The challenge of using standard contracts in public–private partnerships

Abstract

A call for an increased use of standard contracts in public-private partnerships (PPPs) for infrastructure development is noticeable in practice. These contracts are expected to simplify and improve procurement since they create opportunities for learning, lower transaction costs, and better competition. This paper delineates standard contracts in PPP as a new venue for research and unfolds the potential impact of the standardization of public-private contracts.Here lies an important challenge since the benefits of standardization are not as straightforward as they look at first sight, particularly when taking into account the tension between the powerful, control-oriented role of contracting authorities and the need for contingent, informal contracting.

Managing Critical Services through Hybrid Arrangements

“…Without neglecting these limiting factors, our framework sheds light on the well-defined circumstances under which hybrids might outperform alternative arrangements in the delivery of critical services. Our insights contribute to the ongoing debate in the public administration/management literature and among practitioners about the role of organizational solutions that differ from extended outsourcing or full privatization and from the in-house provision of public services by public bureaus (Bel et al, 2014;Van Den Hurk & Verhoest, 2016;Warsen et al, 2018). Focusing the attention on "critical services" enabled us to push further in the direction suggested by some scholars about potential gains from public-private interactions and their implications on value creation (Kivleniece & Quelin, 2012).…”

“…In that respect, hybrids can mitigate or even overcome these risks, particularly when public authorities do not have the managerial capabilities required to properly monitor risks across all phases of the value chain (Mahoney et al, 2009). Contracts framing adequately public-private interactions, particularly if complemented by guiding documents and control devices (Van Den Hurk & Verhoest, 2016), help leading to a non-adversarial approach and positive outcomes (Sanderson, 2009), mitigating resistance to private involvement in critical services and reinforcing the legitimacy of hybrid arrangements.…”

Internal and External Transparency in Public-Private Partnerships—The Case of Barcelona’s Water Provision

“…Van den Hurk [30], for example, acknowledges the complex nature of PPPs and states that PPPs require major efforts in terms of preparation, procurement, managing and operation, leading to high transaction costs. PPPs also involve high financing and demanding negotiations [31,32]. With the increased use of PPPs, the issue of transparency has also become an important challenge recently addressed in literature [9].…”

Ten Lessons from Ten Years PPP Experience in Belgium

“…The advice to ‘keep it as simple as possible’ was repeatedly heard in the 100 opinions and in the workshop discussions, usually followed by a request for a wider use of standard contracts. Standardizing tendering procedures and contracts could reduce the complexity of PPPs (lower transaction costs), increase the confidence of the private market (more competition), and refine procedures and documents based on learning processes (Van den Hurk and Verhoest ). Whereas standardization has improved a lot in pioneering countries such as the United Kingdom, Canada, and Australia, this is not the case for Belgium (Van den Hurk and Verhoest ).…”