Endogenous Determinants for Renegotiating Concessions: Evidence from Local Infrastructure

The engagement of local government in public–private partnerships (PPPs) for the provision of infrastructure and public services is a global trend. Light rail services, water systems, waste management systems, schools, sport centres and social housing are simply a few examples of sectors in which the private sector is becoming more actively involved with local authorities. Most of these engagements are conducted through the use of mixed companies and contractual concessions. However, both of these uses suffer from a major shortcoming – renegotiations. Contracts are often renegotiated within a few years of being signed, and some evidence reveals that the results might not protect the public interest. This article aims to understand how and why renegotiations of local concessions occur by examining the specific characteristics of contracts (endogenous determinants). To illustrate the discussion, a case study of a light rail system is analysed, exemplifying the effect of a contractual renegotiation. The authors argue that contractual renegotiation can be useful in decreasing contract incompleteness, but a poorly designed contractual clause can allow for opportunistic concessionaire behaviour.     

The Outcome of Renegotiations between Institutionalized Public–Private Partnerships and Their Public Clients: Data on the Public–Private Partnerships of the German Federal Armed Forces

This study analyzes the renegotiations that take place between institutionalized public–private partnerships (PPPs) and their public clients drawing on survey data on the PPPs of the German Federal Armed Forces. Generally, both the party that initiates such renegotiations and the time at which renegotiations are launched determine the outcome of the PPP’s renegotiated remuneration. This effect is moderated by the degree of contract specificity and by a decrease in demand. Specifically, when the public client initiates the renegotiation of an incomplete contractual agreement due to a decrease in demand, it can successfully reduce the remuneration of the PPP.     

Infrastructure Public–Private Partnerships in the Developing World: Lessons from Recent Experience

Seeking to address inefficient and costly infrastructure delivery, governments over the past two decades have turned to public–private partnerships (PPPs) to build and operate infrastructure. The key characteristic of PPPs is the outsourcing and ‘bundling’ of project delivery components (for example, design, build, finance, operate), structured to incentivise the builder-operator to incorporate long-term operating cost considerations in the design and construction phases of a project and reduce coordination costs. This article reviews the benefits and drawbacks of PPPs and the experience to date, focusing in particular on developing economies. Relative to traditional procurement, PPPs are complex, and require governments to anticipate and plan for contingencies and conduct monitoring and enforcement of long-term contracts. We argue that institutional capacity is a key determinant of PPP success and in mitigating potentially welfare-reducing contract renegotiations evident in the Latin American experience.     

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

ABSTRACT

How 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.     

The introduction of public–private partnerships in the Netherlands as a case of institutional bricolage: The evolution of an Anglo‐Saxon transplant in a Rhineland context

In this contribution, the introduction of contractual public–private partnerships (PPPs) in the Netherlands, more specifically the use of Design, Build, Finance, Maintenance, and Operations (DBFMO) contracts in Dutch infrastructure management, is analysed using a specific strand within the policy transfer and institutional transplantation literature: that of ‘institutional bricolage’. This perspective states that policy transplants come to fit their new institutional context stepwise. This contribution reconstructs the adoption process by which the Anglo‐Saxon‐inspired PPP practice is incorporated into the traditional ‘Rhinelandic’ practice of infrastructure management in the Netherlands, identifying four waves of PPP initiatives. It concludes that these waves and the difficulties that emerge in them stem from an ongoing struggle between actor coalitions, one aiming to preserve the transplant in its original shape, and others making attempts at bricolage. Shifts in power relations explain the progress and outcomes of the process of institutional transplantation.     

Analysing managerial perceptions of when and how to structure public involvement in public-private partnerships

Previous research highlights what managers perceive to be the purposes of public involvement in public-private partnerships (PPPs) and the need for addressing stakeholder concerns unique to PPPs. Yet, we have little evidence of how particular modes of participation benefit particular goals of participation in this context. Through canonical correlation analysis (CCA) of survey data collected in the U.S., this study examines the modes and sequencing of 14 public involvement activities in respect to 10 goals of public involvement in this context. The results indicate that selections among modes of participation are contingent upon when they are introduced. Respondents prefer widening stakeholder involvement early in the project development phase and during the contract implementation phase, but not during the later phases of contract design. Respondents also assign more value to engaging local citizens than their respective political leaders, particularly at mature stages of the PPP’s implementation phase.     

Analysing contractual environments: lessons from Indigenous health in Canada, Australia and New Zealand

Contracting in health care is a mechanism used by the governments of Canada, Australia and New Zealand to improve the participation of marginalized populations in primary health care and improve responsiveness to local needs. As a result, complex contractual environments have emerged. The literature on contracting in health has tended to focus on the pros and cons of classical versus relational contracts from the funder's perspective. This article proposes an analytical framework to explore the strengths and weaknesses of contractual environments that depend on a number of classical contracts, a single relational contract or a mix of the two. Examples from indigenous contracting environments are used to inform the elaboration of the framework. Results show that contractual environments that rely on a multiplicity of specific contracts are administratively onerous, while constraining opportunities for local responsiveness. Contractual environments dominated by a single relational contract produce a more flexible and administratively streamlined system.     

