+ mainstreaming 88233 PUBLIC-PRIVATE PARTNERSHIPS IN E-GOVERNMENT: KNOWLEDGE MAP AN infoDEV PUBLICATION PREPARED BY: The Institute for Public-Private Partnerships June 2009 Information for Development Program www.infoDev.org PUBLIC-PRIVATE PARTNERSHIPS IN E-GOVERNMENT: KNOWLEDGE MAP An info Dev publication prepared by: The Institute for Public-Private Partnerships June 2009 Information for Development Program www.infoDev.org ©2009 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved The findings, interpretations and conclusions expressed herein are entirely those of the author(s) and do not necessarily reflect the view of infoDev, the Donors of infoDev, the International Bank for Reconstruction and Development/The World Bank and its affiliated organizations, the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgment of the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to infoDev Communications & Publications Department; 2121 Pennsylvania Avenue, NW; Mailstop F 5P-503, Washington, D.C. 20433, USA; telephone: 202-458-4070; Internet: www.infodev.org; Email: info@infodev.org. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Cover design by Patricia Hord Graphic Design, Inc. Typesetting by The Word Express, Inc. To cite this publication: The Institute for Public-Private Partnerships, 2009. Public-Private Partnerships in E-Government: Knowledge Map, Washington, DC; infoDev / World Bank. Available at http://www.infodev.org/publications Acronyms and Abbreviations B2B Business-to-Business IFC International Finance Corporation B2C Business-to-Consumer IMF International Monetary Fund BOO Build-Own-Operate ISP Internet Service Provider BOOT Build-Own-Operate-Transfer IT Information Technology BOT Build-Operate-Transfer ITES Information Technology-Enabled CAPEX Capital Expenditure Services CCO Contract Compliance Office JV Joint Venture CDC Commerce Dot Com KBE Knowledge-Based Economy CIO Chief Information Officer KPI Key Performance Indicator CMB Citizens Migration Board LGU Local Government Unit DBFO Design-Build-Finance-Operate MCIT Ministry of Communication and E-Government Electronic-Government Information Technology EPU Economic Planning Unit MSC Multimedia Super Corridor eSeva Electronic Service PDF Project Development Facility FIRR Financial Internal Rate of Return PFF Project Finance Facility FOREX Foreign Exchange PFI Private Finance Initiative FS Feasibility Study PPP Public-Private Partnership G2B Government-to-Business PSC Public Sector Comparator G2C Government-to-Citizen RFP Request for Proposal G2G Government-to-Government RFQ Request for Qualification IA Implementing Agency SOE State-Owned Enterprise ICT Information and SPV Special Purpose Vehicle Communications Technology VFM Value for Money Table of Contents Preface vii Chapter 1. Introduction to the Knowledge Map 1 Purpose 1 Context 1 Outline 1 Chapter 2. What is a PPP and What is its Rationale? 3 Case Studies 3 Resources 3 Chapter 3. Why Should Governments Consider PPP as a Tool to Promote E-Government? 5 Case Study 5 Resources 6 Chapter 4. What Are the Forms and Models of PPP Projects? 7 Service Contracts or Outsourcing 7 Management Contracts 7 Leases 8 BOT and Variants 8 Concessions 9 Resources 9 Chapter 5. What Are the Potential Applications of PPP at All Levels of Government? 11 National 11 Sub-national 11 Case Studies 11 Resources 12 Chapter 6. What Are the Key Policy Objectives and Issues in PPP? 13 The Broader Policy Objectives of Governance Reform within which PPPs Occur 13 Appropriate Policy Objectives of PPPs in E-Government 13 Table of Contents v Pitfalls to Avoid: Inappropriate Policy Objectives for PPPs 14 Case Study 14 Resources 14 Chapter 7. What Are the Key Legal and Regulatory Prerequisites for PPP in E-Government? 15 PPP Laws 15 PPP Central Body 15 PPP Guidelines 15 Contract Compliance and Dispute Resolution Procedures 17 Asset Ownership Guidelines 17 Labor Laws 17 Tax Laws 17 Digital Signature Laws 17 Sector Regulations 18 Independent Regulator 18 Competition Law 18 Stakeholder Consultation 19 Case Studies 19 Resources 19 Chapter 8. What Are the Institutional Roles and Responsibilities in PPP Projects? 21 Importance of Institutional Frameworks 21 PPP Institutions 21 Function of PPP Units 21 Alternatives to PPP Units 22 How the Role of Public Sector Institutions Changes in a PPP Environment 22 Case Study 24 Resources 24 Chapter 9. What Are the Major Political Constraints and Challenges to PPP? 25 Case Studies 25 Resources 25 Chapter 10. How Do You Identify and Structure Feasible PPP Projects? 27 Identifying Appropriate Business Models 29 Case Study 29 Resources 30 vi Public-Private Partnerships in E-Government: Knowledge Map Chapter 11. What Are the Financial Challenges and Constraints in PPP Projects? 31 Overview of PPP Project Finance 31 Payment Mechanisms 33 Reasonable Returns 33 Incentives for Investors 33 PPP Funding Facilities 34 Case Study 34 Resources 37 Chapter 12. What Are the Major Risks in PPP Projects and How Are They Managed? 39 Introduction and Risk Sharing 39 Categories of Risk 39 Roles and Responsibilities 41 Key Issues and Challenges 41 Case Studies 42 Resaources 42 Chapter 13. What Are the Best Practices in Tendering, Evaluating, and Negotiating PPP Transactions? 43 Case Studies 44 Resources 45 Chapter 14. What Are the Lessons Learned in Monitoring PPP Agreements? 47 Case Studies 47 Resources 48 Chapter 15. What Are the Gaps in our Knowledge of PPP in E-Government? 49 Knowledge Gaps 49 What Has Worked 49 …and What Has Not 50 Positive Developments in Bridging the Knowledge Gap 50 Chapter 16. Case Studies 51 Chapter 17. Resources and Links 53 Online Publications 53 Government PPP Institutions 55 Websites 55 Table of Contents vii List of Figures Figure 1 – South African Department of Labour E-Government Portal 6 Figure 2 – Traditional Public and Private Sector Roles without PPP 23 Figure 3 – Changed Public and Private Roles in a PPP Environment 23 Figure 4 – Project Identification Analysis Process 28 Figure 5 – Operation of the Philippines Project Development Facility 36 Figure 6 – Risk Allocation Process 40 Figure 7 – PPP Project Evaluation and Tendering Process 44 List of Tables Table 1 – Distinguishing Characteristics of Common PPP Models 7 Table 2 – Business Models for PPP Projects 29 Table 3 – IFC Supported Project Development Facilities 35 LIST OF CHARTS Chart 1 – Public Finance 31 Chart 2 – Corporate Finance 32 Chart 3 – Project Finance 32 viii Public-Private Partnerships in E-Government: Knowledge Map Preface The last few years have seen considerable research areas such as infrastructure, applications, institutions, and applications in the areas of Public-Private people, and policies. While it is important to Partnerships (PPPs) and electronic-government understand the nuances of each concept, it might (e-government). Rather than attempting to redefine help to recognize the fact that PPPs are often the these areas, or considering them as two distinct chosen path when the objectives are to ease the paradigms, the authoring of this Knowledge Map financial constraints on the government while at the (KM) and its accompanying Handbook is an effort same time increase its efficiency and effectiveness. For to bring a certain degree of convergence, and see this reason, PPPs are all the more important in the whether PPPs are, or can be, effective instruments context of the current financial crisis. However, it for e-government initiatives in a country. should also be noted that optimal benefits can only be derived when good governance, transparency, and The increasing emphasis on e-government is often political commitment are coupled with the existence directly attributed to the fact that the use and of appropriate policy, legal, regulatory, and institu- application of Information and Communication tional frameworks, and adequate local capacity Technologies (ICT) are now commonly accepted as (institutional, human, and financial) before such PPP powerful engines for economic growth. As govern- programs and strategies can be translated into action. ments embrace ICT as a means to accelerate the development process this also becomes foremost in This KM and Handbook should not be viewed as a the reforms agenda, and in their delivery of services prescription of best practices. They should be used to citizens, businesses, civil society organizations, and as guides, and lessons should be learned, in terms of other government agencies. how the good practices and experiences can be replicated or applied while undertaking a PPP The extensive experience and knowledge currently initiative in e-government. This KM is designed as a available allows us to focus on the various dimensions guide on the questions of, Why?, What?, and of e-government and the specificities that invariably Where?, while the Handbook answers the question need to be taken into account at the national, of, How?, to implement PPP projects in sub-national, local, and district levels. Similarly, there e-government. is also the need to understand the key aspects that play a significant role in the effectiveness and indeed We anticipate that the KM and Handbook will be the appropriateness of PPPs in such scenarios. This valuable resources for policymakers and practitioners KM and the Handbook help identify such specifici- across the world. Besides helping to address the needs ties, and highlight the importance of policies, in developing countries, they are also relevant for programs, services, and instruments that may middle income as well as developed countries since facilitate the engagement of the private sector into they draw upon a broad spectrum of programs and areas that were hitherto the domain of the govern- experiences across a wide range of sectors in a number ment. of countries. PPPs and e-government are complex exercises, which infoDev would like to acknowledge the contribution must encompass a variety of issues covering many of the Institute for Public-Private Partnerships (IP3) in delivering this KM and Handbook. Vivek Chaudhry Randeep Sudan Valerie D’Costa Task Manager Lead Reviewer Program Manager Preface ix x Public-Private Partnerships in E-Government: Knowledge Map Chapter 1 Introduction to the Knowledge Map Purpose What do we mean by E-Government? This “Public-Private Partnerships in E-Government: The World Bank defines e-government as “the use of informa- tion and communications technologies by governments to Knowledge Map” is designed to be an introductory enhance the range and quality of information and services guide to PPPs for public officials responsible for provided to citizens, businesses, civil society organizations, e-government initiatives. It is for those who are and other government agencies in an efficient, cost-effective and convenient manner, making government processes more seeking to enhance the quality, efficiency, and transparent and accountable and strengthening democracy.” affordability of those initiatives by employing PPPs. Context ■■ ■■ C  oncise thought pieces that provide analysis, Case studies that illustrate key concepts and,  ■■ Resources for users that want more detailed  The Knowledge Map (KM) is part of a broader information. infoDev initiative to expand the scope of e-government applications in all aspects of govern- These fourteen topics on frequently asked questions ment services. The Knowledge Map contains about PPP and e-government are enhanced by two extensive links to reference materials, and guide- sections compiling selected practical case studies and lines for contributing to the growing body of useful resources readily available to users of this knowledge about e-government. Knowledge Map. The idea for this Knowledge Map was born out of This Knowledge Map is designed for online use, so the recognition that while governments have been that readers can access the links and searchable successfully employing PPP models in other sectors database of resources. The Knowledge Map also such as water, energy and transportation, their serves as the basis for a separate Handbook for PPP’s application to the ICT and e-government sector is in e-government. While the Knowledge Map relatively new. Furthermore, given that the techno- answers the Why?, What? and Where? about PPP’s logical know-how required for most e-government in e-government, the Handbook serves as a User’s initiatives lies primarily with the private sector, Guide and answers the How? to implement PPP especially in emerging economies, learning how to projects in e-government. appropriately leverage that know-how is essential to ensuring the success of e-government. Outline The Knowledge Map is divided into fourteen (14) topics that address the essential characteristics of PPP. Each topic raises key questions or issues and then addresses them with: Introduction to the Knowledge Map 1 2 Public-Private Partnerships in E-Government: Knowledge Map Chapter 2 What is a PPP and What is its Rationale? Simply stated, public-private partnerships (PPP’s) for the price of a local phone call. Internet are contracts between a private sector entity and a use increased from 1 million users to 5 government body that call for the private partner to million users six months later. Private ISPs deliver a desired service and assume the associated install remote access server equipment at risks. The government is relieved of the financial and local exchanges, and Telecom Egypt config- administrative burden of providing the service, but ures a Free Internet number to cover the retains an important role in regulating and monitor- region. Users have no interface with the ISP, ing the performance of the private partner. no subscription or set-up fees, but simply pay for the services as part of their regular The popularity of PPP arose initially out of govern- Telecom Egypt telephone bill. ment need for financing to meet increasing demand ■■ Smart Village – Egypt’s Smart Village project for expansion and rehabilitation of physical infra- is a technology park that was designed to structure such as roads, energy facilities, and water remove obstacles to ICT firms investing in and sanitation networks. Employing PPP as a tool the Egypt’s ICT sector. Within two years of for meeting its obligations to citizens, governments its inauguration in 2005, the Smart Village have been able to avail themselves of state of the art hosts a growing number of IT companies technology and private sector expertise, while including multinationals, local and regional avoiding excessive strains on already limited budgets. enterprises, start-ups, training centers and Citizens enjoy improved service delivery without the Ministry of Information and large tax increases, and sometimes with decreased Communication Technology (MCIT). The user fees, and economic growth flourishes in sectors project is a PPP between the MCIT and a seeking to compete for lucrative PPP contracts. private consortium. Under the partnership, While the experience with infrastructure PPP has the MCIT provided 300 acres of land, been varied, public and private partners alike have or20% of the cost, and the private investors learned from early infrastructure PPPs. The model financed the remaining 80%. continues to gain acceptance, and is rapidly expanding in to all areas of public life, including ICT resources and e-government. Resources ■■  E-Government Services and Public-Private “ Partnerships Modeling,” by Thomas White, The  Case Study Institute for Public-Private Partnerships, http:// www.ip3.org/pub/publication2002_019.htm. ■■ Egypt’s ICT and E-Government Program – The ■■ Knowledge Services for Private Sector  goal of the Egypt’s ICT and e-government Development, by Rapid Response/World Bank. program is to create a national information Numerous links to articles, papers, and websites society. The Government of Egypt has adopted dealing with PPP. http://rru.worldbank.org PPP as the main driver for the majority of the ■■  National Council for Public-Private program’s implementation. The following are Partnerships, www.ncppp.org some components of the program that have been ■■  Canadian Council for Public-Private implemented through PPP: Partnerships, www.pppcouncil.ca ■■ Subscription Free Internet: went public in January 2002 offering access to the Internet Establishing the Appropriate Policy, Legal, Institutional & Regulatory Framework for PPPs in E-Government 3 4 Public-Private Partnerships in E-Government: Knowledge Map Chapter 3 Why Should Governments Consider PPP as a Tool to Promote E-Government? E-government and ICT projects are natural candi- interface with stakeholders. An e-government dates for PPP. When assessing projects, one has to system was conceptualized, in which retirees ask first: could the private sector finance the capital could go online and access the status of their investment required to design, install, and operate an retirement accounts, employees could access e-government or ICT Project? If so, would that be information about their benefits and pay grades, preferable to the public sector financing and the general public could access information operating the system, thus freeing up public sector regarding labor laws and regulations, and job resources for projects that have higher social returns? seekers could access job listing databases to And second: would the private sector be able to search for new employment. The system needed manage and operate an e-government or ICT to be interactive, so that stakeholders could project, under government supervision or regulation, submit forms and information, in addition to more efficiently than the government? If so, how can receiving forms and information. the government get the highest number of competi- tive bids so that PPP’s in e-government and ICT Through a competitive tender process, Siemens represent a best value and a technical innovation? was selected to design, build, and operate the new e-government system via a PPP methodol- In most countries, the rationale to undertake ogy. The budget for the Department of Labour e-government and ICT are compelling. All levels of under the old system became the budget for the government require modernization, new technolo- new Internet-based system. The selection of the gies, better efficiency, and improved services for service provider was based on which bidder citizens and customers. However, many of the would deliver the most services at the highest upgrades and modernization required is not only quality, within the budget provided. This capital intensive and expensive, but is also complex selection methodology reflected a basic principle to manage and outside of the scope and skill-set of of PPP, which is value for money. most government agencies. By having the private sector perform an e-government or ICT service, on Although outsourcing arrangements have raised behalf of, the government, a potential “win-win” resistance among civil service workers in other solution can be realized where the private sector countries, like the local government units in the financed and operates a system, the government is in United Kingdom, there was no such resistance a better position to “ensure” effective delivery of the among civil service workers in the department of service, and the customer/citizen is receiving a Labor. The new e-government system expanded higher quality service and is engaged more construc- the department’s service provision activities, tively in customer interfaces with the public sector. thereby keeping present workers employed, in more productive tasks, rather than keeping the existing level of service provision and making existing employees redundant by doing the Case Study outsourcing. ■■  outh African Department of Labour S The following is a replica of the South African Stakeholder Interface – As part of the South department of Labour e-government portal that African National Treasury PPP program, with resulted from the Siemens PPP contract. It assistance from the Treasury’s PPP Unit, the provides one point of access to numerous department of Labour endeavored to improve its services that previously were only accessible via Why Should Governments Consider PPP as a Tool to Promote E-Government? 