Traditional Public Procurement Research Articles

Alternatives to Public Procurement: Free Choice in Marketised Social Services – Legal Challenges Illustrated via Long-Term Care

In light of Europe’s ageing population, the article explores the legal dimensions to freedom of choice within marketised social services, especially in the context of long-term care. It offers critical analysis of the implementation of the free-choice model in Estonia within the framework of European Union public-procurement law and Estonian law on administrative co-operation. The landscape has been a legal ‘no man’s land’ somewhat: this demand-based model with an unlimited number of providers falls outside the traditional public-procurement framework, and how the general principles for transfer of public tasks to the private sector might apply to a free-choice model, which does not entail explicit ‘transfer’, has remained unclear. Although the Estonian care reform of 2023 established a funding model, it did not resolve the legal uncertainties surrounding public–private co-operation and user rights. As care homes in Estonia are largely run by the private sector, vague legal regulation and weak state supervision pose a threat to access, the care services’ quality, and their economic efficiency. Drawing on international comparisons with the Nordic countries, the article warns against uncritical adoption of market-based models, stressing the need to balance the roles of public authorities and private providers. The paper underscores the crucial role of legal professionals in ensuring that public–private co-operation for social services upholds both individuals’ fundamental rights and public interests.

The implementation of Public-Private Partnership in China: A sustainable pathway?

The organizational forms of infrastructure in China are divided into two categories, the traditional Public Procurement Model (PUB) model and Public-Private Partnership(PPP) model. The main difference is the separation or binding of the construction and operation phases. A systematic understanding is needed of how Chinese local governments choose between these two models. In this paper, we take public capital congestion and local government objectives as the entry point to study the effects of both on PPP choice. Firstly, by constructing an endogenous economic growth model under the PPP model, and comparing it with the model under the PUB model, this paper initially explains how the rise in public capital congestion affects the choice of the PPP by growth-oriented local governments. Then the data from prefecture-level cities from 2009-2018 are utilized to conduct empirical tests. We find that urban economic growth pressures have a positive effect on the choice of PPP when the congestion of public capital increases. Furthermore, the implementation of PPP is indeed conducive to economic performance, and its core mechanism is to provide more infrastructure (like roads) rather than tax competition. The PPP model is more sustainable. We are the first to employ both modeling approach and the empirical research to address the implementation of Public-Private Partnership in China. And we have systematically analyzed the conditions and results of PPP selection by local governments. It formulates the Chinese PPP theory.

The change in legal relations with a public or municipal authorities regulated by budget legislation and grant agreements

Public and municipal authorities regularly act as customers of various goods, works and services, as well as finance projects or provide targeted support to organizations as part of the implementation of State support measures. If the first role, as a rule, is implemented through traditional public procurement, then the second is through special regulation created under the conditions of appropriate support, and through agreements on the provision of subsidies or grants in the form of subsidies. Such agreements are not subject to procurement legislation, and the content of the legal relations generated by them has low regulatory and methodological security. At the same time, the Civil Code of Russian Federation (hereinafter referred to as the CC RF) is increasingly being applied to relations based on agreements by analogy with law. The implementation of agreements, as a rule, is associated with the emergence of an objective need to change them, related both to changes in the circumstances from which the parties proceeded when concluding them, and to subjective reasons, including planning errors. Within the framework of the article, the authors, using dialectical, logical, systemic and functional methods, considered and highlighted the circumstances of the permissibility and inadmissibility of making changes to these agreements. A special utilitarian character is carried by a fragment of the article based on the analysis of judicial practice and acts of regulatory and auditing authority, which highlights specific situations that are important for the formation of a comprehensive understanding of the assessment of the circumstances of changing agreements.

Large investors’ involvement in Ireland's primary care centres

Abstract Background In 2001, Ireland announced a Primary Care Strategy that has led to the implementation of primary care centres (PCCs) throughout the country. This presentation examines the nature and extent of private sector involvement in establishing the PCC network since 2001, focusing on large global investors. Methods A dataset on all primary care centres in Ireland was constructed, comprising information on geographical location, the year that it became operational, and its delivery mode (public procurement, lease, or public-private partnership). A survey of large investment patterns was also conducted through the grey literature and news reports. Results By 2023, 172 PCCs are planned to be operational, developed through public, leased or public-private partnerships arrangements. Before 2009, PCCs were delivered by traditional public procurement, but since 2009, private delivery methods have been prioritized. Leased primary care centres have been attractive for large institutional investors attracted by stable rental income. This paper surveys the patterns and trends involved. Conclusions Trends in large multinational and domestic investments in the primary care market should be documented systematically because they have the potential to transform the existing PCC network and primary care system.

