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Establishing a PPP Framework

21.9.4 Promoting Procurement and Good Governance, and Reducing Corruption

High value transactions attract the risk of corruption. Private players may attempt to improperly influence transactions and public officials may attempt to extract private profit from public office. Corruption in PPPs can be minimized using the mechanisms outlined above clear processes and criteria, clear assignment of responsibilities, oversight of the legislature and Supreme Audit Bodies, and transparency of information and public involvement.

Probity advisors and auditors, as well as government procurement agencies, can be used as additional mechanisms to further strengthen anti-corruption efforts.

Probity advisors and auditors

Probity advisors and auditors can be used to ensure that organizations act with integrity and impartiality, that suppliers are treated equally, that there are consistent and transparent processes, that intellectual property remains confidential, that conflicts of interest are resolved, and that procurement processes are aligned with capability. For example, the Victorian government in Australia, requires independent probity advice “where the complexity of the procurement activity warrants independent process oversight”.[167]

In British Columbia and most of the other jurisdictions in Canada, fairness advisors are used on every PPP project to provide an independent assurance of fairness for both the public and market participants. The role of the fairness advisor is described in procurement documents. In British Columbia, there is also a Conflict of Interest Advisor who provides opinions on issues of conflict of interest that may arise with the bidding teams.

Government procurement agencies

Government procurement agencies can be responsible for checking that procurement processes have been followed. This is a role played by the Contractor General in Jamaica (see Box 2.28). In Romania, there are several governmental agencies responsible for checking the procurement process from different angles. The Unit for Coordination and Checking of Public Acquisitions is responsible for checking the public procurement process in relation to public acquisitions (including PPPs). The National Authority for Regulating and Monitoring the Public Acquisitions is the entity currently in charge of promoting and implementing public acquisitions policies in Romania. There are currently discussions at the governmental level to unify the two entities under the government General Office authority.

BOX 2.28: Public Role in Procurement Process Audits

In Jamaica, the contractor general undertook a detailed investigation of the procurement process for a proposed Natural Gas Regasification project. This was prompted by a letter from a “concerned citizen” noting that the project had been the subject of direct negotiations. The 2011 report reviewed the entire process of the procurement process, examining each of the actors and highlighting potential conflicts of interest.

 

References

The table below lists some of the most useful PPP guidance documents, including those published by governments with successful PPP programs.

2 PPP Framework

1

Infrastructure Australia (2011) National PPP Guidelines, Volume 2: Practitioners’ Guide, Commonwealth of Australia

Detailed guidance material for implementing agencies on how to implement PPP projects under the national PPP policy. This includes project identification, appraisal, PPP structuring, the tender process, and contract management. There is detailed guidance in the annexes on technical subjects.

2

Government of Colombia (2014) Guía de Asociaciones Público Privadas, Departamento Nacional de Planeación (Guidance for PPP Development) Departamento Nacional de Planeación

and

Government of Colombia (2010) Manual de Procesos y Procedimientos para la ejecución de Asociación Público Asociaciones Público –Privadas (Process and Procedures Manual for PPP Projects) Ministerio de Hacienda y Credito Publico – Subdireccion de Banca de Inversion

 

Guides for civil servants from national, regional, and local governments. It sets out in detail the processes and requirements for identifying, assessing, preparing, tendering, and implementing PPP contracts.

3

Ministry of Finance, Government of India (2011) PPP Toolkit for Improving PPP Decision-Making Processes Department of Economic Affairs, Ministry of Finance, Government of India

Online toolkit describing the PPP process and providing sector specific guidance and tools for practitioners on all stages of managing a PPP.

4

Government of Rio de Janeiro (2008) Manual De Parcerias

Públicoprivadas - PPPs (PPP Manual)

A guide for civil servants of the state of Rio de Janeiro on developing and implementing PPPs. It defines PPPs and provides guidance on drafting a preliminary proposal, carrying out detailed technical studies, managing the tender, and managing the contract.