5 Figure 1. South African Department of Labour e-Government Portal Source : www.labor.gov.za in-person visits to department offices. This ■■  ublic-Private Partnership Opportunities in P system greatly facilitates consumer access to the E-Government, November 2002, study commis- departments many services. sioned by the Government of Australia to examine PPP options for e-government. http:// www.agimo.gov.au/__data/assets/file/19014/PPP. pdf Resources ■■  E-government Observatory – Section of the IDABC Website that documents news, fact ■■  -Government in the Asia Pacific Region: An E sheets, and best practices from e-government Assessment of Issues and Strategies; includes initiatives throughout Europe. Includes examples discussion on how PPP contributes to of e-government PPP projects. http://ec.europa. sustainability of e-government. Page 17. http:// eu/idabc/en/chapter/140 www.apdip.net/resources/governance/egovernance- egovernment/APDIP-eGovPaper-Subhash.pdf 6 Public-Private Partnerships in E-Government: Knowledge Map Chapter 4 What are the Forms and Models for PPP Projects? The literature on PPP forms and models is vast, partner to perform specific, usually non-core tasks. and the terms used to describe each form vary Examples include government agencies such as, slightly. All sources would agree, however, that the utilities, ministries, and municipal offices that forms of PPP are characterized by the increasing contract out for website design and management, degree to which responsibilities and risk are turned capacity building, janitorial services, billing and over from the public to the private sector. The table tariff collection, or security services. These are below briefly summarizes PPP models and their usually short-term contracts and avail government characteristics. of private sector expertise. They save time and money spent on non-core services. The following are brief descriptions of each type of PPP model. Management Contracts Service Contracts, or Management contracts transfer responsibility for the Outsourcing operation and maintenance of government-owned entities to the private sector. Asset ownership and Service contracts are legally binding agreements commercial risk remains with the government, while between a government authority and a private management control and authority are transferred to Table 1. Distinguishing Characteristics of Common PPP Models Type of Duration What the Private Nature of Private Contract (years) Contractor Receives Contractor Performance Examples Service Contract 1–3 Fee from government for perform- Definitive, often technical type Website design and manage- (outsourcing) ing a non-core service of service ment, ICT Capacity Building Management 3–8 Fee from government for the Manage the operation of a Call center staffing; Seat Contract service and a performance-based government service Management, Parking incentive enforcement, regional water supply management Lease 8–15 All revenues, fees or charges from Manage, operate, repair, and Land for ICT Infrastructure De- consumers for the provision of the maintain, and maybe invest in, velopment, Online property service; the service provider rents a service to specified standards registries, Existing airport or the facility from government and outputs port facilities The government mostly pays the BOO & BOOT 15–25 service provider on a unit basis Construct and operate, to speci- ICT Infrastructure; e-procurement fied standards, the facilities nec- systems; e-business por- essary for service provision tals; Network of Kiosks All revenues from consumers Concession 15–30 service provision; the service Manage, operate, repair, Telecom operations and expan- provider pays a concession fee to maintain and invest in public sion, New airport or seaport fa- the government and may assume service infrastructure to specified cilities, Toll road or bridge existing debt standards What are the Forms and Models for PPP Projects? 7 a private partner, which applies its expertise to ture into a single point of entry via a website improve management systems and practices. (www.snb.ca), toll-free call centers, and 36 Compensation may be in the form of a fixed fee, as service centers across the province. SNB is run as in the case of a fixed fee management contract, or a public-private partnership with CGI Group may be linked to performance indicators. Inc., a private ICT consulting firm. It operates on a commercial basis, ensuring that the private ■■  ase Study – Seat Management for ICT C partner invests in the system and expands the Services: The State of Virginia in the United system to include more government services. The States employs seat management contracts for private contractor retains commercialization many of its government offices. Seat manage- rights for any technology developed. ment is a method of coordinating all the computer workstations in an organization by overseeing the installation, operation, mainte- nance of hardware and software at each worksta- BOT and Variants tion, and help desk support. The State pays a private operator a fixed fee for the service. The Build-operate-transfer (BOT), build-own-operate private contractor has the incentive to manage (BOO), build-own-operate-transfer (BOOT), the operation, as efficiently as possible, while the design-building-finance-operate (DBFO) and State saves on the expense of actually purchasing similar arrangements are contracts specifically computer equipment. The Internal Revenue designed for new projects or investments in facilities Service in the United States is currently planning that require extensive rehabilitation. Under such to release RFPs for seat management. arrangements, the private partner typically designs, constructs and operates facilities for a limited period from 15 to 30 years, after which all rights or title to the assets are relinquished to the government. Under Leases a build-operate-own (BOO) contract, the assets remain indefinitely with the private partner. The There are two primary ways in which lease agree- government will typically pay the BOT partner at a ments function. The private sector builds an asset and price calculated over the life of the contract to cover leases it to the State for operation. Alternatively, the its construction and operating costs, and provide a private sector operates an asset owned by the State reasonable return. and pays the State rent, collecting fees from end users. While the latter is common in physical ■■  ase Study – Poucatempo Citizen Service C infrastructure PPP projects such as water and Centers: Poucatempo, meaning “little time”, is a sanitation utility operations, the former is most program of the State of Sao Paolo in Brazil, common and most appropriate for e-government where citizen service centers have been devel- initiatives. In this case, the private sector may retain oped through partnership with two private the rights to the technology developed, and sell or companies, AMD and Intel. These centers are lease that technology to other clients, government or located in public places such as shopping malls, private, or the government may purchase the and have revolutionized Brazil’s tax system. technology outright and lease the technology to other ■■  Case Study – Bangalore One (B1): Inspired by government agencies. It is preferable for the private the success of Andhra Pradesh’s Electronic Service partner to maintain rights to the technology, as this Project (eSeva), B1 is a PPP between the State of keeps the government focused on its core functions, Karnataka in India and a private consortium of leaving development and commercialization of the CMS Computers Ltd. and Ram Informatics. Its ICT technology in the hands of private firms. goal is to provide a one-stop shop via public center kiosks for all Government-to-Business ■■  ase Study – Service New Brunswick: Service C (G2B) and Government-to-Citizen (G2C) New Brunswick (SNB) in Canada offers services in the state. The government staff e-government services to citizens by uniting responsible for providing services prior to B1 property assessment and registries, government were redeployed into the service of B1 when the services, and geographic information infrastruc- project began. The private operator will be paid a 8 Public-Private Partnerships in E-Government: Knowledge Map fixed fee for each transaction carried out. UTI Estonian Telephone Company, the company Bank is also providing financing by paying the helped to ensure connectivity in rural and salary of 200 kiosk employees. The bank expects scarcely populated areas in return for lucrative to make up the costs out of the one-day float it urban contracts. The government is actively gets to hold on the cash collected. http://www. extending connectivity throughout the nation. karnataka.com/govt/bangaloreone.shtml By 2002, Estonia had approximately 300 public Internet access points providing free email and Internet access. These points also serve as e-government access points where citizens can Concessions conduct the majority of their transactions with the public administration. Under a concession, the private partner, or”Concessionaire”, bears the overall responsibility E-government PPPs must include partnerships for for the services, including operation, maintenance, management and expansion of existing ICT and management, as well as capital investments. The infrastructure such as improving mobile technology, fixed assets either remain the property of the public and expanding ICT services to rural areas. Without authority or revert to public ownership at the end of a wide-spread ICT technology, e-government the concession period. The main advantage of a encours the risk to be limited to wealthier urban concession is that it passes full responsibility for populations and thus widen the digital divide. operations, maintenance, rehabilitation, renewal, and service expansion to the private partner and creates incentives for efficiency in all activities. Therefore, concessions are an attractive option where Resources large investments are required. ■■ “  A P3 Primer: Why Are Countries Interested in ■■  ase Study – Estonia Rural Connectivity: C P3?” Jonathan Loew and Matthew Hensley, the Estonia has one of the highest degrees of Institute for Public-Private Partnerships, 2002. connectivity in Europe and ranks among the top http://www.ip3.org/pub/publication002.htm 20 countries worldwide for teledensity. This is ■■ “Public Good Through Public-Private  the result of the tremendous focus placed on the Partnership,” J. Satyanarayana, National Institute development of a core network infrastructure for Smart Government, 2004. http://www.nisg. and provision of access to the general popula- org/docs_pdfs_ppts/ppts/Public%20Private%20 tion. Through a concession agreement with the Partnership%20--%20Feb%202004.pps. What are the Forms and Models for PPP Projects? 9 10 Public-Private Partnerships in E-Government: Knowledge Map Chapter 5 What Are the Potential Applications of PPP at All Levels of Government? In many countries ICT and e-government is a literally billions of dollars of potential transactions national level function, where “command and and cost savings, if the capacity existed, to imple- control” of the economy is still highly centralized, ment e-government and ICT projects effectively. like Egypt, or where the economy and the market for ICT and e-government are too small for true economies of scale, like Jamaica, Barbados, Gambia. The reality is that, in just about every country, there Case Studies: are various jurisdictions and or “spheres” of govern- ment where e-government PPP’s can flourish, be it ■■  nline Tax Filing in Chile – The Internal O the national, regional, or municipal level. Revenue Service of the Government of Chile began offering online tax filing services in 1999. In its initial year, only 5 percent of taxpayers used the online services. By 2005, however, the National IRS reported that more than 95 percent of taxpayers declared income and taxes online. This At the national level, a range of e-government PPPs remarkable rate of online use suggests that the are possible including national undertaking by system is accessible to the public and very easy to national agencies such as the Defense department use. Initially, one of the biggest barriers to (IT systems), Internal Revenue Agencies, (e-filing providing the service was public Internet access. and computerization), Procurement Agencies, The IRS established a national public-private (e-Procurement), and the like. It is estimated that network of more than 880 centers, providing up governments can save billions of dollars at the to 3,000 connectivity points. Taxpayers were national level by outsourcing or divesting certain able to complete their online tax filings from national agency functions or services to the private these centers either free of charge or for a sector via PPP’s. nominal cost, with the help of trained staff. ■■  Singapore eCitizen Portal – The Singapore eCitizen Portal (www.ecitizen.gov.sg) is a good example of a “one-stop shop” e-government Sub-national website, providing citizens with access to a very wide range of fully online services. Launched in At the sub-national level, including state, regional, 1999, the portal is owned by the Ministry of local, a number of PPP projects are viable in the Finance and managed by the Infocomm ICT and e-government field. In fact, many innova- Development Authority of Singapore (IDA). While tive projects have been undertaken at the local level not a “textbook example” of an e-government which have “liberated” funding from traditional tax PPP, the IDA functions much like a private sources and moved the financing of municipal partner to a PPP as it is government by a Board services “off balance sheet” whilst improving of Directors largely comprised of heads of major efficiency. Examples include local issuance of drivers’ private sector firms operating in Singapore. licenses and other motor vehicle services, voting, ■■ US State Government Web Portals – Each of  property registration, utility services, emissions the State Governments in the United States has controls, education, and parks and recreation. In an online website for citizens to access govern- countries where service delivery is delegated ment services. TexasOnline (www.texasonline. substantially down to the local level, there are com) was named the best State e-government What are the Potential Applications of PPP at all Levels of Government? 11 site in the Nation, in a 2006 study conducted Resources by Brown University. TexasOnline is a PPP between the Texas department of Information ■■  Global E-Government, 2006,” Darrell M. “ Resources and a private partner, BearingPoint. West, Brown University, 2006, http://www. The PPP contract allows for various options for insidepolitics.org/egovt06int.pdf funding; charging subscription fees to some ■■ “Public-Private Partnerships and the Role of  government agencies, and allowing other State and Federal Legislation in Wireless agencies to offer their services free on the Municipal Networks,” by Andrea Tapia, Matt portal. The latter provide services that serve the Stone, Carleen Maitland, 33rd Research public good or whose services are traditionally Conference on Communication, Information offered at no cost to the public. After and Internet Policy, Paper 6269. http://web.si. BearingPoint recouped its initial setup costs, umich.edu/tprc/papers/2005/431/TPRC_Tapia_ the state of Texas began to share in the revenue Stone_Maitland.pdf generated by subscriptions to the portal. ■■ “TexasOnline Passes $1B Mark,” Austin Business  Reports indicate that by 2004, TexasOnline Journal, April 26, 2004. had generated $1 billion in revenue for the ■■ “Public-Private Partnerships, E-Government,  state and was processing one million transac- and Privacy,” by Jim Dempsey, Center for tions per month. Democracy and Technology, Washington, DC, ■■ Andhra Pradesh IT Corridor – An IT corridor  2006. in Andhra Pradesh, where the government, ■■ “Public Private Partnership Projects in Germany:  motivated by a need for more IT infrastructure, A Survey of Current Projects at Federal, Land, provides a rebate on the cost of government land and Municipal Level,” Deutsches Institut fur to IT and ITES companies. http://www. Urbanistik, 2006. http://www.difu.de/english/ expresscomputeronline.com/20030428/infra09. occasional/06ppp.pdf shtml ■■ “Building Local E-Government through  Public-Private Partnerships,” Information Technology in Developing Countries, Vol. 15, No. 2, November 2005. http://www.iimahd.ernet.in/ egov/ifip/nov2005/article7.htm 12 Public-Private Partnerships in E-Government: Knowledge Map Chapter 6 What are the Key Policy Objectives and Issues in PPP? The Broader Policy Objectives through transparent, competitively-procured PPPs. of Governance Reform within which PPPs Occur PPPs therefore, are one important part of a much- broader framework to separate or un-bundle key In order for Public-Private Partnerships in roles of governance: planning & policy-making; e-government to be successful, they must be firmly regulation & performance monitoring; ownership of rooted within an overall policy framework of reform assets and contracting for their operations & for the delivery of public services and the adminis- management, and; the operation and management tration of government. On their own, PPPs can help of those services and procedures. Without a dedicate improve the efficiency of a specific public service or effort to realize these broader policy objectives, PPPs governmental administrative procedure, but unless can add processing capacity and delivery capacity, PPPs occur within the context of an overall policy but they will likely be unable to contribute signifi- framework that supports broader reforms, beyond cantly to improving efficiency, productivity, just improved efficiency in one specific service or performance, and quality throughout the sector. procedure, the goals and objectives of PPPs in E-Government will remain limited. PPPs can realize these objectives best when they are Appropriate Policy Objectives part of an overall policy framework of reform in the delivery of public services and the management of PPPs in E-Government of governmental administrative procedures. Key The policy objectives of PPPs in e-government could elements of these policy frameworks should include: include: ■■  mproved efficiency in the delivery of public I ■■ G  overnment ministries that focus on policy- services or the performance of public administra- making and planning, but that delegate tive procedures; operational decision-making to public con- ■■  Expanded access to public services and to public tracting agencies, their Boards and their information; managers; ■■ Greater transparency & reduced corruption  ■■ Regulation & performance monitoring of these  through improved access to public information; public contracting agencies and any private ■■ Improved quality of service by both measuring  service providers (PPPs) that is done by an and achieving key performance indicators; independent regulatory