quinta-feira, março 31, 2011

Agência das PPPs e a sustentabilidade orçamental - 3

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,  
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