Conference on Government Procurement - Experiences in China and the European

UnionBeijing, 16 May 2006

“Challenges ahead for the Government regulatory framework in the EU for Public-Private Partnerships (PPP)”

Michael Burnett, European Institute of Public Administration, Maastricht, the Netherlands

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PPP - Fundamentals

• No common definition - plenty of jargon

• Use of PPP is a political choice

• PPP matter because of legislative, budgetary and service pressures (“funding gap”)

• PPP should be based on case by case assessment

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Definition of PPP

A Public-Private Partnership is a contractual agreement between a public entity (national, regional or local) and a (normally) private sector supplier. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards arising from the delivery of the service and/or use of the facility.

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Key features of PPP

• Creation and/or exploitation of an asset by the private sector supplier. Key public assets exploited can be publicly owned land and/or the right to provide a service granted by a public entity

• Provision of a new or existing service over a defined period of time (often a longer period of time – say up to 30 years - than is customary in public contracts)

• Payment of a periodic charge to the supplier by a public entity (and/or, possibly, payments by the public directly as customer). Charge may vary according to volume of service provided or consumed

• No commitment by the public entity to pay until the asset is being used in the provision of the service

• The scope, price, quality, time scale, means of service delivery etc are regulated by the public entity

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In summary

PPP are complex, long term, high value transactions

• for public service delivery

• linking provision of assets and provision of services

• aiming to deliver better value for money

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PPP - Current trends in the EU

• Increasing volume of activity

• Different speeds of implementation

• Used in a wide range of sectors

• Market consolidation in some sectors

• Few PPP have yet completed their full life cycle

• Difficulties in integrating EU Structural Funds with PPP

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PPP – EU regulatory context

• EU Treaty neutrality• EU Internal Market• PPP are a form of public procurement –

existing body of law• Different responsibilities – EU and

Member States• Different players (legislative and judicial,

EU and national)• Different regulatory instruments (hard/soft)

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PPP in the current EU regulatory framework -1

• No explicit reference to PPP in EU public procurement law enacted in 2004

• No other special rules in EU law covering PPP• Introduction of new award procedure of

“Competitive Dialogue” in new legislative package (intended to make PPP easier)

• Rising tide of public procurement cases before the European Court of Justice (ECJ)

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PPP in the current EU regulatory framework - 2

• Concessions - a form of PPP - legislated for in Public Procurement Directives

• Works concessions not as fully regulated as public works contracts in Public Procurement Directives

• Service concessions not covered by Public Procurement Directives

• EU Treaty principles cover all transactions (eg freedom to provide services, free movement of goods, freedom of establishment, mutual recognition, proportionality, non-discrimination, equal treatment etc)

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A changing EU regulatory framework for PPP?

• Review by European Commission of EU law and PPP (consultation, Communication, further action?)

• ECJ restricting ability of public entities to into public-public and public private partnerships?

• Review of the public procurement Remedies Directive

• Evolving models of PPP and concessions

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EU regulatory framework - Key challenges

• Enhancing legal certainty for PPP

• Enhancing transparent and competitive procurement processes

• Need for more effective enforcement of public procurement rules

• Need to remove national barriers to PPP

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Addressing key challenges - 1

• Eliminating inconsistency between award procedures for different kinds of transactions (public contracts and concessions)?

• More standardisation of award procedures for PPP in different services?

• A more prescriptive Remedies Directive?• Further review of national law to remove

blockages?

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Addressing key challenges - 2

• More guidance to assist the effective implementation of public procurement procedures for complex contracts ( ie “Competitive Dialogue”)?

• National supervisory bodies to enforcement of rules on award procedures?

• An EU PPP agency?• More national PPP agencies?• More co-operation/sharing of best practice

between national public procurement agencies?

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European PPP Forum

WEB SITE www.eipa.nl training and research/topics /European Public-Private Partnership CONTACT DETAILS Mr Michael Burnett European PPP Forum European Institute of Public Administration Tel. +31-43-32 96 286 E-mail: m.burnett@eipa-nl.com