body, or by a dedicated ■■  Reduced costs in the delivery of public services or contract compliance office (CCO); the execution of public administrative proce- ■■ Ownership of a sector’s underlying, long-term  dures; assets by a public contracting agency, utility, ■■ The transfer of key risks away from the public  parastatal, or asset holding company, which is sector’s limited resources and onto the private responsible for service delivery or contracting party that can best manage them; with private companies, through PPPs, for the ■■ Maximizing Value for Money through reduced  delivery of these services; costs and lower risks to the public sector; ■■ Operation of public assets and networks, and the  ■■ Improved competitiveness of the overall gover-  delivery of public services by private contractors nance and economic framework; What are the Key Policy Objectives and Issues in PPP? 13 ■■  mproved commercial performance in the delivery I government’s new administrative capital, and of public services and execution of public Cyberjaya, a new city created especially to attract administration, such as achieving levels of private international multimedia, communica- cost-recovery specific performance indicators; tions, technology, and knowledge-based firms. ■■  Transfer of technology and improved capacity of Supporting the new mega-project was the the public sector to better manage public services government’s electronic governance policy, and administrative procedures which sought to transform the relationship between the government and its citizens according to new, indigenous, non-Western models of development. As with its past Pitfalls to Avoid: Inappropriate infrastructure mega-projects, the Government of Policy Objectives for PPPs Malaysia relied heavily on partnerships with the private sector to: (1) develop and invest in the PPPs in e-government should not be viewed a simply MSC in order to create the new KBE, and a new source of money from the private sector, who (2) provide the infrastructure, and operate the can somehow afford to provide services that the applications and services of the new government is unable to perform or provide. While e-government program. The case illustrates a many PPPs do entail new investments by private number of successes in being able to attract contractors, either the government or the public will private investments and PPPs in e-government. still need to repay the costs of those investments through the prices or tariffs set in the PPP contract. Nor are PPPs capable of taking proposed public projects, services, and procedures that are determined Resources to be technically, economically, environmentally, and socially unfeasible and to somehow make them ■■  alaysia Office of the Prime Minister M viable. Rather, PPPs are a focused decision about Economic Planning Unit – The entity respon- what is the best means to deliver services and sible for planning and implementing PPP in procedures. Any projects for which PPP approaches Malaysia including many innovative ICT and are being considered should be projects that are e-government schemes. For a look at the EPU already established as clear priorities for the govern- and their many program and initiatives, check ment; projects that are already technically, economi- out www.epu.jpm.my cally, environmentally, and socially feasible. ■■  The Electronic Procurement System of the Government of Malaysia – Malaysia is a world leader in e-government, especially e-procurement. Established as a PPP the Case Studies e-procurement system or “e-perolehan” has transacted thousands of projects and resulted in ■■ Malaysia’s Multimedia Super Corridor (MSC) significant costs savings. Check out this unique – As the centerpiece of the government’s plan to website to learn more at home.eperolehan.com transform the basis of its economic competitive- ■■ Partnerships Victoria Policy (2000) – This is a  ness from manufacturing to a knowledge-based concise and well-articulated example of a sound economy (KBE), in 1996 the Government of statement of the policy objectives of PPPs across Malaysia announced the plan to develop a new a range of sectors, including information & world-class MSC. Encompassing an area 50 km communications technology and e-government- long by 15 km wide, the new MSC stretches related services. The policy covers key objectives from the Petronas Towers in the north of the in value for money, protecting the public new, modern Kuala Lumpur City Center to the interest, risk allocation, and public sector new Kuala Lumpur International Airport accountability. http://www.partnerships.vic.gov.au/ (KLIA) in the south. It includes the two new CA25708500035EB6/WebObj/Policy/$File/Policy. Greenfield cities of Putrajaya, the national pdf 14 Public-Private Partnerships in E-Government: Knowledge Map Chapter 7 What are the Key Legal and Regulatory Pre-requisites for PPP in E-Government? International experience has proven that a well- ownership, financial requirements, public roles designed PPP enabling environment includes a legal and responsibilities, and dispute resolution and regulatory framework that clearly articulates responsibilities. government policy on PPP in e-government. Specifically, there are critical legal and regulatory prerequisites that are usually in place in robust e-government PPP programs at any level of govern- PPP Central Body ment. These include: Many PPP frameworks include a coordinating body, ■■ PPP Laws often created by law, to manage PPP transactions. ■■ PPP Central Body The PPP Central Body or “PPP Unit” generally ■■ PPP Guidelines serves as the focal point to spearhead the PPP ■■ Financial Instruments process either across sectors or even within a specific ■■ Contract Compliance and Dispute Resolution sector or city. Procedures ■■ Asset Ownership Guidelines In Ireland and in South Africa, PPP Units were ■■ Labor Laws established within the finance ministries, and their ■■ Tax Laws function is to ensure that local and provincial ■■ Digital Signature Laws governments receive assistance in planning and ■■ Sector Regulations implementing PPP as required in the Public ■■ Independent Regulator Financial Management Acts. In the United ■■ Competition Law Kingdom, the Private Finance Initiative or PFI was a ■■ Stakeholder Consultation form of centralized PPP Unit. The PFI started as a government program, became a policy instrument, The following section includes a brief discussion of and eventually, was privatized and converted into a each of these legal and regulatory prerequisites. non-profit entity responsible for guiding the PPP process into a more mature phase of development. The role and functions of PPP Units is discussed in PPP Laws greater detail in Section 8. All forms of PPP, from the most capital intensive to the least capital intensive are usually covered under a “Law on Concessions”. While it used to PPP Guidelines be common that each sector would have its own law on PPP or concessions, most countries are Establishing guidelines on how PPP arrangements increasingly establishing multi-sector concession are planned, approved, and awarded creates a laws or “umbrella” legislation to harmonize the key predictable environment in which private partners legal issues in PPP across sectors. At a minimum, a are willing to engage. The South African National concession law will clearly establish what sectors Treasury Public-Private Partnership Unit is a good are eligible for PPP, the form of eligibility, eligible example of how PPPs have been enabled through PPP approaches, the rights and obligations of the clearly established guidelines. Below are some of the parties, how projects are approved, limits to fundamental areas where standardized guidelines What are the Key Legal and Regulatory Pre-requisites for PPP in E-Government? 15 have served governments in effectively carrying out used to varying degrees by PPP units world- e-government PPP projects: wide. The Canadian Council for Public- Private Partnerships has published helpful ■■ P  roject Identification – Potential e-government guidelines for determining how and when to PPP projects are best identified by the govern- employ the PSC. To download these guidelines, ment agency that will be responsible for click here. http://strategis.ic.gc.ca/epic/internet/ implementation. For example, if the depart- inpupr-bdpr.nsf/en/h_qz01557e.html. ment of Transportation needs an electronic Partnerships Victoria (Australia) has published system for managing its employee payroll, the similar guidelines which are available here. department itself must express this need rather ■■ Value for Money Framework – The Value for  than rely on any central PPP body for project Money Framework, employed by the identification. Government of Queensland in Australia, ■■  Project Prioritization – Given that there will applies to all infrastructure projects over $100 likely be needs for more than one e-government million over the life of the asset. It encourages PPP project, there must be a process for discipline such as focusing on outputs, under- determining which are priorities vis-à-vis standing whole of life costing, identifying risks available government resources and already and appropriately allocating these risks to the established government policies. party best able to manage them. It provides a ■■ Project Feasibility Studies – Once potential  rigorous and transparent analytical framework projects have been identified and prioritized, to ensure the government obtains the best value there should be clear guidelines for carrying out for money. http://www.coordinatorgeneral.qld. project feasibility analysis. gov.au/pp_partnerships/policy_value.shtm ■■ Project Approval – Once a project has been  determined to be financially and technically While it is true that a poorly prepared PPP project feasible, there must be clear guidelines that can present an enormous cost to government, some determine which government department or PPP practitioners have noted that elaborate systems agency will approve the project’s readiness for that measure value for money risk becoming overly the procurement stage. bureaucratic and regulatory, and could stifle project ■■  Project Procurement Guidelines – These guidelines preparation and deal flow. must include standardized bidding documents, procedures for announcing the project for public ■■  overeign Guarantees – Sometimes national S tender, transparent procedures for evaluating governments will offer sovereign guarantees to private sector bids, and methods for contract reduce public sector financial support and ensure award, including specified time frames for payment to the private operator or lender in a project mobilization. PPP project, in case of government default on contractual obligations or in case of a natural disaster, or a financial crisis such as a severe currency devaluation. Governments have felt Financial Instruments that such guarantees were necessary to secure private sector financing for projects where the Governments have developed some helpful financial borrowing sub-national entity is not itself credit instruments to assist them in making good decisions worthy, but where the investment is badly about what PPP projects to pursue and to attract needed. However, experience has shown that private partners to those deals. such guarantees often expose governments to unnecessary levels of risk. So many have ■■ P  ublic Sector Comparator (PSC) – The PSC is a established only limited circumstances in which method used to calculate the “in house” costs to sovereign guarantees will be offered in PPP government of preparing and delivering a Projects. There are two criteria to look for when service. Knowledge of such costs is essential determining if a sovereign guarantee is appropri- when determining whether or not to pursue a ate: (1) Does a long-term evaluation of the PPP project, and determine if the project borrowing entity’s performance indicate that it represents a good value for money. The PSC is will be able to recoup its costs? (2) Does the 16 Public-Private Partnerships in E-Government: Knowledge Map project involve long-term financing, such as loan Labor Laws terms of more than 10 years, with risks that are difficult for the market to assess due to its In some environments, PPP can result in the unique character? displacement of public sector employees. Another For further reading on the topic of sovereign concern of many public employees is maintenance of guarantees, please refer to the World Bank’s seniority, pensions, wages, benefits and collective website on Sub-sovereign and Municipal bargaining rights. Governments worldwide struggle Finance. The IMF has also published with how to address labor concerns when introducing Guidelines for Public Debt Management. PPP. While labor laws differ from country to country, a few basic strategies are available to alleviate labor opposition to PPP. First, carefully implemented stakeholder consultation policies that involve labor Contract Compliance and organizations from the start of PPP initiatives are Dispute Resolution Procedures essential. Second, there may be room to revise labor laws themselves that make them more amenable to From the moment a contract is awarded, it is vital functioning within the auspices of a PPP arrange- that the government and the appropriate regulatory ment. For example, in some countries, public officials bodies ensure compliance with the terms of the who leave public service to work for a private contract and the prevailing laws and regulations. employer are often prohibited from maintaining their This can be done in two ways: regulation by position in public employee pension funds. In the contract, meaning the contract is the dominant case of a PPP where government employees are document that states the key terms and conditions, transferred to private employers, often performing the or regulation by decree or statute, often done under same public service, prohibiting their participation in a regulatory body. The contract or regulatory decrees the pension scheme generates unnecessary opposition must also state what the dispute resolution proce- to the PPP. The solution is to change the labor laws dures will be. PPP Monitoring and Evaluation is and allow them to remain in the pension fund. discussed in greater detail in Section 14 of this Knowledge Map. Tax Laws Asset Ownership Tax laws can be drafted or amended to create an incentive based enabling environment for PPP. For Typically with PPP public and private sectors join example, in the US education sector, a major tax bill to design, build or rehabilitate, finance and operate passed in 2000 opened up tax-exempt bonds to new or improved facilities, such as schools, hospi- private investors seeking to build and lease public tals, toll roads and power generation plants. Over education facilities. Prior to this bill, access to these the life of the project, usually 25–30 years, the bonds was limited to state and local governments. In private financier owns the asset and the private the e-government sector, tax laws can be amended to operator receives periodic payments for asset reduce import and duty taxes on computer, server, operation. At the end of the contract, the assets and other Internet-based hardware as well as revert to public ownership. encourage greater investments in technology based solutions for improved service delivery and “partner- In the case of e-government, where assets are ships” with government. likely to be ICT infrastructure or systems with great potential for roll-out to clients other than government, there are needs for some allowance for asset ownership by the private partner during Digital Signature Laws and after the end of its contract with the private sector. Some e-government PPP projects will require the use of digital signatures (define), while others will not. In this case, the government must have a digital What are the Key Legal and Regulatory Pre-requisites for PPP in E-Government? 17 signature law on record that gives digital signatures parties. Processes and rules governing the the same level of trust and assurance as the hand- selection of regulators must be transparent and written ones. demonstrate the body’s independence from special interest groups. ■■  ase Study – Estonia National ID Card: PPP C ■■  Transparency: The mandate of the regulatory Models can be used to design and implement a body and its processes should be clearly specified digital signature and identity program, as in in all pertinent legislation. Additionally, there Estonia. Estonia’s National ID Card scheme is should be clear procedures for the publication managed by a PPP between the Citizens and explanation of all decisions make by the Migration Board (CMB) and two private regulators. partners: SK, a joint-venture company, and ■■  Accountability: A well-established and publicized TRUB Baltic AS. The CMB issues the identity public participation process and an accessible cards to citizens, SK manages the associated appeals process will provide a system of checks electronic services, and TRUB Baltic AS and balances ensuring that the regulatory body manufactures the card. The PPP is governed by fulfils its mandate. It is especially important that Estonia’s Digital Signatures Act. the courts have the authority to determine the merits of appeals so that the regulatory body Such regulations, however, can be burdensome to will not be bogged down with unnecessary governments, and should not be seen as prerequi- litigation. sites for either PPP or e-government. ■■  Consistency: All regulatory decisions should be consistent with the regulatory body’s goals and purposes and applied in a consistent fashion to clearly demonstrate its goals and principles. This Sector Regulations consistency will reduce regulatory uncertainty and ensure that, when any change in method is Each sector is governed by its own regulations, rules, required, it can be accomplished in a manner and procedures. Most countries are moving either to that is acceptable to all parties. sector specific or multi-sector regulation. Across countries, there is no clear best approach, and each In some countries, PPP programs and transactions country must select the institutional strategy that are developed ahead of the establishment of best meets its own bureaucratic context, as well as regulatory bodies. While not ideal, that need not be the ambitions of its e-government policy. In general, fatal. What is key, in this instance, is to ensure that it is not advisable to create an entirely new unit, the PPP documents and contracts used in the such as a specialized e-government PPP unit, if it bidding stages reflect the forms and standards of can be avoided (it adds to public sector overhead regulation that one contemplates using in the costs)—especially if a capable cross-sector PPP unit, future. In short, it is important to establish a such as within a Ministry of Finance, already exists. suitable regulatory regime within the body of the contract. While this is not a substitute for an independent regulatory body and policy, sector by sector, it is a starting point in the process of Independent Regulator establishing sound and mature regulatory institu- tions that are consistent and complementary with The presence of an independent regulator is an the PPP framework. important component of the PPP framework. While regulatory structures vary from country to country, there are four key elements of a regulatory frame- work that is open and conducive to PPP transac- Competition Law tions in any sector: Competition Laws drive market structure. Most ■■ I  ndependence: In order