The PPP legal and regulatory framework can include specific PPP legislation, as described below. However, the legal framework for PPP is broader in scope, and can comprise a range of types of law.
Firstly, in civil law countries, as described above, PPP contracts are couched in general administrative law, which governs the functions and decision-making processes of government agencies. This body of law can create legal rights for both contracting authority and private party, in addition (or indeed, overriding) those specified in the contract. For example, it may establish the right of the contracting authority to modify or cancel a contract (often linked to a legal requirement for continuity of service provision). Some protections of the operator are also implied by law-such as the right to 'financial equilibrium' in case of certain types of unexpected change in circumstances (as described further under Section 3.4: Designing PPP Contracts). Administrative law may also define processes and institutional roles relevant to PPPs; such as those for procurement, or resolution of contractual disputes-including the ultimate jurisdiction of administrative courts, unless otherwise specified.
In both civil and common law jurisdictions there may also be specific laws that apply to aspects of the PPP process. These can include:
• Procurement law-the transaction process for a PPP must typically comply with public procurement law and regulations, unless PPPs are specifically exempt
• Public financial management law-institutional responsibilities, processes, and rules established in public financial management laws and regulations can contribute to the PPP framework. For example, this could include project approval requirements, fiscal limits, budgeting processes, and reporting requirements
• Sector laws and regulatory frameworks-PPPs are often implemented in sectors that are already governed by sector-level law and regulatory frameworks. These may constrain the government's ability to contract with the private sector, or provide rules for doing so
• Other laws affecting the operation of private firms, which also apply to PPP companies, and should be taken into consideration when defining PPP projects and processes. These can include:
- Environmental law and regulations
- Laws and regulations governing land acquisition and ownership
- Licensing requirements, particularly for international firms
- Tax rules
- Employment law
These laws taken together may comprise the legal framework for implementing PPP-that is, there may be no need for PPP-specific legislation. For example, Box 2.5: PPP Legal Framework in Germany.
| Box 2.5: PPP Legal Framework in Germany The development and implementation of PPPs in Germany is regulated primarily by the Budget law, particularly sections 7 and 55 of the Federal Budget Code, which set out requirements for project preparation and appraisal, and procurement, respectively. The Budget law establishes guiding principles and appraisal requirements for all public procurements, including PPP projects. Under section 7 subsection (1) of the Federal Budget Code, the principles of efficiency and economy must be observed when preparing and executing the budget-which includes the preparation of PPP projects. Economic feasibility analysis is the main instrument for implementing the efficiency principle-it must be conducted for all measures having a financial impact, which includes PPPs (section 7 subsection (2) of the Federal Budget Code). This analysis must be conducted during various stages of the project development process, before any decision with financial impact; and includes analysis of possible procurement approaches. General provisions for procurement processes are set out in Section 55 of the Federal Budget Code. Federal procurement procedures are related to a certain threshold (€5 million for construction contracts; €200,000 for supplies and services contracts; €400,000 for supplies and services contracts involving sectoral clients; €130,000 for contracts involving higher and supreme federal authorities). For procedures exceeding stipulated thresholds, the rules established under EU Directives must be applied, as well as the Act Against Restraints of Competition [#110, part 4] and the Ordinance on the Award of Public Contracts [#113]. For procurement procedures below the above-cited threshold, the following regulations apply: Section 55 of the Budgetary Principles Act, Section 55 of the Federal Budget Code, and the respective Länder budget codes in conjunction with the corresponding administrative provisions, plus Section 1 both of the VOB/A (Vergabe- und Vertragsordnung für Bauleistungen) and VOL/A (allgemeine Bestimmungen für die Vergabe von Leistungen). |