65. The policy framework is critical for public-private partnerships even if much of the analysis tends to focus on the economics, risks and financial implications of PPPs. Pre-existing procurement and investment legislation and sector-specific legislation is often inadequate for public-private partnerships. At all stages of the PPP process, there must be a clear and transparent legal framework that both the public and private parties trust. Clarity in the regulatory framework will also help minimise the risk of corruption and prevent unethical behaviour. Where possible, contracts can be standardised to improve clarity and reduce transaction costs. In addition, since PPP contracts are long-term commitments and as demand for public services may change, clear rules for renegotiation must be clear and applicable to all parties (OECD, 2008).
66. Ready access to information at all stages of PPP procurement assists both the public and private partners and improves transparency, accountability and project management. For the public, transparency helps ensure that a project tender is fair and that the planned costs are open to public scrutiny. For private firms, access to PPP data, particularly from past tenders and from ongoing project evaluations, will provide a better chance for robust project development and competitive modelling. Transparency also has the potential to reduce opportunities for corruption (OECD, 2008).
67. Because public-private partnerships are contractual arrangements, compliance and enforcement issues are just as relevant as for any other type of contract. Successful PPPs require that the PPP contract align the objectives of the government and the private sector. Ensuring that the PPP contract is as comprehensive as possible can be an additional form of risk mitigation, but it is impossible and impractical to cover all contingencies, especially for long-term projects that run over 25 to 30 years. Therefore, a robust legal framework and dispute resolution mechanism is essential (OECD, 2008).
68. The ideal regulatory framework would ensure that all partners are accountable without over-regulating them. It would also protect the interests of all stakeholders and still create a favourable investment incentive. The use of regulatory powers requires that governments also pay attention to the setting of incentives that will elicit the desired behaviour from all parties (OECD, 2008).
69. Private investment will be facilitated if unnecessary red tape is removed and delays to approval processes are reduced. An effective regulatory framework implies careful evaluation of new regulations and systematic review of existing regulations to ensure that they are up to date, cost effective and consistent and deliver the intended policy objectives. This may require coordination of approval processes in specific circumstances to remove regulatory obstacles to PPP delivery, i.e. coordinating and streamlining multiple layers of regulation that may affect projects (on either one or multiple levels of government) (OECD, 2012). A one-stop-shop solution for PPPs, where all permits, licences and permissions necessary for the project can be obtained through one agency or office, is an example of such coordination. This could be provided at a PPP central unit or by the tendering authority, especially if the authority anticipates participating in a number of PPPs.