for any regulatory body ICT and e-government PPP’s are either a result of to be truly effective, it must be free to make deci- competition law or policy that “unbundled” the sions without undue interference from outside market for services or they are a result of an 18 Public-Private Partnerships in E-Government: Knowledge Map inadequate existing ICT or governance sector where regulatory framework for the participation of e-government PPP’s are in response to customer private sector entities in the development of demand. infrastructure projects and the provision of services that are normally the responsibility of the government. Stakeholder Consultation Another key component of a solid regulatory Resources framework for PPP in e-government is a system for consultation with stakeholders prior to and during ■■ Managing Digital Identities and Signatures project implementation. Governments around the through Public/Private Partnership, Cybertrust, world are increasingly recognizing that the need to 2005. http://www.cybertrust.com/media/case_ understand and engage stakeholders in the process studies/cybertrust_cs_easton.pdf of a public sector reform in order to build support ■■  UNCITRAL Model Legislative Guide on for change and to ensure long term sustainability. Privately Financed Infrastructure Projects, 2003. Stakeholder consultation is a particularly impor- http://www.uncitral.org/pdf/english/texts/procurem/ tant element of any PPP program, and the pfip/model/annex1-e.pdf following often results from good consultation ■■ “Is the Public Sector Comparator Right for  programs: Developing Countries, James Leigland and Chris Shugart, Gridlines, Note No. 4, April 2006. ■■ I  ncreased demand responsiveness of public http://www.ppiaf.org/Gridlines/4africa.pdf. services. ■■ “Champion the Philippine BOT Law,”  ■■ Growing support for reform among key  Coordinating Council for Private Sector constituents. Participation, The Institute for Public-Private ■■  Improved coordination between various Partnerships, 2001. http://www.ip3.org/pub/ branches of the public sector. publication014.htm ■■ Stakeholders who are prepared for the changes  ■■  Guidelines for Using the Public Sector that will come about as a result of PPP. Comparator, Government of Canada, http:// strategis.ic.gc.ca/epic/internet/inpupr-bdpr.nsf/ In practice, targeted, customized stakeholder en/h_qz01557e.html consultation is often seen as cost prohibitive by ■■ “Value for Money Framework,” Government of  governments, and the result is that consultation and Queensland, Australia http://www. communication is often undertaken in a cursory coordinatorgeneral.qld.gov.au/pp_partnerships/ manner if at all. policy_value.shtm ■■  World Bank website on Sub-sovereign and Municipal Finance, http://web.worldbank.org/ WBSITE/EXTERNAL/EXTABOUTUS/ Case Studies ORGANIZATION/EXTINFNETWORK/0,,cont entMDK:20535853~menuPK:1827920~pagePK ■■  outh African Public Financial Management S :64159605~piPK:64157667~theSitePK:489890, Act and PPP Framework – The Public 00.html Financial Management Act, issued in 1999, ■■  Guidelines for Public Debt Management, regulates all national and provincial level PPPs in International Finance Corporation, http://www. South Africa. This act also established the imf.org/external/np/mfd/pdebt/2003/eng/am/index. National Treasury PPP Unit and has issued a htm PPP manual and standardized guidelines for ■■  “A Strategic Framework for Consultation and government departments to be followed Communication,” Kathleen Slattery, Institute throughout the PPP project life cycle. for Public-Private Partnerships, 2002, http:// ■■  Philippines BOT Law – Act 6957 of the www.ip3.org/pub/publication2002_009.htm Government of the Philippines, often referred to ■■  “Putting Federal Public-Private Partnering on as the BOT Law, spells out the policy and Track,” by Roger D. Feldman, Construction What are the Key Legal and Regulatory Pre-requisites for PPP in E-Government? 19 Business Review, 2004. http://www. ■■ The Philippines BOT Law, 1993, http://www.  constructionchannel.net/Ashley/CBR%20 botcenter.gov.ph/botlaw/index.htm. Magazine/Construction%20Business%20Review/ ■■ Partnerships Victoria Guidelines for Employing  Ashley/Public-Private%20Partnerships.htm the Public Sector Comparator http://www. ■■  “New Tax Law Boosts School Construction with partnerships.vic.gov.au/CA25708500035EB6/0/E Public-Private Partnerships,” Ronald D. Utt, The 4C501A76F826D77CA2570C0001B45EA?Ope Heritage Foundation, Aug 2001. http://www. nDocument. heritage.org/Research/Taxes/BG1463.cfm ■■  “Digital Signatures Act,” Government of Estonia ■■ South African Public Financial Management  – http://www.esis.ee/legislation/digital_signatures_ Act, 1999, http://www.treasury.gov.za/legislation/ act.pdf acts/pfma/default.htm. 20 Public-Private Partnerships in E-Government: Knowledge Map Chapter 8 What are the Institutional Roles and Responsibilities in PPP Projects? Importance of Institutional placement clearly communicates to local govern- ment and to private investors the national govern- Frameworks ment’s commitment to private sector partnerships. Examples of these departments or PPP units are Institutionalizing PPP can arguably be the determin- found worldwide. They range from national level ing factor in the success of PPP projects. As with any PPP units, such as Ireland’s Central PPP Policy major policy change or initiative, governments must Unit and South Africa’s National Treasury PPP have an institutional strategy to ensure that the Unit to provincial level agencies such as change takes place. Simply stated, PPP does not just Partnerships Victoria in Australia, and the Gujarat happen. ESD Services Limited, a private joint Infrastructure Development Board in India. venture (JV) company, did not approach the Government of Hong Kong and offer to design ESDlife, a web portal for government services. Rather, the Government of Hong Kong recognized a Function of PPP Units need to offer its services online, saw that the private sector was best equipped to design and operate the While individual operating policies in PPP units portal, and most importantly, availed itself of its insti- varies from country to country, they serve to answer tutional resources in managing PPP contracts. Private three main questions: investors do not just come to governments ready to invest (except in the case of unsolicited bids), but ■■ I  s the project affordable? rather willingly partner with governments where a ■■ Is the project a priority for the government?  clearly identified pathway for institutional collabora- ■■ How can the project be implemented?  tion has been established. This is true for any PPP, be it in e-government or in solid waste collection. Project Affordability – The PPP Unit, either through its staff or through independent contractors There are two main themes to consider when will conduct financial pre-feasibility analysis, and discussing institutional roles in PPP projects. First, financial feasibility studies to determine if the there is the role of independent or departmental project is economically viable. PPP institutions in supporting the development and implementation of projects. Second, there is the role Project Prioritization – Once a government depart- of the public institution involved in a PPP project, ment proposes a PPP project, the PPP Unit will and how it must manage its transition from service liaise with other departments and/or the Ministry of provision to contracting monitoring. Finance to determine if the project is an overall priority for government. For example, the depart- ment of Transportation may see a need for a highway investment project, but the PPP Unit has PPP Institutions the responsibility of evaluating that need along with other investment needs in the department of Health The best way to define clear institutional roles and or Education. The PPP Unit has the benefit of an responsibilities for PPP is to form a designated “arms length” perspective. department or task force within government. In the case of national level PPP’s, the Ministry of Finance Project Support – The PPP Unit serves as a center is the best place for such a department, as its of expertise for all government departments in What are the Institutional Roles and Responsibilities in PPP Projects? 21 identifying, structuring, and implementing viable Philippines department of Trade and Industry PPP projects, including deal flow, capacity building. was created via the BOT Law to coordinate and monitor BOT projects and to guide government ■■  ase Study – Irish Central PPP Policy Unit: The C agencies and Local Government Units (LGUs) Government of Ireland established the Central in the preparation, development, and monitor- PPP Policy unit to lead, drive, and coordinate the ing of BOT projects. Its main role is to identify nation’s PPP process. It’s key function is to develop financial, technical, institutional, and contrac- the legislative framework, technical and policy tual solutions to help government agencies make guidance to support the PPP process and dissemi- BOT Projects work. In addition to having nate best practice in PPP. Dedicated units with re- specialized groups within the BOT center for sponsibility for individual sectors are established in transport and environmental infrastructure, the key departments of State. Government depart- Information and Communication Technology ments are generally expected to drive the process Projects Group (ICTPG) oversees PPP projects in their respective sectors, having regard to the in the IT sector. One specific e-government guidelines on the process and the need for requi- initiative spearheaded by the ICTPG was the site sanctions from the department of Finance. In development of the Generic Information July 2005, the Minister for Finance announced a Systems Strategic Plan to boost the Philippine new initiative to support PPP projects by setting LGU’s ability to develop and package ICT up a single specialized “Centre of Expertise” to be Projects for PPP financing and implementation. located in the National Development Finance Agency (NDFA). It will be responsible for the procurement of all new PPP projects in the central government area, with the exception of roads and Alternatives to PPP Units rail where existing arrangements with the NRA and RPA will continue. Are PPP Units necessary to ensuring successful PPP The Central PPP Unit chairs two key groups processes? Given that that one rationale for PPP is to which are crucial to the effective management of lessen bureaucratic red tape in the delivery of public the PPP process: An Inter Departmental Group services, we have to agree that while PPP units are on PPPs representing all public service sectors, indeed useful, they are not prerequisites to successful whose role is to bring together key decision PPPs. In Australia, for example, the Sydney Water makers to ensure that there is coherence and Corporation identifies and prioritizes its need for consistency across the public service in develop- major infrastructure projects, and recommends ing partnership arrangements with the private whether or not PPP financing and implementation sector; and a Public/Private Informal Advisory vehicles are required. These recommendations are Group on PPPs which includes representatives of forwarded to the Board of Sydney Water for careful employers organizations (IBEC), the Trade review. If the project requires major investment, it is Union Congress (ICTU), the construction and usually reviewed by the Cabinet, and is subject to a engineering sectors (the CIF). financial veto by the New South Wales State Treasury ■■  Case Study – South African National Treasury responsible for maintaining the State’s credit rating. PPP Unit: The South Africa PPP Unit oversees This system is effective in quantifying and minimiz- the development and implementation of PPP ing direct state risk. projects, and serves as a center of knowledge on capacity building to stimulate their use and improve their quality. The CEO of the PPP Unit notes that since the establishment of the unit, How the role of public sector the PPP ‘deal flow’ has increased to the extent that private investment in public infrastructure institutions changes in through PPPs, has tripled from 6 billion ZAR a PPP environment between 1999 and 2004 to a projected ZAR 18 billion from 2005 to 2008. When PPP is used as a policy tool, the traditional ■■  Case Study – Philippines BOT Center: The role of the government agencies that previously was Build-Operate-Transfer (BOT) Center of the directly providing the service must change. 22 Public-Private Partnerships in E-Government: Knowledge Map Figure 2. Traditional Public and Private Sector Roles without PPP Government Line Ministry Sets sector policies; Finances sector investments; Construction; Regulation; Assumes all Financial Risk Consumer Governmentowned Consumer service Receives low-level of service; provider (SOE) Receives low-level of service; Often pays noncommercial Often pays noncommercial tariffs Operates facilities, Collects user fees, tariffs Provides minimum maintenance Figure 3. Changed Public and Private Roles in a PPP Environment Government Line Ministry Private Sector Public Profit Finances Sets Policy Interest Credit Enhancements Constructs Facilitates approvals and permits Operates PPP Technical Regulation Collects User Fees Contract Economic Regulation Assumes commercial, construction, and operational risk PPP Unit Consumer Often in Ministry of Finance Manages process of identifying, tendering, negotiating, Receives higher level of service and monitoring PPP contract Pays commercial tariffs Helps line agencies and private sector follow procedures and regulations Moreover, the role of the private sector also changes In conclusion, with the introduction of PPP, a from limited involvement in service delivery, to full government goes from being the direct provider and partner in service delivery assuming all the associ- financier of the service, to overseeing the delivery of ated financial and management risk. Figures 2 and 3 a service at a higher standard of quality. The illustrate this change. financial risk is also transferred to the private provider. This is the major changing role. What are the Institutional Roles and Responsibilities in PPP Projects? 23 Case Study Resources ■■  ervice@Swansea – This is a PPP between the S ■■ P  ublic-Private Partnership Units: Are they Swansea City Council in the UK and a private needed and what should they do? An online partner, Capgemeni. The goal of the first phase discussion moderated by PPP specialists among of the PPP, known as Resource@Swansea, was to PPP practitioners worldwide. http://rru. reduce duplication and paperwork by upgrading worldbank.org/Discussions/topics/topic76.aspx and harmonizing the software used for the ■■  “Championing the Philippine BOT Law,” by the Council’s payroll, finance, HR, and procure- Coordinating Council for Private Sector ment services. A second phase, under consider- Participation, PPP News, The Institute for ation as of November 2006, would include a Public-Private Partnership, 2001. http://www. call center and face-to-face contact center, as ip3.org/pub/publication014.htm well as a website to handle customer inquiries. ■■ “Locking Private Sector Participation into  Under the scheme, more than 50% of the Infrastructure Development in the Philippines,” Council’s IT employees were transferred to the Noel Kintanar, Lourdes Baclagon, Rodolpho private partner for the implementation of the Azanaz, Jr., and Rina Alzate, Transport and city’s e-government program. The contract Communications Bulletin for Asia and the Pacific, provision that allowed the transfer of staff No. 72, 2003. http://www.unescap.org/ttdw/ prompted an eight-week strike by the Council’s Publications/TPTS_pubs/bulletin72/bulletin72_ IT staff in August 2004 before the contract was ch2.pdf officially signed in December 2005. For details ■■ South Africa National Treasury PPP Unit –  on this PPP, see http://www.swansea.gov.uk. www.ppp.gov.za ■■  Irish Central PPP Policy Unit – www.ppp.gov.ie 24 Public-Private Partnerships in E-Government: Knowledge Map Chapter 9 What are the Major Political Constraints and Challenges to PPP? As with any shift in government policy or practice, a dren, to work with in the early planning stages number of stakeholder groups will inevitably resist of a PPP initiative. to change. Employing PPP models for government ■■  Lack of local private ICT industry – Many service delivery is certainly no exception. PPPs have emerging market countries lack private ICT frequently been the impetus for major political and industries that are sufficiently developed to social resistance. The following are several of the partner with the government on e-government most common constraints or challenges to PPP. PPP projects. ■■  erceived Misuse of Taxpayer Money – When a P private operator is introduced into public services, there is often the risk that the public Case Studies will perceive that tax-payer money is transferred to profit-driven enterprises. ■■  ational Institute for Smart Government N ■■  Private Profits in Exchange for Service Quality – (NISG) – One method for mitigating some of Often the public perception is that the only way the challenges of PPP in e-government is to the private operator can make a profit in PPP establish a designated organization to facilitate projects is by cutting corners in service quality. the process. For example, the NISG in India is a Past failures in large-scale PPP infrastructure non-profit organization set up under a PPP projects cast a shadow on current PPP initiatives model to facilitate the application of public and in other sectors. private resources in e-governance in architecture, ■■  Past Failures in Technology Investments – Past consultancy, and training. www.nisg.org public expenditures in technology have not ■■  E-Authentication Federation – A PPP in the always yielded expected results. In these cases, US that will enable citizens, businesses and the public criticizes the waste of money, and government employees to access online govern- become wary of supporting other major ment services using log-in IDs issued by trusted investments in ICT or e-government. third-parties, both within and outside the ■■ Political Elections Cycle – If PPP projects are  government. proposed and debated during an election year, the changes that a PPP project is likely to bring to the lives of different stakeholder groups might be exaggerated, or downplayed, by political Resources candidates seeking to garner support for their campaign. ■■ “  The Politics of Public-Private Partnerships,” ■■ Lack of capacity to develop and manage PPP – It is  Flinders, M., 2005, British Journal of Politics possible to have political will to support PPP, but and International Relations. no skills in government to further them. In this ■■  “What are Public-Private Partnerships,” BBC situation, it is extremely useful to establish a News, 2003. http://news.bbc.co.uk/1/hi/ designated PPP Unit within government, and uk/1518523.stm invest in the training of its staff. ■■  “Public-Private Partnerships; an Incomplete ■■ Lack of a Public Spokesperson – e-government  Contract Approach,” John Bennett and PPPs do not have the ‘champions’ that more Elisabetta Iossa, Economic and Social Research traditional PPPs have had. There is not always an Council, 2006. easily identified stakeholder group, such as utility ■■ E-Authentication Federation – http://www.fmcsa.  