Exploring Contracts as Reinvented Institutions in the Danish Public Sector

Contracts have been on the agenda in public sector reform in most OECD countries. In Denmark, contracts have been considered as one of the most important tools in reorganizing the public sector. The article examines the implementation of contract agencies in central government in Denmark during the 1990s. First, a review of contractual theory distinguishes between 'hard' and 'soft' contracting. Second, recent developments in contracting in Denmark are examined, and three phases of contract agencies are identified. Contracts have been supported by other tools for reporting on performance like annual reports. Third, it is argued that Denmark has put co-operation and negotiation before more strict management and control. The Danish experience can be seen as an alternative to the principal-agent model. The article finishes by discussing the pros and cons of the Danish approach, and suggests that although the pragmatic approach has merits, it may lead to problems in the future concerning the credibility of the whole project.     

Contracts,resource use and productivity in sharecropping

This article identifies the contractual terms in sharecropping that result in efficient use of resources. Evidence is then presented from Pakistan to comment on the manner in which landlords ensure that sharecroppers fulfil the terms. It is shown that landlords in general specify contract terms that encourage sharecroppers to adopt new techniques of production. Productivity comparisons are also made for farms under different tenancy contracts to conclude that share‐cropping tenancies do not appear to result in output loss even when technology is changing.     

Contract Budgeting

Contract budgeting attempts to reconfigure public budgeting as a system of purchase contracts between provider agencies and central government. It draws its inspiration from a simple model of contract in which the purchaser buys clearly specified outputs from a provider at a preagreed price. Contract budgeting thus represents a fusion of output-based budgeting schemas with the newer enthusiasm for placing the public sector on a 'market' footing. This paper reviews the problems which confront any form of output based budgeting, and then analyses the specific issues of contractualization. It concludes that contract budgeting does not well fit the realities of budgeting in a complex public sector.     

ON THE PERFORMANCE OF COMPETITIVELY TENDERED, PUBLIC SECTOR CLEANING CONTRACTS

Quantitative analysis of competitive tendering and contracting typically focuses on their effect on the cost of providing public sector services. In this article we turn to the systematic factors that appear to influence the performance of cleaning contracts. This is defined as compliance with contract specification, public perception of service quality and other qualitative measures of service characteristics as observed by the contracting authority. Our analysis attempts to isolate particular features of contract design, monitoring and enforcement that influence performance positively or negatively. Econometric results based on a sample of public sector cleaning contracts suggest that contractor selection procedures and contract enforcement mechanisms have the greatest influence on performance.     

PUBLIC PRIVATE PARTNERSHIPS: ADDED VALUE BY ORGANIZATIONAL FORM OR MANAGEMENT?

The central idea of public private partnerships (PPPs) is that added value can be achieved from greater co‐operation between public and private actors. In general, the literature speaks of PPPs in which public and private actors develop a more or less sustainable co‐operation through which they realize products, services, or policies together, share risks, and develop an organizational form to arrange this. The assumption is that a higher degree of PPP leads to more and better outcomes because public and private actors combine their knowledge and resources. One can find a wide array of organizational forms in which this co‐operation is organized and the literature pays a great deal of attention to these forms. But is this organizational form really so important, or are the intensity and type of managerial strategies more important for the outcomes? Based on a large survey of individuals involved in Dutch environmental projects, we show that although the degree of PPP correlates positively with the outcomes of projects, this correlation disappears when we include in the analysis the number of managerial strategies employed. The organizational form does not have significant impact on outcomes and the conclusion we draw is that scholars and practitioners of public private partnerships should pay greater attention to the managerial efforts necessary to develop and implement PPPs.     

A closer look at risk factors for public-private partnerships in Singapore: six case studies

ABSTRACT

Despite its global popularity over the past few decades, the public-private partnership (PPP) has not always led to successful outcomes, due largely to a number of risk factors associated with the projects. To explain how and why PPPs sometimes fail, this study considers the success-failure continuum of Singapore’s recent PPP experience from 2000 to 2019. After taking a critical, close look at the six failed cases, we identify the following latent risk factors: unstable financial capacity during the execution period of a project, force majeure unforeseen problems that arise, a lack of technical and/or financial foresight, poor corporate management (e.g. delays in construction and poor-quality service delivery), and an unfavourable investment environment stemming from the lack of a clear and supportive governance framework. In addition, we find that most risk factors tend to appear during the contract management (pre-operation) and project management (operation) phases. Such risks seem to drive the operational failure and subsequent contract termination of multiple unsuccessful PPPs, simultaneously (and sometimes sequentially) rather than in isolated fashion. All in all, this study offers for policymakers that better risk allocation and proper, mutual coordination between the public and private partners represent essential factors for PPP success.     