Delivering transport infrastructure using state-owned enterprises (SOEs): A business history of Vietnam Expressway Corporation between 2004 and 2016

Adopting a business history approach, this paper explores the role and evolution of Vietnam Expressway Corporation (VEC) as a state-owned enterprise (SOE) delivery model for five highway projects in Vietnam's first phase of network development between 2004 and 2016. It draws upon insights from the field of transaction cost economics and resource-based theory to explain why the Vietnamese government employed the SOE model instead of traditional public procurement (TPP) or public private partnership (PPP). The case study shows the government chose to use an SOE to achieve dual policy goals: (1) accelerate the preparation and construction of five priority highways and (2) reduce fiscal pressure on the state budget. As a toll-funded SOE responsible for both the lifecycle delivery of highway infrastructure and debt repayment, VEC effectively economised transaction costs and maximised financial resources from both government and market sources, including a mix of international loans from major development institutions. The SOE model's unique advantages were also difficult to imitate by TPP and PPP. More specifically, the public ownership and not-for-profit mandate of the SOE model gave the government flexibility to effectively mitigate the adverse impacts of unforeseen project-specific risks and macroeconomic uncertainty on project performance. Taken together, these findings contribute to growing academic interest in the role of modern SOEs as a delivery model for transport infrastructure.

A selectivity index for public-private partnership projects in the urban water and sanitation sector in Latin America and the caribbean

The rapid urban development, the Agenda 2030, the climate change adaptation and the COVID 19 crisis highlight the need to increase investment in public infrastructure and improve water supply and sanitation services. For this, an alternative to traditional public procurement is the participation of the private sector under the public-private partnership (PPP) model. The objective of this article is to develop a tool based on critical success factors (CSFs) that allows for evaluation during early stages of the convenience of developing a PPP project for W&S in urban areas of Latin America and the Caribbean. The index was developed based on literature review (779 variables), review of cases (20 variables) and expert opinion to assign them an estimated value of importance. The results were analysed by exploratory and confirmatory factor analysis, selecting 17 main variables grouped into 6 CSFs, the most relevant of which are Convenience, Certainty, Leadership, Attraction, Performance and Reliability. The application of this index allows an early assessment of the feasibility of a PPP project and/or the selection of the alternatives with the best chances of success. On the other hand, this study contributes to the international discussion on the most relevant elements related to the success of PPP in W&S projects.

State audit of public–private partnerships: Effects on transparency, auditor's roles, and impact on auditee's reactions

AbstractSupreme Audit Institutions (SAIs) play an active role in the government's accountability to the parliament. Public–private partnerships (PPPs) are a different route used to deliver infrastructure‐based public services by private sector entities compared to traditional public procurement. Due to their nature, PPPs raise specific issues related to transparency for public accountability and SAIs, through the independent and competent audit they provide, may enhance the information content of the accountability relationship between the government and the parliament. We conducted a documentary analysis of 16 PPP audit reports issued by the Portuguese Court of Auditors (CoA) to analyze the audit process and outputs. Overall, our evidence suggests that the CoA, through the audit reports, reduced the information asymmetry by disclosing relevant information for more comprehensive public scrutiny and political accountability of PPPs and made several recommendations towards better PPP governance and management. Furthermore, our findings corroborate the two functions of SAIs, which can both be found in the same audit report: the watchdog function (magistrate and public accountant roles), drawing attention to failures at different stages of the PPP cycle, and the shepherding function (management accountant role), providing advice to the Government towards best practices on PPP governance and management. Considering the Government's reactions to the audit reports and the information available about CoA's recommendations implementation, there are doubts about the desired audit impact on the auditee's change of PPPs governance and management.