customers, doctors, or parents of school chil- dot.gov/eauth/federation/ What are the Major Political Constraints and Challenges to PPP? 25 26 Public-Private Partnerships in E-Government: Knowledge Map Chapter 10 How do you Identify and Structure Feasible PPP Projects? Carefully following the stages of the PPP Project In practice, project sponsors in many countries do Life Cycle is key to identifying and structuring not conduct the activities described in the chart feasible PPP projects, including distinguishing above with the necessary level of analysis and due appropriate business models for operators and key diligence, to consistently deliver potential PPP considerations for governments. The stages of the projects of good quality. Accordingly, most PPP PPP Project Life Cycle are as follows: programs place a heavy emphasis on technical assistance to project sponsors at the project identifi- ■■  roject Identification – the Project Sponsor, P cation level so that they will be better able to which is the government body that proposes the generate “bankable quality deal flow.” Much of such project, identifies and prioritizes its list of technical assistance is focused on business basics, potential PPP projects. because the government officials involved in ■■ Project Development – with assistance from the  procurement have traditionally focused on engineer- PPP Unit, the Project Sponsor conducts research ing and contracting, rather than on the business and analysis to determine financial and eco- analysis required for PPP projects. nomic feasibility. ■■  Project Assessment – the PPP Unit assesses the At the project development stage, the feasibility proposed project’s feasibility, and the Project analysis begins with a compilation and a basic Sponsor conducts a “market sounding” to gauge updating of all previous studies, to create a pre- investor interest. feasibility study. If the pre-feasibility study indicates ■■  Project Structuring – the PPP Unit assists the probable financial and economic viability, then the Project Sponsor in structuring the risk alloca- project sponsors will move forward into a feasibility tion, contractual relationships, and financing study, for which new research and analysis will be arrangements. required to build on the results of the pre-feasibility ■■  Project Procurement – with assistance from the study. PPP Unit, the Project Sponsor conducts fair, open, and competitive procurement via RFQ At the project assessment stage, the results of the and RFP. feasibility study are evaluated and the key inputs to ■■ Contract Management – the Project Sponsor  the financial projections are manipulated to generate conducts contract negotiations and, with a sensitivity analysis. Key financial ratios will be assistance from the Regulator, implements evaluated. Realistic time frames and costs for monitoring and enforcement. concluding all necessary land acquisition, environ- mental clearances, extraction permits, etc. will be At the Project Identification stage, the project put into procurement documents and shared with sponsor performs the analysis outlined in Figure 4. prospective Bidders. The output of this process is the “Indicative Implementation Plan” that is shared with the PPP At the project structuring stage, the results of the Unit, which then uses the plan to decide whether “market sounding” will be used to structure the or not PPP Unit assistance is warranted. If as- contractual relationships, risk allocation, and sistance is warranted, then the unit will assist the financing design. The output of this stage is the draft project sponsor with the project development, concession agreement, which will be shared with the which is the next stage in the PPP Project Life bidders to inform them of the probable contractual Cycle. obligations of the parties. How do you Identify and Structure Feasible PPP Projects? 27 Figure 4. Project Identification Analysis Process* Initial An initial output specification, which is based on the conclusions of the Project Appraisal and provides a high level definition output specification of what is required in terms of service delivery. A value for money assessment, involving the identification of factors that will determine whether a project is likely to represent Value for value for money, and a qualitative assessment of the potential of the project to deliver those factors, using tools such as precedent review money assessment and market. A preliminary risk assessment, including the identification and quantification of key risks, initial allocation of risk between Preliminary the public and private sectors, and an assessment of whether sufficient risk transfer is possible to merit a PPP approach. Preliminary views risk assessment on the key contractual issues should also be included. A bankability assessment of any project that may be part or wholly financed by the private sector. The bankability assessment Bankability should establish the financing issues that need to be addressed prior to a procurement proceeding as well as those that will need to be assessment reflected in contract documentation. A legal viability assessment, to assess whether the Contracting Authority has the legal ability to enter into a Public Private Legal viability Partnership contract. The legal viability assessment should also consider the legal implications of the project in relation to existing specification employees, assets and contracts. A PPP option selection, involving the selection of the contractual form and scope of Public Private Partnership that most closely PPP option meets the strategic objectives of the project and offers greatest scope for value for money. selection Parameters for Identification of the parameters to be used at the end of the procurement process to test whether the preferred PPP tender represents final VFM value for money. In some cases this will involve the preparation of a Financial Comparator. assessment Indicative An indicative implementation plan describing the organisational structures required to manage the procurement, and setting out Implementation an indicative timetable with target completion dates for the main activities involved in the procurement of the project. plan Source: Partnerships Queensland In the project procurement stage, a lot of informa- In the contract management phase, which begins tion is received from the bidders, both in their with the contract negotiations, the project sponsors technical proposals and in their financial proposals will get further feedback from the Bbdders. The that will give the project sponsors considerable focus of the feasibility analysis, at this stage, will be feedback on their feasibility analysis. Because PPP on risk allocation and further refinement of the procurement is focused on service delivery rather mechanisms by which the parties will manage their than the engineering specifications of traditional allocated risks in the contract. procurement, the private sector innovation is enabled and the project sponsors can use the various approaches the bidders propose to achieve the service delivery in order to fine-tune the feasibility analysis. 28 Public-Private Partnerships in E-Government: Knowledge Map Identifying Appropriate scheduling requirements as regards to passenger traffic. In the middle of the range of contracting Business Models modalities, would be an e-government system in which the government provides the backbone, and Business models for operators can vary considerably its private sector partners provide the services that depending on the nature of the service delivery. consumers will access via the backbone and its links. Independent Power Producer (IPP) and oil/gas Table 2 illustrates the spectrum of business models pipeline projects tend to give the operator virtual for PPP projects. carte blanche as regards where the facilities will be located, which technologies to use, how the Facilities will be maintained, etc. Such is the case because the government is simply the buyer of the outputs. At Case Study the other extreme, there are projects such as railways, in which the operator is usually given ■■  ong Kong Smart I.D. Card – A private sector H considerable freedom as regards freight traffic, but is partner provides user interface and software. It subjected to a complex array of price, quality, and also provides consumers with electronic access to Table 2. Business Models for PPP Projects* Service Management Lease Build-Operate- Concession PSP Option Contract Contract Contract Transfer (BOT) Contract Financing invest- Public sector Public sector Public sector Private sector Private sector ments Financing working Public sector Public sector Private sector Private sector Private sector capital Contractual relations Public sector Private sector (on be- Private sector Public sector Private sector with retail customers half of public sector) Private-sector Low Low Low to medium Medium to high High responsibility and autonomy Need for private Low Low Low High High capital Financial risk for Low Low Low to medium High High private sector Duration of con- 6 months – 2 years 3–5 years 5–15 years 15–30 years 20–30 years tract/license Ownership Public sector Public sector Public sector Private then public Public sector sector Management Mainly public sector Private sector Private sector Private sector Private sector Setting retail tariffs Public sector Public sector Contract and Public sector Contract and regulator regulator Collecting retail Public sector Private sector Private sector Public sector Private sector tariffs Improve technical Improve technical Mobilize private Mobilize private Main objective Improve operating efficiency efficiency capital and/or capital and/or of PSP efficiency expertise expertise Source: The Institute for Public-Private Partnerships How do you Identify and Structure Feasible PPP Projects? 29 a wide variety of government services, such as Resources national identity cards, driver’s licenses, business licenses. This case gives guidance regarding ■■  ESDlife – http://whs.esdlife.com/eng/default. important issues that arise regarding the trade asp?referer=govhk offs between user convenience, user information ■■  E-Government Resource Center – the Victoria privacy, and inter-departmental government Government’s repository of e-government dynamics when using PPP to develop an initiatives and international research, http://www. e-government system focusing on G2C and egov.vic.gov.au. G2G. ■■ “Closing the Infrastructure Gap: The Role of  Public-Private Partnerships,” William Edgars and More details on this case can be obtained from the Tom Startup, Deloitte Research, 2006. http:// first link provided below. www.deloitte.com/dtt/cda/doc/content//ca_en_fas_ infrastructure_gap_mar07.pdf 30 Public-Private Partnerships in E-Government: Knowledge Map Chapter 11 What are the Financial Challenges and Constraints in PPP Projects? Overview of PPP Finance or the Central Bank, or both. These charges can raise the cost of borrowing by the project to Project Finance levels associated with private sector lending. Sovereign guarantees can also be problematic, as In order to understand the payment mechanisms, those are contingent liabilities that the ministry of reasonable returns, and financial incentive schemes finance should be accounting for via a debt or risk for PPPs, it is necessary to first understand the management unit, with associated line items in the components of a PPP’s project finance structure. national budget reflecting the unit’s statistical There are three components: (1) public finance; estimate of the probability the guarantee will be (2) corporate finance; and (3) project finance. In called. theory, PPP projects should be fully financed via project finance but in practice the financing is nearly Recording the statistical estimate of calls on always a blend of the three methods. sovereign guarantees creates expense line items in the National Budget, so there is a real cost to using In public finance, as Chart 1 below illustrates, there such guarantees. Investment is another form of is direct lending to the project, or there is a govern- government financial participation in the PPP ment guarantee provided to the private sector project. It is quite common in PPP infrastructure lenders, or a combination of the two. Direct lending projects for government, to purchase the land to the project can be problematic if it involves the required for the project, that represents an invest- on-lending of funds borrowed from donors by the ment of public funds. In a PPP project, the public government, because there are always charges levied partner is entitled to returns on equity just like the by the intermediary, usually either the Ministry of private partner. Chart 1. Public Finance I A government borrows funds to finance an infrastructure project and gives a sovereign guarantee to lenders to repay all funds. Government its own equity in addition to the borrowed funds. I Lenders analyse Government’s total ability to raise funds through taxation and general public enterprise revenues, including new tariff revenue from the project. I The sovereign guarantee shows up as a liability on Government’s list of financial obligations. Sovereign guarantee act Private construction ion contr R Construct contractor Loan Lender Government Construction Repayment Taxes/tariffs Treatment plant Users/taxpayers up ply Water s Source : South African PPP Unit What are the Financial Challenges and Constraints in PPP Projects? 31 Chart 2. Corporate Finance I A private company borrows funds to construct a new treatment facility and guarantees to repay lenders from its available operating income and its base of assets. I The company may chose to contribute its own equity as well. I In performing credit analysis, lenders look at the company’s total income from operations, its stock of assets, and its existing liabilities. I The loan shows up as a liability on the company’s balance sheet (”Mining the Corporate Balance Sheet”). sion Government R Conces Loan Lender Private company Investm ent Repayment Fees Treatment plant s Users Service Source : South African PPP Unit The corporate finance component (Chart 2) of a ment can be secured, there is additional risk to the PPP Project involves providing the lender(s) with Lender. The future asset values and revenues of the recourse to the Borrower’s, or if the Borrower is a borrower’s parent company depend on factors other new Special Purpose Vehicle (SPV) company that than the financial viability of the project. The parent has been established to become the operator then, company may have multiple product lines and both the Borrower’s and the Borrower’s Parent multiple layers of management to manage those lines, Company’s, assets to secure loan repayment. thereby creating a wider range of risks for the lender. While the Corporate Finance component of PPP The Project Finance component (Chart 3) of PPP Project Finance provides lenders with a broader asset Project Finance can be either “non recourse” or base and a revenue stream from which loan repay- “limited recourse” financing, which means the Chart 3. Project Finance I A team or consortium of private firms establish a new project company to build, own and operate a specific infrastructure project. The new project company is capitalised with equity contributions from each of the sponsors. I The project company borrows funds from lenders. The lenders look to the projected future revenue stream generated by the project and the project company’s assets to repay all loans. I The host country government does not provide a financial guarantee to lenders; sponsoring firms provide limited guarantees. “Off-Balance-Sheet” financing. Sponsor 1 Sponsor 2 Sponsor 3 R Loan Lender Project company Government Concession contract Repayment Tariffs Users Services Source : South African PPP Unit 32 Public-Private Partnerships in E-Government: Knowledge Map lender’s access to the assets and revenue streams of the service, or even take over the project in event of borrower and/or its parent company is entirely or default. partially limited. Funds to repay the loan are supposed to come entirely or partially from the project. Reasonable Returns Although the non-recourse or limited-recourse feature of project finance limits the lenders’ access to There are two kinds of returns: debt returns and the borrower and/or parent company assets and equity returns. They are both measured by perform- revenues. It also limits the array of risks that the ing discounted cash Ffow (DCA) analysis using a lenders have to consider in making the loan. The discount rate equal to the weighted average cost of project has one group of services and one manage- capital (WACC). The DCA analysis will reveal the ment team, so if the lender can be comfortable with financial internal rate of return (FIRR) for both debt the service provision risks and is confident of the and equity. Project’s management team, then the decision to make the loan might be easier than it would under a What is “reasonable” is a matter of negotiation, but corporate finance scenario. generally the reasonable rate of return on debt is the interest rate offered by the lender. The reason- PPP projects are usually financed through a blend of able rate of return on equity is an estimate of what corporate finance and project finance. The borrow- the investors in the host country, in the relevant er’s parent company, or financial sponsors, if there is sector usually expect in order to be willing to invest more than one legal entity supporting the Ppoject their equity, and partially a matter of negotiation in finance effort, provides the lender with partial loan agreeing what tariffs will be allowed and what levels repayment guarantees. For it/them, this represents of operations and maintenance will be required in the “off-balance-sheet” financing. order to meet the service delivery standards in the concession contract. In such negotiations, the operator and the government will agree on an equity FIRR and then during the concession period Payment Mechanisms there will be periodic financial audits to see if that FIRR is being realized. If it is lower than agreed, There are a wide variety of payment mechanisms in then the government might offer a higher tariff or a PPP Project Finance. Loans can be either senior longer concession period. If it is higher than debt, in which the loan payments must be made agreed, then the government might indicate a regardless of the financial performance of the project, concern that operations and maintenance costs are or they can be subordinated debt, in which case, the too low, because the operator is not properly loan payments have to be made to the extent that the maintaining the Facilities, or seek to reduce the project earnings and profits are realized. authorized tariff. Sometimes, potential equity investors will make available “quasi-equity” in the form of loans that can be converted into equity at the option of the lender. Incentives for Investors In such cases, when the investors approve, the borrower may give them equity in lieu of loan Traditionally, governments have offered “investment payments. It is common practice, in “loan workout” incentive” schemes that focused on tax holidays, tax situations, to offer debt-to-equity exchanges, even if exemptions, labor training grants, import duties the loans were not originally structured as convert- exemptions, subsidized land and/or buildings ible debt. provision. The global experience has been that such direct incentives do not materially impact the It is also common practice to provide lenders with decisions of potential investors and lenders. The sole “step-in rights” via which they may intercept certain exception is the investment tax credit, in which categories of revenues to cover debt service, or seize investors get a tax credit equal to a percentage of the assets that they will sell in order to cover the debt costs of plant and equipment, purchased and What are the Financial Challenges and Constraints in PPP Projects? 