From the government's perspective, including local private and public partners in the PPP process as much as possible is generally desirable. There are a variety of ways to achieve this:
• Local private partners. Local companies are often qualified to be the private partner in PPPs and to develop, improve, and operate infrastructure. Contracts with local partners can range from service contracts to BOTs and may apply to big and small projects. Local partners may be particularly effective for smaller, localized projects, e.g., to reach small towns and peri-urban areas, which demonstrate a viable market, but which are remote from the core infrastructure. Competent utilities or construction firms may enter into competitive tenders to perform discrete services or to construct new facilities. To encourage and regulate local participation, government should predetermine a policy on the inclusion of local companies, ensuring against unfair access to procurement officials, safeguarding against corruption, and setting appropriate and realistic evaluation criteria to enable local companies to compete, while assuring appropriate project quality.
• Local subcontractors. In sectors such as water and energy where small-scale service providers are prevalent and necessary to fill gaps in the service provided by the dominant utility at least for the short to medium term, PPP partners may be encouraged to integrate such providers into their strategies. This would not replace intentions to ultimately provide service through formal arrangements, but would prevent the PPP from displacing small-scale providers until such time as replacement services are available.
• Local government units. Many joint venture arrangements include municipal or other local public partners. This can be an effective way to bring government decision makers and local stakeholders into corporate governance of the company, transforming their role into one of ownership. There are also conflicts of interest possible in such arrangements, which need to be recognized and mitigated against.