5

National Treasury, PPP Unit (2004) Public Private Partnership Manual Government of South Africa

Manual for implementing agencies. It sets out, in detail, the process and requirements for developing and implementing PPPs in accordance with the national PPP regulation. Includes modules on PPP inception, the PPP feasibility study, PPP procurement, and managing the PPP agreement. The annexes have tools and templates used at each stage.

6

Kerf, Gray, Irwin, Levesque, and Taylor, under the direction of Michael Klein (1998) Concessions for Infrastructure: A Guide to their Design and Award World Bank Technical Paper No. 399, World Bank and the Inter-American Development Bank

Describes and provides examples on several of the important steps in developing and implementing PPPs – focusing on user-pays PPPs, or concessions. Includes sections on detailed design, the tender process, and the institutional (regulatory) structure for contract management.

7

Farquharson, Torres de Mästle, and Yescombe, with Encinas (2011) How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets PPIAF, World Bank

Describes and provides guidance on the whole PPP process, highlighting the experience of EMDE countries. Briefly covers project selection; the focus is on preparing and bringing the project to market and engaging with the private sector.

8

PPIAF (2009) Online Toolkit for Public Private Partnerships in Roads and Highways, World Bank

Module 5: Implementation and Monitoring provides guidance and links to further material on project identification, feasibility studies and analysis, procurement, contract award, and contract management.

9

World Bank and PPIAF (2006) Approaches to Private Participation in Water Services: A Toolkit

Provides guidance on the PPP process, from planning and upstream policy, to the detail of structuring a PPP and implementing a transaction. Focus is on user-pays PPPs in the water sector.

10

World Bank and PPIAF (2007) Port Reform Toolkit Second Edition

Provides guidance on several aspects of PPPs in the port sector including guidance on risk identification, financial analysis, contract structuring, and contract management approaches.

11

HM Treasury, UK (2015) The Green Book: Appraisal and Evaluation in Central Government

HM Treasury guidance for public sector bodies on how to prepare, appraise, and evaluate proposals before committing funds to a policy, program or project.

12

Construction Industry Council (1998) Constructors’ Key Guide to PFI

Highlights the benefits of PPPs to businesses engaged in construction. Discusses pertinent topics to those buying from the PPP market as well as those supplying it, including the corporate risk of over reliance on PPP concessions.

Dealing with Privately-Initiated Projects (unsolicited proposals)

 

Reference

Description

1

PPIAF (2009) Online Toolkit for Public-Private Partnerships in Roads and Highways, World Bank

Module 5: Implementation and Monitoring, Stage 3: Procurement includes a section on unsolicited proposals which describes their benefits and challenges, and provides examples of both successful and unsuccessful PPPs from unsolicited proposals.

2

World Bank PPP in Infrastructure Resource Center, online at: http://ppp.worldbank.org/pppirc

Section on “procurement processes and standardized bidding documents” briefly describes the World Bank’s view on unsolicited proposals, and provides examples from and links to some countries’ relevant law and policies.

3

Reddy and Kalyanapu (undated) Unsolicited Proposal – New Path to Public-Private Partnership: Indian Perspective, Technische Universiteit Eindhoven

Describes the approach to dealing with unsolicited proposals in several Indian states which have adopted a Swiss Challenge process, and draws lessons from India’s experience.

4

Hodges and Dellacha (2007) Unsolicited Infrastructure Proposals: How Some Countries Introduce Competition and Transparency, PPIAF Working Paper No. 1, 2007

Describes commonly used rationales for advocating direct negotiation on the basis of unsolicited proposals, and describes the systems and policies that some countries have instead introduced to promote competitive tension. Appendices describe the approach and experience with unsolicited proposals in several countries in Africa, the Americas and Asia, and includes links to the relevant laws and regulations.

5

Hodges (2003) Unsolicited Proposals: The Issues for Private Infrastructure Projects, World Bank Public Policy for the Private Sector Note Number 257

Provides an overview of important issues governments face when dealing with unsolicited proposals including when and how they should be accepted, and why and how competition should be introduced into the process.