33 installed for the project. Accordingly, such direct grants, in some cases with contributions from incentives are not generally considered advisable. governments. The International Finance Corporation (IFC) participates in many such The most effective incentive for any project, facilities (see Table 3), along with a wide array of including PPP projects, is to provide the investors, bilateral donors. One example of an IFC supported lenders, and operators with a “level playing field” in PDF is the Private Enterprise Partnership (PEP) which they have access to timely, effective, and Southeast Europe Infrastructure, formerly known equitable resolution of contract disputes, and in as the Balkans Bid Facility. In practice, such which they have equal access to capital, permits, facilities usually focus on small and medium scale licenses, raw materials, labor, and other key inputs enterprises, as opposed to the large and costly vis-à-vis other players in the market. In order to infrastructure projects that tend to dominate the create such a level playing field, governments must portfolios of PPP Units. remove distortions in the economy by removing monopolies, minimizing economic interventions, The other kind of facility is a PPP project finance and providing mechanisms for fair and transparent facility (PFF). Such PDF-type organizations dispute resolution. facilitate the financing of PPP projects by channel- ing debt and equity funds raised from donors and governments into financing consortia that they help organizing to finance the PPP projects. Examples of PPP Funding Facilities such facilities are the Private Infrastructure Investment Center of Korea (PICKO), the BOT There are two kinds of PPP funding facilities. The Center (Philippines), the Bureau of first is a project development facility (PDF), Infrastructure Investment of Sri Lanka (BOI), which is a pool of money, usually donor grant the Infrastructure Investment Facilitation Center funded with possibly some contribution from the of Bangladesh (IIFC), and another IIFC organiza- government. A Trustee, reporting to a Board that is tion being organized in India by the ministry of financially and politically independent from the finance. In all cases, public sector finance is government, manages the money. It has a fiduciary leveraged with private sector finance, in many cases role to ensure that the funds are expended in the public sector support providing a credit accordance with donors and government procure- enhancement function for project debt securities. ment rules and in accordance with the relevant These PDF-type facilities are not necessarily grant agreements. associated with a PPP Unit. A PDF hires independent consultants upon request from the PPP unit, to conduct feasibility analysis of PPP projects. The reports produced are usually  Case Study pre-feasibility studies and feasibility studies. Often, there is a cost-sharing arrangement between the ■■ Philippines BOT Center Project PDF and the project sponsors, the government Development Facility: The Project agency that proposes the PPP project, as opposed to Development Facility (PDF) is a revolving loan Financial Sponsors, which are members of the facility administered by the BOT Center, finance consortium, whereby the cost of the formerly the Coordinating Council for Private consulting services is shared at different ratios Sector Participation (CCPSP), to assist the depending on the stage of the project in the PPP Philippine Government Implementing Agencies project cycle. (IA’s) and Local Government Units (LGU’s) for PPP project pre-investment activities. The PDF Some PDF-type organizations are formed as was designed as a loan rather than a grant stand-alone entities, i.e. not tied to any PPP Unit. facility to promote sustainability of the fund There are numerous such facilities and they provide and ensure greater commitment on the part of PDF-type assistance to a broad spectrum of IA’s and LGU’s to successfully tender proposed potential PPP projects. The funding for such projects. Figure 5 describes the process by which stand-alone facilities is usually provided by donor IA’s and LGU’s access and reimburse the PDF. 34 Public-Private Partnerships in E-Government: Knowledge Map Table 3. IFC Supported Project Development Facilities PDF Name Overview Website China Project Devel- Coverage: Sichuan Province, Southwest China. www.cpdf.org opment Facility (CPDF) Established in 2001. Provides enterprise level support, capacity building, and business enabling environment assistance. Latin America & the Coverage: Bolivia, Honduras, Nicaragua, Peru. Caribbean Facility Established in 2003. Focuses on sectors with high potential for export, facilitates SME http://www.ifc.org/ access to finance, supports linkage programs, and improves the business enabling ifcext/lac.nsf/Content/ environment. SMEfacility Mekong Private Coverage: Cambodia, Lao PDR, Vietnam. — Sector Development Established in 1996. Provides company advisory assistance and develops business Facility (MPDF) support services. Private Enterprise Coverage: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, http://www.ifc. Partnership (PEP) Mongolia, Russian Federation, Tajikistan, Ukraine, and Uzbekistan. org/pep Established in 2000. Promotes private sector investment and support for SME growth, and improves the business enabling environment. Private Enterprise Coverage: Sub-Saharan Africa. — Partnership for Africa Established in 1986. Provides business advisory and enterprise support services. (PEP-Africa) Private Enterprise Coverage: Afghanistan, Algeria, Bahrain, Arab Republic of Egypt, Islamic Republic — Partnership for the of Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Pakistan, Saudi Middle East & North Arabia, Syrian Arab Republic, Tunisia, United Arab Emirates, West Bank and Gaza, Africa (PEP-MENA) Republic of Yemen. Established in 2004 by combining the North Africa Enterprise Development facility and the Private Enterprise Partnership for the Middle East. The new facility focuses on improving the business enabling and regulatory environment, strengthening the financial sector, harnessing the growth of small and medium size enterprises and their support services such as business organizations and consulting firms, helping restructure and privatize state-owned enterprises, and developing viable private sector and public- private partnership projects, especially in infrastructure. Pacific Enterprise Coverage: Pacific Islands, Papua New Guinea and Timor-Leste. — Development Facility Established in 1990. The primary activity of PEDF is to facilitate and support best (PEDF) practice in the design and delivery of business support services to the private sector in the Pacific region with a particular focus on small to medium enterprises. PEDF works with institutions, organizations and associations on capacity building and strengthening in a wide range of areas across industry sectors and financial markets. Program for Eastern Coverage: Eastern Indonesia: Kalimantan, Sulawesi, Bali, East Nusa Tenggara. http://www.ifc. Indonesia SME As- Established in 2003. It improves access to finance, the business enabling environment, org/pensa sistance (PENSA) develop sustainable supply chain and provide linkages in the agribusiness, oil, gas and mining, handicraft industries. South Asia Enterprise Coverage: Nepal, Bangladesh, Bhutan, Northeastern India. http://www.sedf.org/ Development Facility Established in 2002. Improves access to finance, access to business development (SEDF) services, and the business enabling environment. Private Enterprise Coverage: Albania, Bosnia and Herzegovina, FYR Macedonia, Serbia and Monte- http://www.ifc.org/ Partnership Southeast negro. ifcext/pepse.nsf/Con- Europe Established in 2000. Provides investment and capacity-building services and improves tent/PEPSEI_Home the business-enabling environment. Source: www.ifc.org Further reading on PPP funding facilities can be facilities is available for download at http://pdf.usaid. found at the PEP Southeast Europe website. In gov/pdf_docs/PNACY218.pdf. addition, an international survey of PPP funding What are the Financial Challenges and Constraints in PPP Projects? 35 Figure 5. Operation of the Philippines Project Development Facility CCPSP PROJECT DEVELOPMENT FACILITY 1. Executes TAA to access PDF loan to undertake the 6. Repays PDF loan pre-investment study Implementing Agencies/LGUs 2. Hires consultant thru 5. Reimbueses competitive selection PDF cost 3. Prepares feasibility 4. Awards Implements study & bid/lender contract project documents & assists in the lender process CONSULTANTS WINNING BIDDER Source : Philippines BOT Center http://www.botcenter.gov.ph/pdf/PDF3.htm Case Study  Commission funds in combination with investment by the Government of Germany. This reduced the level of investment that the ■■ Germany’s Initiative D-21 – Initiative D-21 is private service providers would have to make, the largest e-government PPP in Europe, with thereby enabling them to achieve agreed rates of hundreds of private partners providing value- return on their investments from revenue- added services over an ICT platform. The sharing arrangements relating to the service project financing modalities for network provision. In organizing the financing for this build-out, maintenance, and operation; massive project, extensive negotiations were held government inter-agency coordination utilized a with prospective private sector service providers, wide array of PPP modalities. Privacy and focusing on the following : (a) what should be information sharing issues were substantial, the agreed equity financial internal rate of dealing with the trade-off of convenience and return; (b) what service standards, both quantity confidentiality. Substantial financial participa- and quality, should be required of the operator; tion was obtained from the European (c) what will be the mechanisms for generating Commission. There was extensive exploration of and processing of revenues from consumers; and G2G, G2C, G2B, B2B, and B2C dynamics, (d) what should be the government’s participa- system regulatory issues and modalities, and tion in the revenue stream. improved service delivery for government. The backbone for the system, actually a More details on this case can be obtained from the system of data interchange points on the project website, www.initiative21.de. Internet, was developed using European 36 Public-Private Partnerships in E-Government: Knowledge Map Resources: ■■  rivate Enterprise Partnership for Southeast P Europe – www.bidfacility.com ■■ “Project Development Facilities: A Survey of  ■■  ermany’s Initiative D-21 – http://www. G International Experience,” USAID, Booz, Allen initiatived21.de & Hamilton, 2002, http://pdf.usaid.gov/pdf_docs/ ■■ Partnerships UK – http://www.partnershipsuk.org.  PNACY218.pdf. uk What are the Financial Challenges and Constraints in PPP Projects? 37 38 Public-Private Partnerships in E-Government: Knowledge Map Chapter 12 What are the Major Risks in PPP Projects and How are they Managed? Introduction and Risk Sharing Categories of Risk Because a PPP is a partnership, the process of PPP is a very popular mechanism for developing determining which partner will be tasked with electronic infrastructure, such as e-government managing each of the categories of risk reveals key projects; transport infrastructure such as airports, issues and challenges. in. The price and quantity of seaports, and railways; public works infrastructure services that are projected over the concession such as roads, toll roads, bridges, and public utilities, period are essential inputs to the financial projec- such as telecom, electricity, and water; and build- tions, so those are a good starting point in risk ings. Such projects usually have a long construction analysis. period, and construction delays and cost overruns are a persistent and recurring problem in PPP ■■  rice should be determined by market factors to P infrastructure projects. the extent possible. In order to protect consum- ers from being exploited by the service provider, Generally, the construction period risk is allocated it is common for a PPP project to have some to the private party, which is usually required to degree of monopoly in the contract, to enable provide a bond to ensure that, if it experiences the private party to recover its investment at an delays and/or cost overruns in construction beyond agreed rate of return, governments often regulate a certain point, then the government can liquidate prices. If there is no price regulation, then the the bond to cover its costs associated with such price represents a pure commercial risk that is delays and/or cost overruns. In the contract, borne entirely by the private partner. If there is however, things under the reasonable control of the price regulation, then the government must public partner, which can potentially have adverse accept some of the price risk. impacts on construction period risk, such as ■■  Quantity is estimated by demand projections. environmental clearances, land acquisition, notice to Such projections are notorious for their lack of proceed, certificate of operational worthiness, are reliability; it is not unusual for the demand to be identified in the contract as risks allocated at least realized at levels up to 75% over/under projected partially to the government, as represented by the levels. Quantity of demand is generally consid- contracting authority. This means that if the ered to be a commercial risk, but in many cases, government fails to perform, it must then compen- governments have control over factors that can sate the private party for losses incurred as a result of directly impact the quantity of the demand. For such failure. example, a toll traffic volume can decline precipi- tously if the government widens the parallel, The next key category of risk that needs to be toll-free road. In structuring PPP transactions, assessed and allocated is the operations and quantity of demand should be treated as a maintenance (O&M) risk. The private partner must commercial risk, therefore borne by the private conduct a sufficient O&M to enable the facilities to partner, but the Contract must clearly define deliver the required levels of quantity and quality of how much compensation, and what form of service. There has to be a section of the contract in compensation, the government must pay the which O&M requirements are clearly defined, with private partner in the event that the government their associated engineering specifications. Normally, commits an act that adversely impacts the the sector regulator inspects the facilities at periodic quantity of demand. intervals to ensure compliance. In many cases, the What are the Major Risks in PPP Projects and How are they Managed? 39 Figure 6. Risk Allocation Process Step Description Outcome Preliminary Identification of the principle risks associated with the design, construction and operation of an infrastructure Preliminary list of risks Risk Identification project. Formation of an initial view as to whether the Contracting Authority or the Contractor is likely to be best able Preliminary risk Preliminary to manage each risk. Risks are then either allocated to the Contracting Authority, the Contractor, or identified allocation Risk Allocation as risks to be shared. Qualitative assessment of the potential significance or impact of each risk. The results of the qualitative Preliminary risk Qualitative assessment are combined with the list of risks and the risk allocation to provide a preliminary risk matrix for matrix Risk Assessment the project. A risk management plan is prepared for those risks that are to be retained by the Contracting Risk management plan Authority. Preliminary assessment of the monetary value of the most significant risks identified in the preliminary risk Risk adjusted Financial Preliminary matrix. The monetary value of the most significant risks transferred to the Contractor is included in the Comparator Risk Quantification Financial Comparator. Source : Partnerships Queensland regulator will delegate the inspection role to the There are, of course, many other kinds of risks but executing agency, which is the government body that the above are the most significant except for projects is tasked with executing the activities required of the involving cross-border finance. Financing risk contracting agency in the contract. includes not only the risk that the financing source will fail to perform, but also the risk that the operator The O&M risk is normally allocated to the private will default on its loan payments and the lender will partner. Such risk is particularly important to the use step-in rights to take over the project. In the case government when there are assets that have been of cross-border finance, Currency risk can play a consigned to the concessionaire for provision of the major role in determining the success or failure of the services. A common example is a railway track, for project. This applies not only to the risk that comes which the operator is provided a right of way, and for with borrowing hard currency when the revenues of which it pays the government a tack access charge. In the project are local currency, but also the risk that the Contract, the concessionaire will be required to the government will not have sufficient foreign perform all reasonable and necessary O&M on these exchange reserves to meet its obligations under a assets, so that, at the end of the concession period, contract denominated in hard currency. Contracts they can be returned to the government in their should be in local currency, as well as borrowings, so original condition, less normal wear and tear. that any currency risk can be minimized. Quality of service risk is covered to some degree by O&M requirements, to the extent that quality of service is dependent on the quality of the facilities. Roles and Responsibilities But in PPP projects, it is essential to keep the focus on the outputs. How the Concessionaire delivers the The roles and responsibilities of the parties to a outputs is its responsibility. Output Specifications PPP contract are: are a key component to any PPP project. ■■  idder – this is the private legal entity or B The categories above are the key areas of risk that consortium that submitted a bid and was have to be assessed and allocated for PPP projects. awarded the concession; 40 Public-Private Partnerships in E-Government: Knowledge Map ■■  ontracting Authority (CA) – this is the C often kept with the government, such as government body that has the legal authority to telecoms fiber optic backbone, airport runways execute the concession agreement on behalf of and taxiways, and internet-based platform for the government; e-gov. Although the focus of PPP is on service ■■ Executing Agency (EA) – this is the government  delivery and not ownership, the government body that is tasked with performing all of the might want to retain ownership, or have a obligations of the government under the transfer of ownership at the end of the conces- Agreement; sion period, to protect the public interest. ■■ Regulator – there always has to be a regulator  ■■  Tariff regulation is a recurring area of complex- that will oversee the contract and protect the ity in PPP projects. The mandate of the govern- interests of all parties to the contract as well as ment is to protect the consumer, but this consumers; and conflicts with the private sector operator’s need ■■  Third Parties – if any third parties are bound by who wants to have prices to fluctuate in accor- any provisions of the contract then those parties dance with market forces. This dichotomy makes should execute the agreement. the presence of a politically and financially independent regulator particularly important in Care must be taken in confirming that the con- PPP projects. Unless tariff regulation is con- tracting authority may legally bind other govern- ducted by an independent regulator, future ment agencies that might be involved in the disputes between the parties regarding tariffs and contract and service provision. This is a weak area tariff adjustments are likely to occur. in many PPP Contracts, for example a ministry of ■■ Subsidies are an area of concern in PPP projects.  