Public-Private Partnerships in Infrastructure Projects: The Role of Ida Status of a Country

Public-private partnerships (PPPs) are increasingly promoted by advocates as an innovative policy tool for redressing inefficiency in traditional public procurement mechanisms. Governments, operating on razor-thin budgets in many developing countries, also pursue PPPs on the grounds that they will bridge their countries' infrastructure gaps. This paper empirically investigates the main incentives that motivate both public and private entities to pursue PPPs as an infrastructure investment tool, focusing on the International Development Association (IDA) status of a country. This study uses a cross-country panel regression for 36 developing countries over 1990-2019, where the outcome variable is the project count as well as the level of PPP investment (PPI). For the regression of the former the study applies Zero Inflated Poisson (ZIP), while for the latter it uses tobit model. While IDA status is negatively associated with PPPs, GDP per capita, economic growth, market size, M2 money supply and inflation are all positively related with PPPs. While volatile exchange rates discourage risk-averse investors, fuel export and foreign aid encourage them to participate in PPPs. Findings also suggest that private investors are less inclined toward PPPs in highly indebted and effectively governed countries. Although the years of PPP experience initially attract more PPPs, further experiences are proving to be frustrating and discouraging of future PPPs. The size of the market, purchasing power in terms of per capita GDP, and inflation all emerge as the most relevant factors in attracting PPPI. Countries with substantial foreign exchange reserves and higher fuel exports are found to attract greater PPPI. Similarly, crisis-ridden nations also pursue more PPPIs. Finally, government effectiveness is found to exert a negative impact on PPPI. The findings could be useful for governments of these countries to guide the design and implementation of policies conducive to a sound investment environment. The prevalence of PPPs in richer countries and the private sectors' preference for higher inflation and less effective government hint a rent-seeking motive on the part of private entities. Alternatives should, therefore, be investigated before pursuing the PPP route. If governments opt to engage in PPPs, they have to pay attention to certain macro conditions.

Unpacking the context of value for money assessment in global markets: a procurement option framework for public-private partnerships

PurposeThe unprecedented SARS-CoV-2 (COVID-19) pandemic has further constrained the budgets of governments worldwide for delivering their much-needed infrastructure. Consequently, public-private partnerships (PPPs), with the private sector's investment and ingenuity, would appear to be an increasingly popular alternative. Value for money (VfM) has become the major criterion for evaluating PPPs against the traditional public sector procurement and, however, is plagued with controversy. Hence, it is important that governments compare and contrast their practice with similar and disparate bodies to engender best practice. This paper, therefore, aims to understand governments' assessment context and provide a cross-continental comparison of their VfM assessment.Design/methodology/approachFaced with different domestic contexts (e.g. aging infrastructure, population growth, and competing demands on finance), governments tend to place different emphases when undertaking the VfM assessment. In line with the theory of boundary spanning, a cross-continental comparison is conducted between three of the most noticeable PPP markets (i.e. the United Kingdom, Australia and China) about their VfM assessment. The institutional level is interpreted by a social, economic and political framework, and the methodological level is elucidated through a qualitative and quantitative VfM assessment.FindingsThere are individual institutional characteristics that have shaped the way each country assesses VfM. For the methodological level, we identify that: (1) these global markets use a public sector comparator as the benchmark in VfM assessment; (2) ambiguous qualitative assessment is conducted only against PPPs to strengthen their policy development; (3) Australia's priority is in service provision whereas that of the UK and China is project finance and production; and (4) all markets are seeking an amelioration of existing controversial VfM assessments so that purported VfM relates to project lifecycles. As such, an option framework is proposed to make headway towards a sensible selection of infrastructure procurement approaches in the post COVID-19 era.Originality/valueThis study addresses a current void of enhancing the decision-making process for using PPPs within today's changing environment and then opens up an avenue for future empirical research to examine the option framework and ensuing VfM decisions. Practically, it presents a holistic VfM landscape for public sector procurers that aim to engage with PPPs for their infrastructure interventions.

Should Value for Money Be the Sole Criteria in Opting for PPP Option for Infrastructure Projects?

Countries are increasingly using Public-Private Partnerships (PPPs) to deliver infrastructure projects and there are a number of reasons why governments around the globe utilise PPPs in delivering infrastructure projects amongst which is the financial benefits of the project. In PPP projects, it is necessary for the host government to carry out an analysis to show that the proposed project is a viable venture. It has been argued by various practitioners and academics that the critical question from the government’s viewpoint is whether the project demonstrates good Value for Money (VfM) sometimes also called Value for Investment (VfI). This article examines the concept of VfM, PPPs as distinguished from traditional procurement. It also expatiates on the use and focus of VfM assessment in the PPP decision-making process and puts the VfM analysis into a broader, context by expanding its subsets which is a mix of both quantitative and qualitative analysis and the tools used in assessing if an infrastructure project demonstrates VfM, this paper also looks at the different criticisms, constraints and limitations submitted by different academics, institutions and practitioners on why VfM should not be the only factor to be contemplated in determining if PPP is the best option for delivering infrastructure projects or if the project should be skewed towards traditional infrastructure procurement. The article proffers key recommendations which can guide government institutions, agencies, and industrial sectors in using and improving the VfM analysis. The concluding section answers if VfM should be the sole criteria in reaching the determination of skewing projects towards PPP or Traditional Procurement. Keywords: public-private partnership, traditional public procurement, value for money, public sector comparator, infrastructure finance

