Transcript Slide 1

HoPs’ WG on PPPs
• Created by HoPs at their Oct. ’07
meeting
• Co-chaired by WB and IDB
• Objectives:
 address increasing interest in and demand
for PPPs from borrowers;
 reach consensus among MDBs on
financeable PPP options; and
 provide common guidance to Banks’ staff
and borrowers on appropriate procurement
methods
• Internal consultations to be carried out
at each Bank prior to first WG meeting
WB’s PPP monitoring group
• Conformed in Feb. ’08 by Procurement,
Infrastructure, GPOBA & PPIAF, in
preparation for further discussions at
MDB level
• Tasked with drafting a concept note:
 identifying/defining PPP modalities;
 addressing areas where WB can help and
stages at which to intervene; and
 assessing appropriateness and
acceptability of Bank’s and procurement
processes employed worldwide
Highlights of WB’s Concept Note
• No guidance on which PPP option is suitable or
should be pursued
• Not a single definition/modality but generic elements
identified aimed to arrive at Bank’s own definition
• Bank has financed through IL:
 Mgmt. contracts, leases, concessions & BOTs in
energy, telecom., transport & WSS sectors;
 Govt. contribution in form of equity to SPVs,
infrastructure assets or subsidies
• Competitive procurement is a key condition for
success of PPPs but traditional public tender process
may be ineffective due to:
 Uncertainty under which PPPs start/evolve;
 PPPs involve multiple proposals and criteria other than
lowest-evaluated price; and
 PPPs require informal communication between public
and private sectors
• Various alternative procedures employed worldwide
depending on PPP types - Bank acceptability
depends on them not being conducive to corruption
or high costs to governments
Diversity of PPP definitions
Some PPP Definitions
The term public-private partnership (“PPP”) is
not defined at Community Level. In general, the
term refers to forms of cooperation between the
public authorities and the world of business
which aim to ensure the funding, construction,
renovation, management or maintenance of an
infrastructure or the provision of a service.
Source: Green Paper on Public-Private
Partnerships and Community Law on Public
Contracts and Concessions, European Union
Commission, April 2004
“Public-Private Partnership” is a generic term for the
relationships formed between the private sector and public
bodies often with the aim of introducing private sector
resources and/or expertise in order to help provide and
deliver public sector assets and services. The term PPP is,
thus, used to describe a wide variety of working
arrangements from loose, informal and strategic
partnerships, to design build finance and operate (DBFO)
type service contracts and formal joint venture companies.
Source: The EIB’s Role in Public-Private Partnerships,
European Investment Bank, July 2004
A Public-Private Partnership is a contractual
agreement between a public agency (federal,
state or local) and a private sector entity.
Through this agreement, the skills and assets of
each sector (public and private) are shared in
delivering a service or facility for the use of the
general public. In addition to the sharing of
resources, each party shares in the risks and
rewards potential in the delivery of the service
and/or facility.
Source: U.S. National Council for Public-Private
Partnerships website:
http://www.ncppp.org/howpart/index.shtml
PPP is any medium-to-long term relationship between the
public and private sectors, involving the sharing of risks
and rewards or multisector skills, expertise and finance to
deliver desired policy outcomes.
Source: Standard & Poor’s PPP Credit Survey, 2005
Public-Private Partnerships (PPPs) refer to “innovative
methods used by the public sector to contract with the
private sector, who brings their capital and their ability to
deliver projects on time and to budget, while the public
sector retains the responsibility to provide these services to
the public in a way that benefits and delivers economic
development and an improvement in the quality of life”.
Source: Guidebook on Promoting Good Governance in
Public-Private Partnerships, United Nations Economic
Commission for Europe (UNECE), 2007
Public private partnerships (PPPs) are
arrangements typified by joint working between
the public and private sector. In the broadest
sense, PPPs can cover all types of collaboration
across the interface between the public and
private sectors to deliver policies, services and
infrastructure. Where delivery of public services
involves private sector investment in
infrastructure, the most common form of PPP is
the Private Finance Initiative (PFI).
Source: United Kingdom’s HM Treasury website
HM Treasury Home
Diversity of PPP options
Typical PPP arrangements*
Categories of PPI projects
* Source: Guidebook on Promoting Good Governance in PublicPrivate Partnerships, United Nations Economic
Commission for Europe (UNECE), 2007
Concession: Contractual arrangement where a facility is given by
the public to the private sector, which then operates,
maintains and improves a facility for a certain period of