public works agrees to acquire all land necessary for The government’s mandate is to protect the the project, but in practice the funds for such consumer by ensuring the availability of “basic purchases have to come from the ministry of services” for low-income groups, and this finance. If the ministry of finance is not going to be mandate conflicts with the PPP project’s goal of a signatory to the agreement, then the contracting profitability. Subsidies are required when the agency should be required to produce a letter of government requires the operator to provide commitment from the ministry of finance for the such services to low-income groups, like railway land purchases. passenger traffic. Yet governments often find that they are unable to make such subsidy payments and then disputes arise. ■■  There is a continuing issue of response time in Key Issues and Challenges PPP projects. While the private operator can respond quickly to changes, the government is The above-described synopsis of roles, responsibili- usually less able to be responsive in a timely ties, and risk sharing provides some insight into how manner. Because of this, disputes often arise in one can manage key issues and challenges often PPP projects over a government delay in making faced in PPP projects. A brief summary of such a tariff adjustment or in issuing a permit, while issues and challenges is provided below: the market forces necessitating such acts have already occurred. ■■  ecause PPP projects are essentially business B joint ventures, and government officials are more familiar with traditional procurement than with business, it can be difficult for the government to Case Studies assemble a contract negotiations team that will be able to handle the virtual “army” of lawyers, ■■ A  Failed PPP – South Africa Golaganang accountants, and highly skilled negotiators that E-Government for Development: Golaganang, the private sector will mobilize for large projects. meaning ‘come together’, was a PPP between the This creates a necessity for extensive consultant South African Government and private sector IT assistance to protect the government’s interests. firms. It was initiated in 2002 to provide public ■■  To protect the public interest, ownership of the service employees with an affordable computer “backbone” or “basic assets” or “platform” is bundle including PC, operating system, What are the Major Risks in PPP Projects and How are they Managed? 41 software, Internet connectivity, warranty and there was a long waiting period while the computer skills training. The goal was to increase overloaded public official processed the applica- digital literacy among public servants and tions. This problem was exacerbated by the consequently better public service delivery. increasingly decentralized nature of the Indian While the initial project hailed a prescription of Government. Consumers had to deal with shared risk, the private operator later insisted on multiple levels of government, in addition to government guarantees to cover commercial risk. multiple agencies, at each level. The result was Unable to offer such guarantees, the DPSA continually increasing dissatisfaction among sought alternative options for continuing the stakeholders regarding a perceived lack of project, but no financially viable options were responsiveness on the part of the government, found. Assessments of the project determined and increasing corruption at all levels as private that its failure was due to trust without due parties offered more and more financial incen- diligence. Too much weight was placed on tives to government officials to put their partnership, resulting in a misunderstanding of applications “on the top of the pile.” This where the financing was coming from. project, therefore, is an excellent example of how ■■ India MCA 21 – Originally named DCA 21,  PPP can be used to improve public sector service this case includes a number of sub-cases that delivery and reduce commercial risk on the part illustrate the various modalities of PPP for of consumers, while reducing political risk for e-government, including: (1) community-level the government. programs in which the community provides the More details on this case can be obtained basic infrastructure and provides some user from http://www.mca.gov.in/. interfaces, while the private sector provides additional user interfaces on a for-profit basis; (2) issuing licenses to the private sector for BOOT fiber optic systems for which the Resources operator can generate profits by selling excess bandwidth, for high-speed data transfer, not ■■ M  inistry of Company Affairs India – MCA 21 used by government; (3) government providing initiative for e-government, http://www.mca.gov. the ICT backbone while the PPP is used to in/ bring the private sector for customer interface ■■ e-Procurement.gov.in – Comprehensive  and B2C transactions; and (4) different kinds of e-infrastructure of the Government of India revenue generation with modalities for revenue allowing for eProcurement, eTendering, eSelling, sharing between the government and the private and eAuctions, http://www.eprocurement.gov.in partners. ■■ Irish Central PPP Policy Unit – www.ppp.gov.ie  This PPP project was designed to solve many ■■ “(Not) Providing Computers for all South  processes required for government approvals, African Civil Servants,” Alan Levin, such as formation of a new company, for which E-Government for Development, Success/Failure owners had to obtain multiple permits from Case Study No. 26 http://www.egov4dev.org/ multiple ministries. The volume of new business golaganang.htm#title applications was so high that, in each ministry, 42 Public-Private Partnerships in E-Government: Knowledge Map Chapter 13 What are the Best Practices in Tendering, Evaluating, and Negotiating PPP Transactions? Tendering and evaluation of PPP projects include As the PPP project moves through the tender/bid the usual project appraisal activities of research and process, the 3-stage appraisal criteria described above analysis to prepare pre-feasibility studies and feasibil- are applied in the following manner: ity studies. But for PPP projects several distinct sequential steps should be followed: 1. Request for Qualifications (RFQ): The tender/ bid process begins with the RFQ, unless the ■■  ffordability: (a) Conduct consumer demand, A requirement is consulting services, in which case affordability, and willingness to pay surveys to the process begins with a Request for Expressions determine whether the tariff rates required for of Interest, and within the RFQ information the project to be financially viable are acceptable about the project must be presented. At this and affordable to people who will be the stage, the pre-feasibility study must have been consumers of the services provided by the completed, so that such information can be project; and (b) perform a review of budget provided, and the affordability test must have resources for government’s projected share of been passed. Usually, a PPP Unit performs this costs in the project; if there are not sufficient test, and provides guidance to the project resources in the current budget, determine sponsor regarding the tender/bid process. whether the required amount can be put into the 2. Request for Proposals: While the submissions next fiscal budget. in response to the RFQ are being received and ■■ Risk Allocation: Does the proposed PPP project  evaluated, the project sponsor, the government appropriately transfer risk to the private sector, body proposing the PPP project, should develop and does the resulting risk allocation matrix the pre-feasibility study into a full feasibility appropriately match each category of risk with study. At the same time, the PPP unit should be the partner best able to manage that kind of risk? completing its risk allocation review, the result The general principle is that the public sector of which should be a draft contract, or Draft partner manages political risks while the private Concession Agreement, revealing the proposed sector partner manages commercial risks. In allocation of contractual obligations between the practice, there are always a few categories of risk partners. The results of the feasibility study that the partners must share, like tariff risk, should be included, in summary form, in the which fluctuates based on both commercial Request for Proposals (RFP) along with a demand/supply factors and political factors. disclaimer that the project sponsor, or the ■■ Value for Money: The proposed PPP project  Contracting Authority that will execute the must give the government more value for money Contract, does not represent or warrant that any than it would get if it did the project without a of the information is accurate, and that proposed private sector partner. It will be necessary to private partners must conduct their own due develop a “base case” scenario, in which the cost diligence. of doing the project with no private partner is 3. Bidder Selection: After the technical proposals estimated. Then, a “public sector comparator” is have been evaluated and scored the financial calculated to give a figure that can be compared proposals will be opened. The information to the cost of doing the project with a private contained in the financial proposals will enable sector partner. In the final stage of selecting the tender committee to make its selection, and which partner to accept, the financial proposals will also enable the PPP unit to determine which will be evaluated and ranked based largely on proposal offers the government the best value this value for money criterion. for money, for the amount of financial resources What are the Best Practices in Tendering, Evaluating, and Negotiating PPP Transactions? 43 the government must contribute to the PPP project, and which bidder offers the most Figure 7. PPP Project Evaluation and benefits in return for such contribution. The Tendering Process interpretation of “benefits” can include both financial and economic benefits, usually Phase Activities expressed in terms of service delivery. Advertise I Place prior information notice 4. Negotiation begins after the preferred bidder is I Place contract notice selected via the process described above. The I Place other advertisements focus is the draft contract, or Concession Prequalification I Establish prequalification criteria Agreement, that was included in the RFP. The I Develop project information memorandum government should take care to ensure that I Develop request for prequalification members of the negotiation committee have I Identify short list of tenderers I Debrief unsuccessful applicants experience in PPP transactions and understand the business aspects of the project. This requires Tendering I Prepare Instructions to Tenderers skills that are not usually found in negotiation Process I Prepare Project Agreement committees for standard project procurement. I Prepare Output Specifications I Establish evaluation criteria Non-PPP projects do not carry the complex I Obtain approval of central authority business partnership aspects of a PPP project, in I Hold clarification meetings with tenderers particular the risk allocation that is a cornerstone I Receipt of tenders of PPP transactions. Tender I Assess tender compliance Evaluation I Evaluate tenders The focus of the contract negotiations for PPP I Hold clarification meetings with tenderers projects is Service Delivery Standards, in terms of I Select preferred tenderer I Prepare report on tendering process both quantity and quality of service, which I Obtain approval of Central Authority represent an essential part of the contract. In traditional procurement, the focus is on getting Contract I Award contract what the government wants to buy, at the lowest Award I Debrief unsuccessful tenderers price and the least risk necessary. In PPP procure- I Place award notice ment, the focus is on getting the highest quantity Source : The World Bank and quality of service for consumers, within the budget that the government has allocated for the project. Value for money, rather than cost savings, should be the primary objective of contract negotiations. Labor represents one of the most daunting chal- lenges for government IT systems. The array of retirement systems requires tracking personnel job Case Studies histories. The public service systems require easy access by prospective employees to the application ■■  outh Africa Department of Labour ICT: This S process, and its related testing processes. It requires case illustrates the cost savings and improved tracking current employee histories and their service delivery of government services when qualifications for advancement. Labor IT systems PPP is used to bring ICT technology into a include the highly complex payment of salaries and previously hard copy environment. G2C, G2B, bonuses, and vacation or sick time accrued. By and G2G modalities are identified and explored contracting out service provision to the private regarding the increased convenience for Citizens, sector, this project enabled the Government of profit options for business, and intra-govern- South Africa to provide prospective and current mental information-sharing dynamics. The case employees with quick and easy access to informa- also illustrates the impact of a PPP structure for tion, forms, tests, pay records, time-off records, and labor mobility and improved access to employ- credential records necessary to manage their careers. ment opportunities, along with online skills More details on this case can be obtained from training for career advancement. www.labour.gov.za 44 Public-Private Partnerships in E-Government: Knowledge Map ■■  edBid.com – A private company specializing in F that only one company, HP, would be a qualified web-based reverse auctions that allow govern- bidder. This case is an example of controversy in ments to obtain supplies at lower costs while e-government PPP due to perceived lack of spending less manpower on negotiating complex transparency in the procurement process. E-Gov contracts and finding vendors. News, Monday, September 4, 2006. http://www. ■■  Controversy in PPP – Bulgaria E-Government egovnews.org/?s=public-private&paged=2 Procurement Process: In August of 2004, the Government of Bulgaria awarded private IT firm HP a contract to design the country’s e-government system. The contract was awarded Resources amidst controversy that the projects tendering process was biased. The Bulgarian Association of ■■ S  outh African Department of Labour – http:// Information Technology launched a formal www.labour.gov.za complaint claiming that the evaluation criteria in ■■ South African Department of Treasury – http://  the tender package were written in such a way www.treasury.gov.za What are the Best Practices in Tendering, Evaluating, and Negotiating PPP Transactions? 45 46 Public-Private Partnerships in E-Government: Knowledge Map Chapter 14 What are the Lessons Learned in Monitoring PPP Agreements? Contract monitoring procedures are components of Case Studies a successful PPP project. Contracting agencies and regulatory bodies must be vigilant in monitoring the ■■  ustria’s ADONIS: A Failed E-Government A technical and financial requirements of all PPP PPP – In early 2002, the federal Government of projects to ensure appropriate performance and Austria initiated a PPP project for the establish- mitigate stakeholder complaints. A government ment of ADONIS (Austrian Digital Operating considering PPP models for e-government projects Network for Integrated Services), a nationwide should bear in mind the following: security radio network for the police, fire brigade, ambulance and army. Designed as a ■■ C  ontract design is the most important part of BOOT model, the private partners would invest contract compliance. A poorly designed contract in the system, and recover capital expenditure will be difficult to enforce, leaving the govern- costs through charges paid by the network users. ment, consumers, and the private partner open Various implementation problems led to its to unnecessary risk. Clearly established guide- collapse in June 2003. Among these were lines for PPP arrangements are a critical compo- (1) a failure to secure the estimated number of nent to the legal framework. commercial users, whose participation was ■■  Contracts must contain the necessary contract moni- required to make the project commercially viable toring clauses. Specifically, the contract should and affordable, resulting in significant fee clearly articulate: how the technical performance increases; (2) technical difficulties that led a of the private partner will be evaluated; proce- major partner, the Austrian Red Cross organiza- dures for collecting, managing, and reporting tion, to threaten not to join the project; data for internal and external (like media, (3) growing number of negative media reports constituents) use; scenarios under which tariffs, about the project; and (4) hostile and accusatory if applicable, may be raised. communications between public and private ■■  Contracts should clearly specify who is responsible partners. for monitoring. A good e-government PPP ■■  India’s eSeva: Lessons from a Successful contract identifies the individual, department, or E-Government PPP – eSeva is a system of Rural agency with oversight responsibilities so that the IT centers in India developed and staffed by private partner…knows who to talk to…about private contractors where citizens can access when any issues or challenges in project imple- government and commercial services, such as mentation arise. Many governments choose to utility payments, land titling, marriage registra- set up a contract-monitoring unit (CMU) for tion, Western Union, in one location. Often large-scale PPP projects. highlighted as a good e-government example, the ■■  Contracts must include dispute resolution proce- success of this project is attributed to a few key dures. Dispute resolution procedures define the factors: (1) it had a political champion in context under which contracts can be renegoti- government that ensured stakeholder support ated, under which the government or private and availability of public funds; (2) solid sector can default on the agreement, such as technical design of the IT infrastructure; (3) use “force majeure”, and what third party body will of the PPP model for financing and implementa- arbitrate, in the event that disputes cannot be tion of the project. Challenges of the PPP resolved between the private partner and the project included: (1) weak enforcement of a government contracting agency. poorly designed service contract; (2) difficulty in What are the Lessons Learned in Monitoring PPP Agreements? 