The critical issue in PPP contract management is getting and maintaining good Value for Money for the taxpayers over the 20-30 year duration of a PPP-concession contract. FIDIC and public procurement rules all focus on procurement, but in PPP the focus has to be on contract management post-adjudication. See the work of S. Ping HO on managing incomplete contracts mentioned in the PPP Lusofonia blog, http://ppplusofonia.blogspot.
To summarize, PPP contracts are very long-term, ultra-complex, incomplete by nature and therefore subject to frequent renegotiations, with continuing risk of loss of Value-for-Money for the public partner due to lack of competitive pressure, asymmetries of information and asymmetries of negotiation skills and experience, etc, etc, as we all know.
So bidders have an incentive to engage in strategic behaviour, where they bid aggressively, price opaquely and then go into one-on-one direct renegotiation and/or arbitration immediately after adjudication, hoping to recover some of the profitability they gave away in the competitive tender. This is tantamount to “capture of the public partner”, (captura do Concedente), similar in theory and in practice to “regulatory capture” which is a well known phenomenon.
The only defence against the negative consequences of such “Concedent capture” in long term concession contracts is to train and sustain public sector PPP officers and PPP units in the Finance Ministry and the various public service ministries. This is difficult to do, because the public sector underestimates the complexity of PPP, there is a scarcity of PPP contract management skills, and PPP units often face active political resistance from within the PPP sector and from other Stakeholders.
Public sector organizations, such as the IFI,nternational Financial Institutions have an obligation to help promote PPP management capacity in the public sector and prop up Government PPP units, in order to prevent PPP abuses that individual small Governments may be unable to foresee or avoid.
This is why the work of promoting PPP training and institutional arrangements is so important, much more important than work on individual PPP transactions which is what catches everybody’s attention.
Mariana Abrantes de Sousa
SEE Agência da PPPs e a sustentabilidade orçamental - 2
The socio-economic impact of monopolies depends greatly on the quality of the regulators, which should be independent of the rest of the Government and of the regulated entitities. That's why "regulatory capture" is such a widely-studied threat.
ResponderEliminarIn concessions and PPP contracts, there is a similar risk, that of "concedent capture" anytime over the 20-30 year life of the contrac. This occurs when the demands of the private partner or concessionaire overwhelm the weak defenses of the public partner, the "concedent".
That's why risk taking and guarantees by the public partner or other Governmental authorities need to be rigously managed, quantified, budgeted in an MTEF, and pre-approved by parliament as representatives of the taxpayer, who are usually "the last to know" what contingent liabilities may be accumulating in their name.
Granting open-ended and unbudgeted Government guarantees to attract increasingly reluctant sponsors and banks is a fast way of getting into a sovereign debt crisis.
... worse than a public monopoly, is a private monopoly
ResponderEliminarhttp://theportugueseeconomy.blogspot.com/2010/04/elusive-source-of-portugals-depression.html
Foi publicado no Diário da República Electrónico, o DL 111/2012 - Cria Unidade Técnica Apoio PPP
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