BETTER REGULATION IN EUROPE: BETWEEN PUBLIC MANAGEMENT AND REGULATORY REFORM

Can the European regulatory state be managed? The European Union (EU) and its member states have looked at better regulation as a possible answer to this difficult question. This emerging public policy presents challenges to scholars of public management and administrative reforms, but also opportunities. In this conceptual article, we start from the problems created by the value‐laden discourse used by policy‐makers in this area, and provide a definition and a framework that are suitable for empirical/explanatory research. We then show how public administration scholars could usefully bring better regulation into their research agendas. To be more specific, we situate better regulation in the context of the academic debates on the New Public Management, the political control of bureaucracies, evidence‐based policy, and the regulatory state in Europe.     

INDEPENDENT REGULATORY BODIES AND IMPOSSIBLE JOBS: THE FAILURE OF GERMAN PUBLIC SERVICE BROADCASTING REGULATION

This case study takes the rise and fall of licence fee indexation within German public service regulation as an example and traces mechanisms of re‐politicization of independent regulatory agencies (IRAs). According to the evidence, agency contestation is likely when: (1) administrative cultures result in incoherencies in institutional design; (2) IRAs deal with redistribution; (3) conflicts about principles of regulation persist; (4) IRAs pursue one particular regulatory ideology; (5) controversial regulatory output is highly visible; and (6) affected interests are not given a say. The article points to the relevance of new regulatory technologies that are likely to embody regulatory bias. Moreover, it seems that successful contestation of IRAs requires the conjunction of escalating factors. Nevertheless, such contestation might not result in a return to old modes of command and control.     

Contracting Out Local Government Services to Private Agents: An Analysis of Contract Design and Service Delivery Performance in Ghana

Contracting out is generally justified on the principle that as governments contract out part of their responsibilities in service provision to private agents, they harness the power of market competition which leads to efficiency in service provision. In working with private contractors, local governments (LGs) face problems related to agent opportunism, while agents also face risks such as dereliction of payment responsibility by LGs for services delivered. The literature shows that these problems are addressed through a web of contractual arrangements. Using agency theory, this study investigates the relationship between contract design and quality of services delivery in three Ghanaian cities (Accra, Kumasi and Tema). The study found a surprising negative correlation between contract document and agents' performance. The paper concludes that effectiveness of contracting out documents depends on contract management capacity of government administrators. In its absence, LGs that contract out are exposed to risks. The paper uses the findings to reflect on the inherent deficiencies in agency theory and Africanist literature on patronage.     

Top Civil Servants Under Contract

This article focuses on the introduction of the new top civil servant contract system in New Zealand and Norway. Even though both countries introduced contractual arrangements at the same time, the content of the reforms and their scope, scale and intensity are very different. The New Zealand reform was more radical and internally consistent. In contrast to an aggressive and thorough implementation in New Zealand, the contract system was implemented more cautiously and reluctantly in Norway. The effects of the reform are ambiguous and uncertain in both countries. A transformative perspective focusing on the interconnection between international administrative doctrines, national political-administrative culture, and polity feature is used to understand why contracts reforms have different contents, effects and implications.     

SELF‐REGULATION WITHIN THE REGULATORY STATE: TOWARDS A NEW REGULATORY PARADIGM?

An emerging feature of the modern regulatory state in Britain and elsewhere is the promotion of self‐regulation. This paper examines the relationship between the state and self‐regulation in the context of the challenge of meeting public interest objectives. It draws on research on the policy and practice of self‐regulation in recent years in Britain. The paper argues that the institutions, processes and mechanisms of the modern regulatory state and the ‘better regulation’ agenda in Britain, notably those that aim to foster transparency and accountability, can assist in the achievement of public interest objectives in self‐regulatory schemes. We conclude that a ‘new regulatory paradigm’ can be put forward which involves a form of regulatory ‘subsidiarity’, whereby the achievement of regulatory outcomes can be delegated downwards to the regulated organizations and self‐regulatory bodies while being offset by increasing public regulatory oversight based on systems of accountability and transparency.     

How do professionals perceive the governance of public–private partnerships? Evidence from Canada,the Netherlands and Denmark

In public–private partnerships (PPPs), the collaboration between public and private actors can be complicated. With partners coming from different institutional backgrounds and with different interests, governing these partnerships is important to ensure the projects' progress. There is, however, little knowledge about the perceptions of professionals regarding the governance of PPPs. This study aims to exlore professionals' viewpoints about governing PPPs, and to explain potential differences using four theoretical governance paradigms. Using Q methodology, the preferences of 119 public and private professionals in Canada, the Netherlands and Denmark are explored. Results show four different viewpoints regarding the governance of PPPs. Experience, country and the public–private distinction seem to influence these viewpoints. Knowledge of these differences can inform efforts to govern PPPs and contribute to more successful partnerships.