time after which the facility, including any improved assets,
is transferred to the public sector.
Buy-Build-Operate (BBO): Transfer of a public asset to a private
or quasi-public entity usually under contract for upgrading
and operating the assets for a specified period of time.
Build-Own-Operate (BOO): The private sector finances, builds,
owns and operates a facility or service in perpetuity. The
public constrains are stated in the original agreement and
through on-going regulatory authority.
Build-Own-Operate-Transfer (BOOT): A private entity receives
a franchise to finance, design, build and operate a facility
(and to charge user fees) for a specified period, after which
ownership is transferred to the public sector.
Build-Operate-Transfer (BOT): The private sector designs,
finances and constructs a new facility under a long-term
concession contract, and operates the facility during the
term of the concession after which ownership is transferred
to the public sector if not already transferred upon
completion of the facility. In fact, such a form covers
BOOT and BLOT (see below) with the sole difference
being the ownership of the facility.
Build-Lease-Operate-Transfer (BLOT): A private entity receives
a franchise to finance, design, build and operate a leased
facility (and to charge user fees) for the leased period,
against payment of a rent.
Design-Build-Finance-Operate (DBFO): The private sector
designs, finances and constructs a new facility under a longterm lease, and operates the facility during the term of the
lease. The private partner transfers the new facility to the
public sector at the end of the lease term.
Note: Contracts for Operation & Maintenance (O&M),
Management Services, and Design-Build (DB) are
generally not considered PPP options.
1. Management & Lease Contracts – A private entity takes the management of a
state-owned enterprise for a fixed period while ownership and investment
decisions remain with the state.
(a) Management contract: The government pays a private operator to manage the
facility. The operational risk remains with the government.
(b) Lease contract: The government leases the assets to a private operator for a
fee. The private operator takes on the operational risk.
2. Concessions – A private entity takes over the management of a state-owned
enterprise for a given period during which it also assumes significant
investment risk.
(a) Rehabilitate, operate & transfer (ROT): A private sponsor rehabilitates an
existing facility, then operates and maintains it at its own risk for the
contract period.
(b) Rehabilitate, lease or rent, and transfer (RLT): A private sponsor
rehabilitates an existing facility at its own risk, leases or rents the facility
from the government owner, then operates and maintains the facility at its
own risk for the contract period.
(c) Build, rehabilitate, operate, and transfer (BROT): A private developer
builds an add-on to an existing facility or completes a partially built
facility and rehabilitates existing assets, then operates and maintains the
facility at its own risk for the contract period.
3. Greenfield Projects – A private entity or public-private joint venture builds and
operates a new facility for the period specified in the contract. The facility
may be turned to the public sector at the end of the concession period.
(a) Build, lease, and transfer (BLT): A private sponsor builds a new facility
largely at its own risk, transfers ownership to the government, leases the
facility from the government and operates it at its own risk up to the expiry
of the lease. The government usually provides revenue guarantees through
long-term take-or-pay contracts for bulk supply facilities or minimum
traffic revenue guarantees.
(b) Build, operate, and transfer (BOT): A private sponsor builds a new facility at
its own risk, operates the facility at its own risk, and then transfers the
facility to the government at the end of the contract period. The private
sponsor may or may not have the ownership of the assets during the
contract period. The government usually provides revenue guarantees
through long-term take-or-pay contracts for bulk supply facilities or
minimum traffic revenue guarantees.
(c) Build, own, and operate (BOO): A private sponsor builds a new facility at its
own risk, then owns and operates it at its own risk. The government
usually provides revenue guarantees through long-term take-or-pay
contracts for bulk supply facilities or minimum traffic revenue guarantees.
4. Divestitures – A private entity buys an equity stake in a state-owned enterprise
through an asset sale, public offering, or mass privatization program.
(a) Full: The government transfers 100% of the equity in the state-owned company
to private entities.
(b) Partial: The government transfers part of the equity in the state-owned
company to private entities. The private stake may/may not imply private
management of the facility.
Diversity of procurement
procedures
1/4
EU’s Choice of Procurement Procedures for Contractual PPPs
Open procedure

