Etat ou un établissement public de l'Etat confie à un tiers, pour une période déterminée en fonction de la durée d'amortissement des investissements ou des modalités de financement retenues, une mission globale ayant pour objet le financement, la construction ou la transformation, l'entretien, la maintenance, l'exploitation ou la gestion d'ouvrages, d'équipements ou de biens immatériels nécessaires au service public. II peut également avoir pour objet tout ou partie de la conception de ces ouvrages, équipements ou biens immatériels ainsi que des prestations de services concourant à l'exercice, par la personne publique, de la mission de service public dont elle est chargée. |
Different legal systems favored the separate evolution of PPPs' structures, which in the last decade have influenced each-others. In continental Europe, the difficult transplanting of Common Law-based PPPs structures into Civil Law systems discouraged the adoption of such model and consequently the creation of shared PPP concept. 3 The British and Australian model suffered the same "transplanting" difficulties as they treated PPPs as a variety of government procurement while in Civil Law countries PPPs were considered a special typology of contracts. The Commonwealth PPP model was highly influenced by the US model. In the UK and Australia, the US PPP "partnership type" was institutionalized into the "procurement type" and highly commercialized through a very successful acronym: "PPP" whose third P constitutes, in fact, the real novelty. For the less famous North American model, traditionally associated with urban renewal and downtown economic development, (which by far preceded the British one only introduced in 1992 with the Private Finance Initiative)4, the difficulty of its replication into the non-Anglo-Saxon world was probably due to its ignorance in addition to the different socio-economic, institutional, and political environment in which it was developed. Nonetheless it is worth noticing that the US seems to have rediscovered PPPs during the last years as a mean for rebuilding or updating its aging infrastructure network. Though, curiously, the US is reintroducing a PPP more influenced by the European PPP "contract type" than the British or Australian one.
Seeing a PPP as a procurement is not antithetic to considering PPP as a specific contract. Indeed, procurement and contract are just two elements of a more complex structure that serves to constitute PPPs. If a PPP may be the result of a public investment decision process; the contract crystallizes the result of that process into a legally binding and enforceable form. On the other hand, the procurement as a "process" may take different forms (PPP, concession, traditional procurement, etc.) and contracts, as "legal instruments" for regulating infrastructure delivery model, may also be of different type (public-private partnership agreements, contract for the sale of services, concession contract, etc.). Additionally, it has to be noticed that a specific type of contract may also be connected to special rules of procurement. Yet, shifting the focus from the contract side to the procurement side had some important implication.
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1 WETTENHALL, R. (2003) "The Rhetoric and Reality of Public-Private Partnerships, Public Organization Review 3(1): 77-107; HODGE G. - GREVE. C. "The PPP Debate: Taking Stock of the Issues and Renewing the Research Agenda", Paper for the International research Society fot the Public Management Annual Conference Brisbane Australia 28-28 March 2008
2 For a deeper analysis of PPP as long term infrastructure contract see OSBORNE S.P., cit.; SAVAS E.S. (2000) Privatization and Public-Private Partnerships. New York: Chatham House Publishers and Seven Bridges Press; BERG S. - POLLITT M. - TSUJI,\ M. (eds) (2002) Private Initiatives in Infrastructure: Priorities, Incentives and Performance. Aldershot, England: Edward Elgar; PERROT J-Y. - CHATELUS G. (eds) (2000) Financing of Major Infrastructure and Public Service Projects: Public Private Partnerships, Lessons from French Experience Throughout the World. Paris: Presses de l'ecole nationale des Ponts et Chaussees.; GHOBADIAN A. - GALLEAR D. - O'REGAN N. - VINEY H. (2004) Public-Private Partnerships: Policy and Experience, London; GRIMSEY D. - LEWIS M. (2004) Public-Private Partnerships: The Worldwide Revolution in Infrastructure Provision and Project Finance. Cheltenham, England: Edward Elgar. Contra see also BOVAIRD that "exclude as "partnerships those relationships between organizations which are based simply on the traditional contracting principles of management, monitoring and enforcement of a detailed specification contained within a legally binding agreement". BOVAIRD T., (2004) "Public-Private Partnerships: form Contested Concepts to Prevalent Practice", International Review of Administrative Science, 70 pp. 200
3 YESCOMBE E.R., Public-Private Partnerships, Elsevier, 2007, pp. 31
4. OSBORNE S.P., Public-Private Partnnerships, Routledge, 2000, pp.38