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Establishing a PPP Framework

21.9 Oversight of PPP Programs and Projects

PPP projects are usually implemented by the Executive branch of government. The processes and responsibilities described in section 1.7 aim to create checks and balances within the executive branch as to how those decisions are made. This section describes the broader governance of the PPP program how other entities and the general public participate in the PPP process, and how they hold the executive accountable for its decisions and actions. Box 2.23 provides an example of how this is undertaken for the UK’s PFI.

BOX 2.23: Private Finance Initiative (PFI) Calls for Evidence

  • In 2011, the UK government decided that a fundamental reassessment of the PFI model was needed. In part because during a period of fiscal austerity, stakeholder groups and the public had become concerned that PPP payments could not be cut, thereby forcing greater reductions in other parts of the budget. As dissatisfaction mounted, many questioned whether the PPP contracts had in fact provided Value for Money;
  • To provide an opportunity for all interested parties to bring forward proposals on how best to reform the PFI model, the government launched a call for evidence. In response;
  • 136 submissions were received from a range of organizations, including advisors, investors, contractors, service providers, academics, and the public sector;
  • 3 responses were received from MPs;
  • 16 responses were received from individuals; and
  • In light of the call for evidence, the government decided to reform the PFI model and develop a new approach, PF2, for involving private finance in the delivery of public infrastructure and services. The PF2 model seeks to improve the Value for Money of financing projects, increase the transparency of the liabilities created by long term projects, increase the equity returns achieved by investors, speed up and reduce the cost of the procurement process, and to provide greater flexibility in the provision of services.

Source: HM Treasury (2012) A New Approach to Public-Private Partnerships.

The entities and groups outside the executive with a role to play in ensuring good governance of the PPP program can include:

  • The legislature: The legislative branch of government often defines the PPP framework by passing PPP legislation. In some cases, the legislature may be directly involved in the PPP process, approving PPP projects. Legislators also exercise ex-post oversight, scrutinizing reports on the government’s PPP commitments. The role of the legislature is explored in section 4.8.1;
  • Auditing entities: Many jurisdictions have independent audit entities. These entities may consider PPP commitments as part of their regular audit responsibilities for example, in auditing government financial statements. They may also review PPP project performance, investigate particular points of concern, or review the Value for Money of the program as a whole. In turn, these reviews enable the legislature and the public to check on PPP program performance. The role of auditing entities is explored in section 4.8.2;
  • The public: The public can directly participate in PPP project design. This can be done through consultation processes and in monitoring service quality, if provided with channels for feedback. The transparency of the PPP process as a whole, and an active media, can inform public opinion and if the issues are serious enough influence elections. The role of the public is explored further in section 4.8.3; and
  • Other mechanisms: There are some additional mechanisms that can be used to ensure good governance of the PPP process. Probity advisors can be engaged at each stage to identify and minimize any real or perceived conflicts of interest. Public procurement watchdogs can monitor the procurement process. Such mechanisms are explored in section 4.8.4.

 

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