The Not So Good, the Bad and the Ugly: Over Twelve Years of PPP in Ireland

Public–private partnerships have been adopted extensively in Ireland for over 12 years. This article analyses the practice of PPP procurement at the level of local government. It adopts economic and governance perspectives on PPP which highlight challenges with procurement under PPP such as complexity, uncertainty, hold-up, transparency and accountability. These perspectives provide a basis for an analysis of three cases of PPP procurement. Two cases from the water services sector illuminate problems arising from the complexity of value for money assessment at the ex ante contracting stage. These cases were also characterised by governance problems stemming from central government's role as policy advocate and steward of public funds. The case of PPP to deliver social housing also demonstrated the challenges of procurement under conditions of economic uncertainty and difficulties with achieving appropriate levels of risk transfer. All three cases demonstrate the value of stakeholder consultation in terms of meeting the governance challenges faced when adopting PPP.

Key Words:

• Public private partnerships
• transaction cost economics
• governance
• Ireland

Notes

1. Department of Finance, 2007. Multi-annual capital investment framework 2008–2012.

2. The largest component of the programme relates to the provision of water and sewerage schemes with a view to complying with both the EU Urban Waste Water Treatment Directive and the Drinking Water Directive. The other main component is rural water services and group schemes.

3. The details in this case are drawn from documentation provided by the local authority.

4. Letter from DOE to Minister for Public Expenditure and Reform dated 27 May 2011.

5. Letter from DOE to Minister for Public Expenditure and Reform dated 27 May 2011.

6. In their survey of PPP practice in Latin America, Guasch et al. (2001) find that excluding the telecommunications sector, over 40% of concessions appear to be renegotiated, and 60% of those within three years of the award of the concession, when in principle the contract agreement was for a period of 15–30 years.

7. The details in this case are based on discussions with trade union officials and correspondence between the local authority and trade unions, provided by the latter.

8. It should be noted that as part of the bidding process the developer would undertake to pay a fixed amount to the local authority.

9. The National Development Finance Agency was established in 2003. It houses the Centre for Expertise in PPPs and is responsible for all aspects of delivering the procurement of the projects (with appropriate input from the sponsoring departments). it hands responsibility over to departments after construction is complete and the asset is operational (http://www.ndfa.ie/home.html).

10. House prices in Ireland peaked in February 2007. By mid 2009 they had fallen by 20%. By May 2011 the peak to trough fall in prices was almost 40%.

11. Cited in Bisset (2008, pp. 130–131).