6

Hodges (2003) Unsolicited Proposals: Competitive Solutions for Private Infrastructure Projects, World Bank Public Policy for the Private Sector Note Number 258

Describes the experience of four countries dealing with unsolicited proposals: Chile, the Republic of Korea, the Philippines, and South Africa.

7

UNCITRAL (2001) Legislative Guide on Privately Financed Infrastructure Projects, United Nations

Section E provides guidance on both policies and procedures for dealing with unsolicited proposals. Distinguishes between proposals that do or do not require proprietary technology.

8

PPIAF (2014) Unsolicited Proposals – An Exception to Public Initiation of Infrastructure PPPs: An Analysis of Global Trends and Lessons Learned, World Bank

This study discusses a series of global trends related to USP processes, including lessons learned from the management of such proposals, and some key implications for further considerations.

Institutional Responsibilities

1

Castalia (2009) Benchmarking Indonesia’s PPP program Report to the World Bank Institute

Report examining the progress of Indonesia’s PPP program and offering recommendations for growth based on comparisons with programs in Colombia , Netherlands and South Africa.

2

Akitoby, Hemming, and Schwartz (2007) Public Investment and Public-Private Partnerships, IMF Economic Issues No. 40

A short booklet describing the implications of PPPs for public investment, including how PPP commitments should be managed and controlled.

3

World Bank Sustainable Development Department in East Asia and Pacific (2007) Public-Private Partnership Units: Lessons for their Design and Use in Infrastructure, World Bank, PPIAF

This report provides a comprehensive assessment of the effectiveness of PPP units in developed and developing countries. The report offers lessons in the context in which PPP units have been most effective.

4

Sanghi, Sundakov, and Hankinson (2007) Designing and Using Public-Private Partnership Units in Infrastructure: Lessons from Case Studies Around the World, Gridlines Note No. 27, Sept 2007

Summary of lessons from source #3 above.

5

Dutz, Harris, Dhingra, and Shugart (2006) Public-Private Partnership Units: What Are They, and What Do They Do? World Bank Public Policy for the Private Sector Note 311

A short note reviewing several country experiences with PPP units. It provides high-level recommendations to improve governance and their effectiveness.

6

Energy and Infrastructure Unit and Finance and Private Sector Development Unit, South Asia Region (2006) India: Building Capacities for Public-Private Partnerships, World Bank

More details on case studies presented in source #5 above, including their applicability to India.

7

Farrugia, Reynolds, and Orr (August 2008) Public-Private Partnership Agencies: A Global Perspective. Stanford University Collaboratory for Research on Global Projects, Working Paper

#39

A review of PPP units with a focus on experiences of developed countries. The report includes case studies and reviews the key aspects of eight different agencies.

8

OECD (2010) Dedicated Public-Private Partnership Units: A Survey of Institutional and Governance Structure OECD

[ISBN: 9789264006515]

Provides an overview of dedicated PPP units in OECD countries, including case studies of the experiences of five jurisdictions (state of Victoria, Australia, Germany, Korea, South Africa and the United Kingdom).

9

Burger (2006) The Dedicated PPP Unit of the South African Treasury Paper presented at the OECD Symposium on Agencies and PPPs

This paper provides a review of the PPP program in South Africa and its dedicated PPP unit.

10

M Muller, R Simpson and M van Ginneken (2008) Ways to improve water services by making utilities more accountable to their users: a review. World bank /BNWP Note 15 May 2008

Case studies on user participation in PPPs.

11

State Secretariat for Economic Affairs SECO

Economic Cooperation and Development (2005) Public-Private Partnerships for Water Supply and Sanitation

Addresses the challenges in the proper definition of governance structures for all actors. How roles and responsibilities must be assigned. How regulatory mechanisms must be established from the outset. In addition, it examines how the involvement of civil society can be ensured.

