1

Algemene Rekenkamer | Postbus 20015 | 2500 EA Den Haag

Audit of Public Private Partnerships

Introduction and international Experiences

Freek Hoek, Netherlands Courts of Audit

2

Public Private Partnerships (PPP): Definition

• Development and delivery of public services or public goods through a partnership of government and private sector companies

• Why PPP?

Off

3

PPP: two main types (1)

1. Concessions: DBFMO contracts

2. Alliances: Joint ventures

High Speed rail Link

Groningen Meerstad

4

PPP: Two main types (2)

• Concessions:

• Alliances:

Public party

Private PartiesSpecial Purpose Entity

DBFMOContract

Public + Private Parties Special Purpose Entity

Public Parties

PrivateParties

Private Capital

Public Capital

Private Capital

PrivateParties

5

PPP: Two main types (3)

Differences

6

PPP: Some characteristics

• Long term relationship

• Private law

• Public and private capital

• Procurement

• Competition

• Transfer of risks

7

PPP: Complications

Different roles of government

Differences in culture and values

Lack of expertise

Unsuitable procedures

Unclarity of goals

Political context

8

Auditing PPP: International survey 2010

• 48 audit reports

• 13 countries

• 21 audit offices

9

International survey 2010: Countries and reports

Country Number of reports Country Number of reports

Austria 1 India 8

Australia 4 Ireland 2

Belgium 2 Lithuania 1

Canada 8 The Nederlands 3

Czech Republic 1 United Kingdom 2 (72)

Germany 5 USA 6

Hungary 5

10

International survey 2010: main findings

• Overall conclusions: Very critical of PPP

• Topics in reports:

1. Decisionmaking2. Procurement3. Financing and costs 4. Contractmanagement5. Evaluation6. Policy and conditions 7. Public accountability

• Value For Money???

11

Auditing PPP: Conference 2012

• Goals: • Share knowledge and experience • Between SAI’s and experts• INSPIRE!

• 90 colleagues• 50 countries

12

Auditing PPP: Conference 2012

13

Conference 2012: Conclusions about PPP

• PPP may lead to faster results, better quality and lower costs of public services, but only in specific cases and under specific conditions

• Risk transfers to private parties are essential in PPP. The realization of this condition is not always obvious

• Government can not lean back after closing of a (DBFM) contract: management of contract-phase is crucial for VFM

• New accounting rules leave less room for off balance sheet financing. This may take away a (perverse) incentive for PPPs

14

Conference 2012: Conclusions about role of SAI’s

• SAIs should be aware of the different roles and responsibilities of government in PPP in order to be effective

• SAIs should contribute to the learning process where standards are still to be developed

• A longer term programmatic audit approach to PPP audit by SAIs makes investments in expertise worthwhile

• SAIs need access to information held by private parties (mandate)

15

Public Private Partnerships and innovation

• Innovation in government

• Knowledge

• Audit processes

• Standards

Innovation in SAI’s!

16

Algemene Rekenkamer | Postbus 20015 | 2500 EA Den Haag

www.rekenkamer.nl

@rekenkamer

www.linkedin.com/company/algemene-rekenkamer