Advertisement

No short listing

All documents issued to all candidates

No negotiation permitted

Award to bidder with lowest price* or most economically advantageous tender**
Restricted procedure

Advertisement

Short listing (at least 5 candidates - range must be stated in notice; at least 3 if 5 not
possible)

Invitation to Tender issued to selected candidates

No negotiation is permitted

Award to bidder with lowest price* or most economically advantageous tender**
Negotiated procedure

With or without prior advertisement (according to circumstances)

Short listing (at least 3 when notice published)

Invitation issued to short-listed candidates

Preferred bidder selected based on announced award criteria

Negotiation with preferred bidder about all aspects of the contract permitted negotiation with second best if no agreement reached

Award to bidder with lowest price* or most economically advantageous tender**
Competitive dialogue procedure

Advertisement

Short listing (may be limited to at least 3)

Invitation issued to short-listed candidates

Dialogue (including negotiation) about all aspects of the contract permitted

Award to bidder with most economically advantageous offer** ONLY
Diversity of procurement
procedures
2/4
Procurement process under Competitive Dialogue for a PFI project
Source: UNECE’s Guidebook on Promoting Good Governance in Public-Private Partnerships, 2007
1
Pr oc.
Notice
-Investment
appraisal
-Select
procedure
-Programme
level VFM
assessment
-Justify and
document
-Design
process for
dialogue
2
Contract
notice
-Emphasis
on early
preparation
-Evaluation
criteria
3
PQQ /
Selecting
participants
-Selection
of
participants
to take
through
dialogue
-Issue
descriptive
document
4
5
Competitive
dialogue
phase
-Invitation to
participate in
dialogue
-Conduct
dialogue to
develop
solution
Final
tender
process
-Final
tenders
-Evaluation
of tenders
7
Post-tender
discussions
Preferred
Bidder
-Clarify,
specify and
fine tune
-No
substantial
modification
of bids
-Clarification
and
confirmation
of
commitments
-Successive
stages
-Closing
dialogue
FBC
OBC
Stage 2 VFM assessment
6
Stage 3 VFM assessment
Contract
signature
Diversity of procurement
procedures
3/4
World Bank’s Two-Stage Bidding Process
Invitation to 1st Stage
Bidding
Evaluation of Technical
Proposals
Clarification/Feedback
Meeting with Qualified
Bidders
Invitation to 2nd Stage
Bidding
Technical/Financial
Evaluation and Award
Employer issues bidding documents including
objectives sought and performance specifications
Bidders asked to submit technical-only proposals
Employer evaluates technical proposals’ responsiveness
to objectives/performance specifications
Employer verifies continued bidders qualification
Bidders may be invited to discuss content of technical
proposals and technical/commercial changes required
Employer prepares minutes of required changes and
may amend bidding documents based on discussions
Bidders invited to submit 2nd stage bids including final
technical proposals and priced bids
Employer evaluates 2nd stage bids per evaluation
criteria
Award to qualified bidder with responsive, lowest
evaluated 2nd stage bid
Diversity of procurement
procedures
4/4
Handling of unsolicited proposals
Initial proposal
requested &
assessed
Is project in
the public
interest?
NO
Proposal no longer
considered
* Extra evaluation
credit or proposal
preparation cost
reimbursement
Formal proposal
invited & examined
YES
Is project
possible w/o
involving
proprietary
rights?
Authority publishes
description of proposal’s
essential output
elements & invites
comparable proposals**
Authority engages in
competitive selection
granting incentives* to
original proponent
YES
NO
Alternative
proposals
received?
YES
Many
alternative
proposals
received?
YES
Authority engages in
competitive selection
granting incentives* to
original proponent
** Variation: “Swiss challenge” –
competitor offering lower-priced
proposal gets award if not matched
by original proponent
NO
Authority may be
authorized to negotiate
directly with original
proponent
NO
Authority invites all
offerors to competitive
negotiations
WB’s procurement policies on PPPs
Guidance for Management Contracts
• Sample PQ & Bidding Docs. & technical note
issued in Dec. ’07
• BD includes selection approaches depending on
nature of services:
 Option A – Single Stage Bidding process, with 3
possible selection methods:
 Lowest Evaluated Cost [governed by Proc. GLs] –
Suitable for mgmt. services focused to O&M, with or
w/o investment fund mgmt.
 QCBS & Fixed Budget Selection [governed by Cons.
GLs] – Suitable for mgmt. services leaning toward
technical assistance
 Option B – Two Stage Bidding process
WB’s procurement policies on PPPs
Guidance for Concessions
•
Para. 3.13 of the GLs covers procurement by private entrepeneur
of Bank-financed G, W & S required by facility under
BOO/BOT/BOOT, concessions & similar “private sector
arrangements”, as follows:
 An entrepeneur selected under acceptable ICB procedures* [may
involve several stages to arrive to optimal evaluation criteria] is free to
use own procedures
 An entrepeneur not selected under acceptable ICB procedures must
use WB procedures
•
To be acceptable, ICB procedures used to select private
entrepeneur must:
 Meet principles of economy, efficiency, transparency & open
competition
 Include, as a minimum: (i) wide advertisement & promotion; (ii) PQ;
(iii) clear/non-discriminatory bidding docs.; (iv) transparent, predisclosed eval. criteria; (v) selection based on announced criteria to
bidder with technically responsive bid & best commercial proposal; (vi)
effective & fair complaints-handling mechanism
•
OM issued in Nov. ’05 clarifies conditions under which incumbent
entrepeneur can use its own procurement procedures:
 WB’s ICB procedures for procuring G, W & S may be impractical [e.g.
low cost];
 Case should involve expansion of existing system;
 Entrepeneur must be privately-owned or if govt.-owned, must be
financially autonomous & operate on commercial basis;
 Upon upfront assessment & post-reviews, WB must accept
entrepeneur’s procurement procedures & capacity
WB’s Action Plan after Concept Note
• Conduct survey among Procurement,
Infrastructure, IFC & MIGA to learn:
 Procurement issues per type of PPP [e.g.,
concessions, BOTs, management contracts,
leases, etc.] that clients are more concerned
about
 Trends with regard to PPPs where clients see the
Bank could provide more support
• Survey results to be analyzed to:
 Prioritize and focus Bank’s resources toward
future steps;
 Assist the Monitoring Group in determining
whether current WB’s procurement policies need
to be clarified or changed and whether specific
guidelines and/or model contracts for complex
PPPs should be developed; and
 Agree on Bank’s position to be further presented
at the HoPs’ WG on PPPs