Data Protection in Smart Cities:

Globally, cities are adopting smart city services processing personal data at a rapidly increasing pace. As custodians of the public interest, public spaces and fundamental rights, cities should consider the need to ensure data protection, and enable democratic oversight and accountability in their procurement processes. Traditional public procurement rarely offers the leeway to substantively tackle this challenge. However, pre-commercial procurement, which allows public sector administrators to be closely involved in the service research and development stage, and to genuinely co-create with private partners, may prevent mismatches between private sector offerings and public sector needs in smart cities. This article contrasts data protection governance in the context of traditional and pre-commercial procurement of smart city services. Through case studies, opportunities and pitfalls for public administrations are distilled. Keywords: smart cities; data protection; traditional procurement; pre-commercial procurement

PUBLIC-PRIVATE COOPERATION MODELS FOR EFFICIENT ACCESS TO GEOSPATIAL CONTENT

Abstract. Traditional public data procurement models for geospatial data sets as basemaps are not any longer alone the spatial reference for decision processes. A fast digitalizing society requires more flexibility and speed in the information streams. Public authorities have to deal with reducing budgets and higher demand, while the industry is searching for new business models. A smart and flexible design of public-private cooperation models increases the value for all stakeholders through (a) negotiated quality levels, (b) reduced unit prices, (c) stable income to all suppliers, (d) risk reduction to the authorities. The models allow for a high flexibility on product definition and orient themselves on the demands of the public and private markets alike.

SUPPLY AND DEMAND FACTORS OF THE STATE AND BUSINESS ON PUBLIC AND PRIVATE PARTNERSHIP

The subject of the study is public–private partnership (hereinafter – PPP) mechanisms in the modern economy of the Russian Federation. The article considers economic factors affecting the demand for PPP mechanisms in Russia from the state and business. The paper carries out a comparative assessment of the supply and demand of PPP and alternative mechanisms of interaction between the state and business. The study reveals that PPP does not have significant advantages in comparison with traditional public procurement or leasing. According to the results of the study, the author makes a forecast that in the near future we should expect a significant reduction in the volume of private and public co-financing of projects implemented on the basis of PPP. Assumption by state additional obligations to finance projects in the absence of budget restrictions can increase the demand for PPP on the part of business.

E-Procurement for PPPs and Concessions:

Recently, also due to the COVID-19 pandemic, the issue of using e-procurement is becoming more and more relevant for all countries around the world, and especially for EU Member States implementing the requirements of the Directives on public procurement. The substantial advantages of the use of electronic procedures for public procurement for reduction of tender costs and better prices, the possibility to avoid misuse, collusion and corruption, led some countries to explore opportunities to adapt the traditional e-procurement experience for public-private partnership (PPP) and concession tenders. Today, the regulation in this field is practically absent and the experience is very limited. This article presents: an analysis of the situation regarding current regulation, experience in electronic PPP procurement implementation, and trends;the peculiarities of PPP procurement compared to traditional public procurement;the difficulties related to PPP procurement as e-procurement;and the recommendations of authors on the use of electronic procurements for PPPs and concessions based on the peculiarities of a project implemented using relevant mechanisms. Keywords: public-private partnership;PPP;public procurement;electronic procurement;e-procurement;digitalisation

The impact of public–private partnerships on public accounts: The Portuguese roads sector

AbstractThe accounting and reporting of public—private partnerships (PPPs) is a matter of extensive debate and is associated with a compelling incentive to follow the PPP route for the construction of public infrastructures, rather than traditional public procurement, even if the PPP route is not affordable and fails to achieve value for money in comparison to traditional public procurement. The aim of this study is to empirically evaluate the so‐called hidden debt hypothesis. Using a novel dataset for the Portuguese roads sector, we studied the annual reports of the operators since the adoption of International Financial Reporting Interpretations Committee (IFRIC) 12 from 2010 up until 2017. Our results show a lack of transparency in the reporting of PPPs in public accounts, as well as a material difference between our simulation of the impact of (International Public Sector Accounting Standards) IPSAS 32 in public accounts, and also the impact resulting from the application of the European System of Accounts, according to which official debt figures are calculated. The paper also presents evidence of the effects of the financial bailout on PPPs accounting. Overall, the results show that public debt is understated from 1.96% of gross domestic product (GDP) in 2010 (3,519 million euros), to 3.99% of GDP in 2014 (6,907 million euros) and an average of 11,027 million euros of fixed assets for the period 2010–2017 are not reported in the Portuguese State Accounts. The results highlight the need for a closer alignment between national accounts and accrual accounting based on IPSAS standards.