Public financial management of PPPs

1

Irwin (2003) Public Money for Private Infrastructure: Deciding When to Offer Guarantees, Output-Based Subsidies, and Other Fiscal Support, World Bank Working Paper No. 10

Describes different payment mechanisms for subsidies to infrastructure projects – including output-based payments and upfront capital subsidies and how the government can decide which is most appropriate.

2

Irwin (2007) Government Guarantees Allocating and Valuing Risk in Privately Financed Infrastructure Projects World Bank

Chapter 3 describes “lessons from history” of government guarantees to private infrastructure projects, with cautionary tales of governments that experienced significant fiscal exposure. Chapter 4 describes why governments can make bad decisions on providing guarantees.

3

Castalia and WBI (2011) Subsidy Funding Mechanisms for Public Private Partnerships in Latin America

The report provides a framework for why subsidies are sometimes needed for PPPs. The report has case studies of PPP subsidy programs in Brazil, Colombia, India and Mexico.

4

Schwartz, Corbacho, and Funke (eds.) (2007) Public Investment and Public-Private Partnerships, IMF [available from Palgrave in hard back, ISBN-13 978-0-230-20133-0]

A collection of papers on managing the fiscal impact of PPPs, drawing from an IMF conference held in Budapest in 2007. Part Two: Fiscal Risks from PPPs, and Part Four: PPP Accounting, Reporting, and Auditing are particularly relevant to public financial management for PPPs.

5

OECD (2008) Public-Private Partnerships: In Pursuit of Risk Sharing and Value for Money Organization for Economic Cooperation and Development [ISBN-9789264042797]

The book identifies best practices for maximizing Value for Money for PPP projects, including accounting for fiscal impacts and affordability. The book also covers issues with regulatory reform, governance, and developing institutional capacity.

6

Cebotari (2008) Contingent Liabilities: Issues and Practice, IMF Working Paper WP/08/245

A seminal paper on managing contingent liabilities, including for PPP projects. It includes case studies to illustrate management challenges and practices from different countries and issues. These case studies also highlight best practices.

7

Akitoby, Hemming, and Schwartz (2007) Public Investment and Public-Private Partnerships, IMF Economic Issues No. 40

A short booklet describing the implications of PPPs for public investment, including how PPP commitments should be managed and controlled.

Oversight of PPP Programs

1

Machado PPP Audits in Portugal, and Bager Hungary’s Audit Experience with PPPs

Both in Schwartz, Corbacho, and Funke (eds.) (2007) Public Investment and Public-Private Partnerships, IMF [available from Palgrave in hard back, ISBN-13 978-0-230-20133-0]

A collection of papers on managing the fiscal impact of PPPs, drawing from an IMF conference held in Budapest in 2007. Part Four: PPP Accounting, Reporting, and Auditing examines the role of different institutions to ensure accountability.

2

INTOSAI (2007) Guidelines on Best Practice for the Audit of Public/Private Finance and Concessions (revised)

 

Provides guidelines on best practices for evaluating PPP projects throughout the entire lifecycle.

3

United Nations Economic Commission for Europe (2008), Guidebook on Promoting Good Governance in PPPs

This guidebook does two things:

1. Demonstrates how governments and the private sector can improve governance in

PPPs.

2. Creates a basis for the elaboration of training modules for PPPs.

             

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

[166] The new World Bank Group guidelines on disclosure of information (“Guide to Disclosure in Public-Private Partnership Projects”) is based on the former report Disclosure of Project and Contract Information in Public-Private Partnerships with further analysis, widening the scope to include both pre and post-procurement information disclosure. It includes an analysis of reasons, benefits, and challenges as well as specific intelligence on handling confidentiality issues and detailed guidelines to develop a disclosure framework (including standard clauses and templates). These guidelines are complemented by a detailed study on a list of jurisdictions and an analysis of case studies.

 

[167]State of Victoria (2014) Managing Probity – Procurement Guide. [Online] Available at www.procurement.vic.gov.au

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