New Zealand’s Guidance for Public Private Partnerships

The National Infrastructure Unit of the Treasury of New Zealand has published a new report entitled “Guidance for Public Private Partnerships (PPPs) in New Zealand”. This is a report that can provide significant insights to the PPP market not only in New Zealand for those working and thinking about the next steps for the PPP market in the United States.

The purpose of this guide is to outline for government agencies, potential bidders and the public the general direction and principles that will be adopted, the processes that are to be followed and the rationale for them. It also provides a framework for assessing whether a PPP is to be preferred over other forms of procurement in any given situation.

As noted in the report for New Zealand:

  • Public Private Partnerships (PPPs) can refer to many different kinds of relationships between the government and the private sector, but these guidelines use the term to refer to long-term contracts for the delivery of a service, where the provision of the service requires the construction of a facility or asset, or the enhancement of an existing facility.
  • The private sector partner finances and builds the facility, operates it to provide the service and usually transfers control of it to the public sector at the end of the contract. These contracts are sometimes also referred to as concession agreements.
  • The long-term nature of PPP contracts, the fact that these contracts are usually used for large and often complex projects which individual government agencies will engage in only infrequently, the importance of financing arrangements and the typically large bidding and contracting costs make it desirable to develop specialist expertise to support departments and agencies in the development of PPPs. In New Zealand, this role is played by the National Infrastructure Unit of the Treasury.

The guide looks at the well developed Australian guidance, but recognizes that New Zealand’s circumstances are different and therefore looks at what can be followed and what needs to be changed. The report looks at when/why a PPP should be considered, risk assessment, project management structure, project delivery structure, the bidding process, project negotiation, financial impacts and project review upon final negotiation.

Most importantly, the report states, “Finally, readers should note that these guidelines should not be substituted for common sense, judgement and experience. Expert advice should therefore be sought wherever appropriate.”

PPP’s are complex and there are no cookie cutters available to any country or any state in the USA. This report is well worth a review.