An overview of economic theory and evidence of public-private partnerships in the procurement of (transport) infrastructure

Public-private partnerships (PPP) to construct infrastructure assets and to deliver the associated services emerged in their modern form in the UK in the 1990s. Although their quantitative significance has remained limited, a rich economic-theoretical PPP literature has emerged. In particular, the trade-off between allocative and productive efficiency has been extensively analysed in contract-theoretical literature. The empirical literature comparing PPP procurement with traditional public procurement is, however, scant. It may be futile to expect any simple empirical conclusions ever to emerge, and the thin evidence base means that public procurement decisions are strongly influenced by considerations other than economic efficiency.

The Public-Private Mix in Primary Care Development: The Case of Ireland.

In 2001, Ireland announced a Primary Care Strategy that has led to the implementation of primary care centers (PCCs) throughout the country. This article examines the nature and extent of private and public sector involvement in establishing the PCC network since 2001. The study is based on a PCC dataset constructed using unpublished data obtained from Ireland's Health Service Executive (HSE). The dataset includes the date when PCCs became operational and their mode of delivery: public procurement, private lease, or public-private partnership. The results show that 140 PCCs have or will become operational by the end of 2019: 35% (49 PCCs) are public, 55% (77) are leases with private landlords, and 10% (14) are public-private partnerships. Before 2009, PCCs were delivered by traditional public procurement, but since 2009, private delivery methods have been prioritized. In conclusion, the PCC network has been increasingly implemented by relying on the private sector. This results in a more commercialized network subject to financial risks associated with public-private partnerships.

Utjecaj načina financiranja na troškovno-vremenske aspekte javnih i društvenih građevina

The comparison of the traditional (budget-funded) public building procurement model with the public private partnership (non-budget funded) model is presented in the paper. Public service buildings procured based on the traditional model and those procured according to the PPP model are compared in the scope of research involving nine buildings realized in the Republic of Croatia. The results point to greater efficiency of the PPP model in the construction of public service buildings, with regard to both cost and time of construction work.

CHALLENGES FACED BY PUBLIC-PRIVATE PARTNERSHIP IN IMPROVING SERVICE DELIVERY

Partnerships, of any kind, come with challenges and obstacles that might be a threat to the success of the vision they have. PPPs are faced with a lot of challenges when it comes to infrastructure delivery in South Africa and across the globe. Hence, the study was conducted to determine the challenges faced by Public Private Partnerships (PPPs) in the South Africa. The data in this paper was obtained from secondary and primary sources. 90 structured questionnaires were distributed to construction stakeholders in the public and private sectors, who were involved in the PPP's projects in South Africa in the Gauteng province. 80 Questionnaires were brought back and were valid for use. The study revealed that: PPPs are inflexible; there is limited trust between public and private sector professionals; lack of sufficient time to implement PPPs; reduced control of public assets; conflict of interest between private and public sector; public acceptability; PPPs are not integrated into sector planning, lack of resources dedicated to fostering PPPs, a policy bias toward traditional public procurement and against PPPs, lack of fiscal imperative to use PPPs and policy on PPP changes with changes in political leadership, etc. The research has revealed that PPPs are lacking at the highest levels of leadership especially at governmental level. Also, PPPs must be favored in general, not in specific circumstances.

Public-Private Partnerships as Collaborative Projects: Testing the Theory on Cases from EU and Russia

ABSTRACTHow do public-private partnerships (PPPs) differ from traditional public procurement and what role should governments play in them? This article views PPPs as collaborative projects with imperfect information between parties. Typical public procurement contracts tackle asymmetric information problems yet limit feasibility of projects: some are not profitable enough to ensure private party participation. Partnership improves feasibility; this justifies PPPs as a form of public good provision and demonstrates how they differ from procurement. Four UK and Russian cases of PPP projects are analyzed within the above framework, focusing on types of contracts, contributions of both partners, and specific partnership elements.