PPP Procurement

Once all the preparation activities are concluded and a decision is made to deliver an infrastructure project as a PPP, the procuring authorities need to find the right private sector partner to undertake such responsibilities. The selection of the private partner is usually carried out through a public tendering process, applying either general public procurement rules or procurement rules specially adopted for PPPs. Given the magnitude and extent of public resources committed, choosing the right private partner is crucial for the success of a PPP. It is ultimately the private partner's capacity to innovate and attain efficiency gains that will make it possible for the government to achieve value for money through the PPP. Moreover, the long-term nature of a PPP means that the selection of the private partner will have long-lasting impact. Choosing the right private sector partner will thus enhance the likelihood of creating a trusting relationship with the procuring authority and realizing the promise of a PPP.

These same features imply that a PPP procurement will usually last longer and be more complex than a conventional procurement. For example, PPP projects usually require a more thorough evaluation of bidder qualifications and proposals to ensure that they will deliver the expected value for money.46 These longer, more complicated tendering processes increase transaction costs for both the public and the private sector. The procuring authorities should have taken this into account when deciding to use the PPP option, but the higher cost of preparing PPP proposals and participating in PPP procurement processes may deter competition. In addition to the reduction of transaction costs, clarity, fairness, and transparency in the procurement process are basic ingredients to ensure a level playing field for all bidders.

To evaluate how economies are conducting PPP procurement processes, Benchmarking PPP Procurement covers a set of relevant items, contrasting each economy's PPP framework with recognized good practices in this area. The PPP Procurement thematic area explores a range of elements that spread throughout the procurement process, such as bidders' access to procurement-related information, the clarity and comprehensiveness of the procurement documents, the qualification of bid evaluation committee members, the bid selection criteria used, the way governments deal with cases of sole proposals, and the restriction on negotiation during the award phase. The recognized good practices that could be drawn from the areas covered in the procurement of PPP projects are summarized in box 3.

Note: PPP = public-private partnership.

Benchmarking PPP Procurement shows regional and income group differences in the average score for the procurement of PPPs (figure 8). The OECD high income region precedes the rest of the regions, followed by ECA and LAC. The EAP region not only has one of the lowest average scores but it displays the greatest intraregional variance. When the data are disaggregated by income level, there is a clear pattern showing that the lower the income group level, the lower the average scores on PPP procurement.

Figure 8 PPP procurement, score by region and income group (score 1-100)

Note: EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; OECD = Organisation for Economic Co-operation and Development; PPP = public-private partnership; SAR = South Asia; SSA = Sub-Saharan Africa.

Source: Benchmarking PPP Procurement 2017

The following paragraphs briefly present the survey findings for a few relevant issues such as the legal period of time granted to potential bidders to submit their bids, handling of sole bidders, access to information throughout the PPP procurement process (publication of the procurement and award notice as well as the PPP contract), and interaction with bidders (box 4).