47 supervising rural centers; (3) variation in quality Industry. www.global-ict.mincom.gov.az/ of service center managers, (4) instability in presentations/24.ppt tenure of directors (5 directors in a period of 4 ■■ “What Went Wrong: Lessons from  years). Cochabamba, Manila, Buenos Aires, and Atlanta,” Kathleen Slattery, Privatization Review, The Reason Public Policy Institute, 2003. http:// www.rppi.org/apr2003/whatwentwrong.html Resources ■■  “E-Government,” Patricia Pascual, UNDP- APDIP, 2003. http://www.apdip.net/publications/ ■■  ix Guiding Principles to Achieve Sustainable S iespprimers/eprimer-egov.pdf PPP Arrangements, by Cledan Mandri-Perrott, ■■  One Stop Shop for Electronic Delivery of http://www.ip3.org/pub/2005_publication_002. Services: Role of Public-Private Partnership, htm. Subhash Bhatnagar, Indian Institute of ■■ “Public-Private Partnerships: Public Affairs  Management, http://www.iimahd.ernet. Management in the Twilight Zone of Public and in/~subhash/pdfs/ Private Sector,” ADONIS Case Study, Gerhard OneStopShopForElectronicDeliveryJun2005.pdf. Hammerschmid, IFSAM VIIIth World Congress, ■■ Effectively Managing Professional Service  2006. http://www.ctw-congress.de/ifsam/download/ Contracts: 12 Best Practices, Sandra Fisher, track_4/pap00344.pdf Michael Wasserman, and Paige Wolf, IBM ■■ “Lessons of PPP in the Austrian ICT and  Center for the Business of Government, 2006. E-Government Sector,” Gerhard K. Wagener, http://www.businessofgovernment.com/pdfs/ Austrian Private Association for the Information FisherReport.pdf 48 Public-Private Partnerships in E-Government: Knowledge Map Chapter 15 What are the Gaps in our Knowledge of PPP in E-Government? This Knowledge Map is an attempt to document financial aspects of “unbundling” a public service “what we know” about Public-Private Partnerships via private investment, management, and in e-government. However, PPP in e-government is technology. still a new trend, and there are knowledge “gaps” in the field. Below is a brief summary of these knowl- edge “gaps”, the developments that are working to bridge those gaps, and an overview of what has What Has Worked worked, and not worked thus far. ■■  itizen Service Centers – In areas where the C Internet coverage in households is low, govern- ment service centers or kiosks have been Knowledge Gaps successful e-government PPP applications. Here, citizens have been able to access the Internet to ■■ C  ase Studies are not well documented: carry out several citizens to government E-Government is relatively new, and the use of transactions such as vehicle registration, utility PPP for e-government is even newer, leaving bills, business licensing, from a centrally located inadequate time to assess whether or not the service center staffed by professional ICT e-government PPP initiatives have been “success- specialists. ful.” For example, the useful website, ■■ E-Portals – Online portals that offer access to  E-government News (www.egovnews.org), which government services, as well as private sector includes reports on e-government projects commercial services, in one location have been launched through PPP models, has only been successful in markets where the Internet coverage operational since January 2006. is high, and widely available. Success of these ■■  PPP and E-Government Dialogue is not portals is also dependent on a high-level of Harmonized – There are a growing number of Internet security and the user comfort with initiatives and websites that attempt to docu- online financial transactions, as well as a history ment best practices and lessons learned in PPP of contracting out key government functions to and also in e-government. There is not a specific the private sector. source that discusses highlights in the applica- ■■  ICT Infrastructure Development PPPs – PPPs that tion of PPP to e-government. involve a transfer of government physical land or ■■  Didactic material on PPP in E-Government is infrastructure to the private sector for the sparse: While there are countless articles, purpose of building or improving ICT assets like websites, and projects dedicated to dispersing IT parks, telephony, have been successful in excellent didactic material on public-private developed and emerging market, where a partnerships, their application is largely significant portion of the population is techno- confined to the physical infrastructure sectors. logically literate and where the country can ■■  Many officials and specialists involved in the support large influxes of ICT businesses. e-government and ICT sectors are unfamiliar Moreover, these types of e-government PPPs are with the potential role of the private sector in only possible if the government is already general, and the use of PPP as a risk-sharing tool experienced in PPP selection, procurement, and in particular. Most of these individuals have monitoring. limited experience with the economic and What are the Gaps in our Knowledge of PPP in E-Government? 49 …and What Has Not Positive Developments in Bridging the Knowledge Gap It is difficult to assess what has not worked in ■■  enchmarking Initiative – The European B e-government PPP given that they are not widely e-Business Support Network (EBSN) is a documented or published. developing initiative of the EU to benchmark policy initiatives that support e-business. The ■■  apital Intensive Projects that are not pilot-tested C network is meant to inform policy makers about – Projects, such as a network of citizen service successful initiatives in ICT and e-business centers/kiosks, cover a large area, and require promotion. The lessons-learned from the large investment in computer hardware and benchmarking initiative will be invaluable to human resources. If these services have not been governments seeking to implement e-government piloted in a small region, the roll-out to the programs through partnership with the private entire project area is more likely to be fraught sector. with high, unsustainable costs. 50 Public-Private Partnerships in E-Government: Knowledge Map Chapter 16 Case Studies The following case studies are developed in the body ■■ Irish Central PPP Policy Unit of the Knowledge Map. Click on the links below to ■■ Malaysia’s Multimedia Super Corridor go directly to each case study. It is important to note ■■ National Institute for Smart Government that each case study was developed within a given (NISG) context for the purpose of illustrating a specific ■■ Online Tax Filing in Chile subject in the Knowledge Map. Therefore, the ■■ Philippines BOT Center details included in each case study are not meant to ■■ Philippines BOT Center Project Development be exhaustive. Facility ■■ Philippines BOT Law ■■  ndhra Pradesh IT Corridor A ■■ Poucatempo Citizen Service Centers ■■ Austria’s ADONIS: A Failed E-Government ■■ Seat Management for ICT Services PPP ■■ Service New Brunswick ■■ Bangalore One (B1) ■■ Service@Swansea ■■ Egypt’s ICT and E-Government Program ■■ Singapore eCitizen Portal ■■ Controversy in PPP—Bulgaria E-Government ■■ South Africa Department of Labour ICT Procurement Process ■■ South Africa Golaganang E-Government for ■■ E-Authentication Federation Development ■■ Estonia National ID Card ■■ South African Department of Labour ■■ Estonia Rural Connectivity Stakeholder Interface ■■ FedBid.com ■■ South African National Treasury PPP Unit ■■ Germany’s Initiative D-21 ■■ South African Public Financial Management ■■ Hong Kong Smart I.D. Card Act and PPP Framework ■■ India MCA 21 ■■ US State Government Web Portals ■■ India’s eSeva: Lessons from a Successful E-Government PPP Case Studies 51 52 Public-Private Partnerships in E-Government: Knowledge Map Chapter 17 Resources and Links The following is a list of all of the resources listed in ■■  E-Government Services and Public-Private “ the body of the Knowledge Map, including online Partnerships Modeling,” by Thomas White, publications, government PPP organizations The Institute for Public-Private Partnerships, worldwide, and other websites with a large compila- http://www.ip3.org/pub/publication2002_019. tion of PPP related information. htm. ■■ “E-Government,” Patricia Pascual, UNDP-  APDIP, 2003. http://www.apdip.net/publications/ iespprimers/eprimer-egov.pdf Online Publications ■■  “Global E-Government, 2006,” Darrell M. West, Brown University, 2006, http://www. ■■  A P3 Primer: Why Are Countries Interested in “ insidepolitics.org/egovt06int.pdf. P3?” Jonathan Loew and Matthew Hensley, ■■ “Guidelines for Public Debt Management,  The Institute for Public-Private Partnerships, Inter-national Finance Corporation,” http://www. 2002. http://www.ip3.org/pub/publication002. imf.org/external/np/mfd/pdebt/2003/eng/am/index. htm htm ■■ “A Strategic Framework for Consultation and  ■■ “Guidelines for Using the Public Sector  Communication,” Kathleen Slattery, The Comparator,” Government of Canada, http:// Institute for Public-Private Partnerships, 2002. strategis.ic.gc.ca/epic/internet/inpupr-bdpr.nsf/ http://www.ip3.org/pub/publication2002_009.htm en/h_qz01557e.html ■■  “Building Local E-Government through ■■ “Guidelines for Employing the Public Sector  Public-Private Partnerships,” Information Comparator,” Partnerships Victoria http://www. Technology in Developing Countries, Vol. 15, No. partnerships.vic.gov.au/CA25708500035EB6/0/E 2, November 2005. http://www.iimahd.ernet.in/ 4C501A76F826D77CA2570C0001B45EA?Ope egov/ifip/nov2005/article7.htm nDocument. ■■  “Champion the Philippine BOT Law,” ■■ “Is the Public Sector Comparator Right for  Coordinating Council for Private Sector Developing Countries, James Leigland and Chris Participation, The Institute for Public-Private Shugart, Gridlines, Note No. 4, April 2006. Partnerships, 2001, http://www.ip3.org/pub/ http://www.ppiaf.org/Gridlines/4africa.pdf. publication014.htm ■■ “Lessons of PPP in the Austrian ICT and  ■■  “Closing the Infrastructure Gap: The Role of E-Government Sector,” Gerhard K. Wagener, Public-Private Partnerships,” William Edgars and Austrian Private Association for the Information Tom Startup, Deloitte Research, 2006. http:// Industry. www.global-ict.mincom.gov.az/ www.deloitte.com/dtt/cda/doc/content//ca_en_fas_ presentations/24.ppt infrastructure_gap_mar07.pdf ■■ “Locking Private Sector Participation into  ■■ “Digital Signatures Act,” Government of Estonia  Infrastructure Development in the Philippines,” – http://www.esis.ee/legislation/digital_signatures_ Noel Kintanar, Lourdes Baclagon, Rodolpho act.pdf Azanaz, Jr., and Rina Alzate, Transport and ■■ “Effectively Managing Professional Service Communications Bulletin for Asia and the Pacific, Contracts: 12 Best Practices,” Sandra Fisher, No. 72, 2003. http://www.unescap.org/ttdw/ Michael Wasserman, and Paige Wolf, IBM Publications/TPTS_pubs/bulletin72/bulletin72_ Center for the Business of Government, 2006. ch2.pdf http://www.businessofgovernment.com/pdfs/ ■■  “Managing Digital Identities and Signatures FisherReport.pdf through Public/Private Partnership,” Cybertrust, Resources and Links 53 2005. http://www.cybertrust.com/media/case_stud- Hammerschmid, IFSAM VIIIth World Congress, ies/cybertrust_cs_easton.pdf 2006. http://www.ctw-congress.de/ifsam/download/ ■■ “New Tax Law Boosts School Construction with  track_4/pap00344.pdf Public-Private Partnerships,” Ronald D. Utt, The ■■  “Public-Private Partnerships; an Incomplete Heritage Foundation, Aug 2001. http://www. Contract Approach,” John Bennett and heritage.org/Research/Taxes/BG1463.cfm Elisabetta Iossa, Economic and Social Research ■■  “Not Providing Computers for all South African Council, 2006. http://www.esrcsocietytoday.ac.uk/ Civil Servants,” Alan Levin, E-Government for ESRCInfoCentre/ViewAwardPage.aspx?data=%2f Development, Success/Failure Case Study No. 26 FrXHTl993rfseTxMGcI2RrDadEM3%2f7d9Iu http://www.egov4dev.org/golaganang.htm#title WJK0suPlMkKP75U%2biuxh85O8MQ%2bFB ■■  “One Stop Shop for Electronic Delivery of NAEdcTtIe42GEJYksOYmuI%2frWlJHpxfM Services: Role of Public-Private Partnership,” 69sGdae0%2f4r6xacYAbe6HLBDl68qw Subhash Bhatnagar, Indian Institute of IY1Kkrk9u7e3fhHLqdzLUE6dpPtB6G Management, http://www.iimahd.ernet. 22rkdu2dpa%2b5sVm3KNA8nbrRVnQn3 in/~subhash/pdfs/OneStopShopForElectronic UxH4AFjuXPCV%2f3nFngRqBRUFdc DeliveryJun2005.pdf. 20fUaTeE10nEPren%2fxlpoCIyLajP0XIN9 ■■  “Partnerships Victoria Policy (2000)” – A concise pmjtdap1YzlMRguUKTXznyKo6V3bv3%2fx and well-articulated example of a sound state- UPKThCk%2b4tyq91Skwq%2fYNApxlcgq ment of the policy objectives of PPPs across a WAP8VDsw0wEUYABHAYBj1UXQsmMbRH range of sectors, including information & eRwSIRp4JdsUnmek4Az%2fjT%2fR27vUX7 communications technology and e-government- WChAxuXvQpTb2vRVrGlAPM6wW4NJRQEg related services. http://www.partnerships.vic.gov.au/ %3d&xu=&isAwardHolder=&isProfiled=& CA25708500035EB6/WebObj/Policy/$File/Policy. AwardHolderID=&Sector pdf ■■ “Putting Federal Public-Private Partnering on  ■■  “Project Development Facilities: A Survey of Track,” by Roger D. Feldman, Construction International Experience,” USAID, Booz, Allen Business Review, 2004. http://www. & Hamilton, 2002, http://www.bidfacility.com/ constructionchannel.net/Ashley/CBR%20 PDF_Survey_Findings.pdf. Magazine/Construction%20Business%20Review/ ■■  “Public Good Through Public-Private Ashley/Public-Private%20Partnerships.htm Partnership,” J. Satyanarayana, National Institute ■■  “Six Guiding Principles to Achieve Sustainable for Smart Government, 2004, http://www.nisg.org/ PPP Arrangements,” by Cledan Mandri-Perrott, docs_pdfs_ppts/ppts/Public%20Private%20 the Institute for Public-Private Partnerships, Partnership%20-%20Feb%202004.pps 2005, http://www.ip3.org/pub/2005_ ■■  “Public Private Partnership Projects in Germany: publication_002.htm. A Survey of Current Projects at Federal, Land, ■■  “TexasOnline Passes $1B Mark,” Austin Business and Municipal Level,” Deutsches Institut fur Journal, April 26, 2004. Urbanistik, 2006. http://www.difu.de/english/ ■■  “The Politics of Public-Private Partnerships,” occasional/06ppp.pdf Flinders, M., 2005, British Journal of Politics ■■ “Public-Private Partnerships and the Role of State  and International Relations. and Federal Legislation in Wireless Municipal ■■  “UNCITRAL Model Legislative Guide on Networks,” by Andrea Tapia, Matt Stone, Carleen Privately Financed Infrastructure Projects,” Maitland, 33rd Research Conference on 2003. http://www.uncitral.org/pdf/english/texts/ Communication, Information and Internet procurem/pfip/model/annex1-e.pdf Policy, Paper 6269. http://web.si.umich.edu/tprc/ ■■ “Value for Money Framework,” Government of  papers/2005/431/TPRC_Tapia_Stone_Maitland. Queensland, Australia http://www. pdf coordinatorgeneral.qld.gov.au/pp_partnerships/ ■■  “Public-Private Partnerships, E-Government, and policy_value.shtm Privacy,” by Jim Dempsey, Center for Democracy ■■ “What are Public-Private Partnerships,” BBC  and Technology, Washington, DC, 2006. News, 2003. http://news.bbc.co.uk/1/hi/ ■■  “Public-Private Partnerships: Public Affairs uk/1518523.stm Management in the Twilight Zone of Public and ■■  “What Went Wrong: Lessons from Private Sector,” ADONIS Case Study, Gerhard Cochabamba, Manila, Buenos Aires, and 54 Public-Private Partnerships in E-Government: Knowledge Map Atlanta,” Kathleen Slattery, Privatization Review, of e-government PPP projects. http://ec.europa. The Reason Public Policy Institute, 2003. http:// eu/idabc/en/chapter/140 www.rppi.org/apr2003/whatwentwrong.html ■■  E-Government Resource Center – the Victoria ■■ E-Government in the Asia Pacific Region: An Government’s repository of e-government Assessment of Issues and Strategies; includes initiatives and international research, http://www. discussion on how PPP contributes to sustain- egov.vic.gov.au. ability of e-government. Page 17. http://www. ■■ e-Procurement.gov.in – Comprehensive  apdip.net/resources/governance/egovernance- e-infrastructure of the Government of India egovernment/APDIP-eGovPaper-Subhash.pdf allowing for eProcurement, eTendering, eSelling, ■■ Philippines BOT Law, 1993, http://www.  and eAuctions, http://www.eprocurement.gov.in botcenter.gov.ph/botlaw/index.htm. ■■ ESDlife – http://www.esd.gov.hk/home/eng/  ■■  Public-Private Partnership Opportunities in default.asp E-Government, November 2002, study commis- ■■ Germany’s Initiative D21 – http://www.  sioned by the Government of Australia to initiatived21.de examine PPP options for E-Government. http:// ■■ Knowledge Services for Private Sector  www.agimo.gov.au/__data/assets/file/19014/PPP. Development, by Rapid Response/World Bank. pdf Numerous links to articles, papers, and websites ■■  South African Public Financial Management dealing with PPP. http://rru.worldbank.org Act, 1999, http://www.treasury.gov.za/legislation/ ■■  Ministry of Company Affairs India – MCA 21 acts/pfma/default.htm. initiative for e-government, http://www.mca.gov. in/ ■■ National Council for Public-Private  Partnerships, www.ncppp.org Government PPP Institutions ■■  Private Enterprise Partnership for Southeast Europe – www.bidfacility.com ■■ C  anadian Council for Public-Private ■■  Public-Private Partnership Units: Are they Partnerships, www.pppcouncil.ca needed and what should they do? An online ■■  Irish Central PPP Policy Unit – www.ppp.gov.ie discussion moderated by PPP specialists among ■■ Malaysia Office of the Prime Minister Economic  PPP practitioners worldwide. http://rru. Planning Unit – The entity responsible for worldbank.org/Discussions/topics/topic76.aspx planning and implementing PPP in Malaysia ■■ South African Department of Labour – http://  including many innovative ICT and E-GOV www.labour.gov.za schemes. www.epu.jpm.my ■■  South African Department of Treasury – http:// ■■ Partnerships UK – http://www.partnershipsuk.org.  www.treasury.gov.za uk/ ■■  The Electronic Procurement System of the ■■ South Africa National Treasury PPP Unit –  Government of Malaysia – Malaysia is a world www.ppp.gov.za leader in e-GOV, especially e-procurement. Established as a PPP the e-procurement system or “e-perolehan” has transacted thousands of projects and resulted in significant costs savings. Websites Check out this unique website to learn more at home.eperolehan.com. ■■  -Authentication Federation – http://www.fmcsa. E ■■  World Bank website on Sub-sovereign and dot.gov/eauth/federation/ Municipal Finance, http://web.worldbank.org/ ■■ E-government Observatory – Section of the  WBSITE/EXTERNAL/EXTABOUTUS/ IDABC Website that documents news, fact ORGANIZATION/EXTINFNETWORK/0,,cont sheets, and best practices from e-government entMDK:20535853~menuPK:1827920~pagePK initiatives throughout Europe. Includes examples :64159605~piPK:64157667~theSitePK:489890, 00.html Resources and Links 55 About infoDev infoDev is global development financing program among international development agencies, coordinated and served by an expert Secretariat housed at the World Bank Group, one of its key donors and founders. It acts as a neutral convener of dialogue, and as a coordinator of joint action among bilateral and multilateral donors—supporting global sharing of information on ICT for development (ICT4D), and helping to reduce duplication of efforts and investments. infoDev also forms partnerships with public and private-sector organizations who are innovators in the field of ICT4D. The infoDev Secretariat is housed in the Global ICT Department (GICT) of the World Bank Group. For additional information about this study or more general information on infoDev, please visit www.infodev.org/publications. Information for Development Program www.infoDev.org www.infoDev.org