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Establishing a PPP Framework

21.9.3 Role of the Public

PPPs are meant to provide value to the public. Getting the right level of public involvement in the PPP process and program can make or break the legitimacy of a PPP program, and directly contribute to good governance. Direct public participation at various points in the PPP process can improve project design. Equally important, making PPP projects and processes transparent enables PPP performance to be a factor in the public policy debate and public opinion on regarding government’s overall performance.

Public participation in the PPP process

Public participation can be introduced into the PPP process at three stages.

  • PPP program development – engaging the public from the onset by involving them in the development of the PPP policy framework and continuing to seek feedback as the program is developed;
  • PPP project development – introducing stakeholder consultation in the PPP development process, so that public concerns can be taken into consideration when structuring and implementing PPPs; and
  • PPP contract monitoring – building mechanisms for user feedback and grievance resolution into contract agreements and management frameworks. Chapter 8 provide guidance and examples regarding how the public can play a role in monitoring contractor performance.

Promoting transparency of the PPP program

Many governments make information about the PPP program publicly available. This enables the media to report on the program, and allows the public to develop informed opinions on the government’s performance in implementing PPPs.

As described in section 4.7.5, international standards require disclosure of financial commitments to PPPs in national accounts. Performance audits and reports are also commonly publicly available (refer to chapter 2.9.2). It is possible to also require disclosure of key contract clauses, or entire PPP contracts. Typically, any commercially sensitive elements of the contract are excluded from the published version. For example, the state of Victoria (Australia) has a policy of publishing all PPP contracts on the Victorian Government Purchasing Board website (www.vgpb.vic.gov.au). In addition, a project summary is required, providing information on the key project features and commercial terms of the project.[165]

While many governments withhold key commercial terms from publications, complete transparency can increase public trust in the program, so it should be considered. In the Australian state of New South Wales, the Freedom of Information Act requires information on PPPs to be made available to the public. In British Columbia, and most other jurisdictions in Canada, requests for quotes and proposals are disclosed during the procurement process, and the project agreement (redacted) and a project summary report are disclosed as soon as possible after financial close. A Freedom of Information and Protection of Privacy Act (FOIPPA) governs the information that must be released (and withheld) if in Canada.

The World Bank Group has recently published guidelines on best practice frameworks for disclosure. These guidelines provide a suggested framework and additional resources for policy makers interested in developing a policy for PPP disclosure for their countries. Recommended aspects of frameworks for disclosure are outlined in Box 2.27.

BOX 2.27: Disclosure Frameworks: Institutionalizing PPP Information Disclosure and Transparency

Managing the disclosure of information for PPPs is paramount for better management of PPP projects and programs. Many aspects of a sound and reliable framework are related to information disclosure management: accounting and reporting for PPP liabilities is in essence an information disclosure exercise regarding liabilities and fiscal implications (this has been discussed in section 1.8). In addition, transparency is a key principle of any public procurement process, and the private sector will only be interested (on a significant scale rather than opportunistically) in PPP programs if the procurement rules provide and protect transparency and fairness in selection, as well as access to meaningful information and studies on the projects to enable potential bidders to assess the opportunity in an efficient manner.

Governments must be accountable for their decisions (PPP procurement), which implies that information must be available to be audited, including information related to the fairness of the process itself and the performance of the PPP project. Such audits are of interest to the political community, the general public, and potential investors. This is discussed in section 1.9.

Information disclosure can be proactive and reactive, and it can refer to the pre-procurement phase and the post procurement phase. According to the World Bank, the types of disclosure are as follows.

  • Reactive disclosure (also known as responsive disclosure) occurs in response to a request for information, usually under a Freedom of Information or Right to Information Act. Proactive disclosure includes all information that is disclosed by governments either voluntarily or under a mandate provided by legislation or policy.
  • Pre-procurement disclosure pertains to disclosure prior to the signing of the contract. Post-procurement disclosure pertains to disclosure after the signing of the agreement.

Information disclosure is so important that it becomes highly desirable to institutionalize it through a specific framework which overlaps with other elements of the PPP framework. The main challenge is in developing proactive disclosure practices: reactive disclosure is more common in existing frameworks.

The benefits of information disclosure are very significant and may include increased appetite from the private investor community, increased public confidence in how tax payers’ money is being spent and whether the government is achieving Value for Money, and above all (and interrelated with all those objectives) a proper disclosure approach will be extraordinarily helpful to tackle corruption.

A number of countries have developed structured and institutionalized approaches to PPP information disclosure, including developed and EMDE countries.

A paramount factor that promotes disclosure is the existence of Freedom of Information Act (FOI) legislation, or equivalent requirements, that mandates proactive disclosure and that applies to PPPs. The other most significant factor is the “imperative and pressure to create new infrastructure” which links to the objective of increasing private sector involvement and, consequently, with the larger objective of reducing corruption. This may be the most relevant factor that explains why practices relating to PPP disclosure have developed more rapidly in some emerging countries, Colombia in particular.

There are many challenges to effective PPP information disclosure. These include the reluctance of public bodies to share information in the absence of a clear mandate or framework for proactive disclosure, the lack of clarity on disclosure specific to PPPs, and the confidentiality issues with respect to contracts and the interest of the private partner.

A framework for proactive PPP disclosure is similar to any general proactive disclosure policy in terms of the broad elements (that is, what should be disclosed, when and in what form, what should not be disclosed and the responsibilities for disclosure). However, the special circumstances and sensitivities associated with PPP projects (for example, the long contract period, complex structure, provision of public services by the private party, multiplicity of stakeholders and their sensitivities, and so on.) require a PPP disclosure policy to go beyond a general disclosure policy in terms of the level of detail.

In this sense, Freedom of Information Acts, preferably with requirements for proactive disclosure, along with PPP specific legislation/guidance, guidance on confidential information, provision of standard contract clauses, and templates for disclosing information from the full suite of instruments that can enable sound disclosure and induce better disclosure practices.

Source: Adapted from “A guide to disclosure in public-private partnership projects” (WBG and PPIAF).[166]

 

[165] Partnerships Victoria (2001) Practitioners' Guide. State of Victoria.

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