?
Public Procurement Mechanisms for Public-Private Partnerships
ABSTRACT. Why do some countries (often developing and emerging
economies) adopt special laws on PPP, whilst in others PPPs are governed
by the legislation on public procurement and related bylaws? This paper
explains the above global discrepancies from an institutional perspective. In
a contract-theoretical framework we demonstrate how PPPs can enable
projects that are not feasible through standard public procurement
arrangements. Incentives for private partners are created through extra
benefits (often non-contractible) from their collaboration with the
government (e.g. risk reduction, reputational gains, access to additional
resources, lower bureaucratic burden, etc.). In a well-developed institutional
environment these benefits are implicitly guaranteed, suggesting no need in
a specialized PPP-enabling legislation. Otherwise, a PPP law should establish
an institutional architecture to provide the above benefits.