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What is Not a PPP

Governments enter into a wide range of contracts with private companies. Some of these contract types share some of the typical PPP characteristics (long-term, output based, risk-transferring), however they differ in some fundamental manner from a PPP—usually in duration, objectives, or legal status and structure.

This is an important distinction to note here, as the guidance in this website applies only to projects that are PPPs. These types of contracts and arrangements are not considered PPP:

Management contracts

Management contracts typically include similar performance indicators and requirements to PPPs. However, they are often short, and do not involve significant private capital investment allowing the private operator to break the contract without damage.

Operations and maintenance contracts

Operations and maintenance (known often as O&M contracts) and performance-based maintenance contracts also fall outside the definition of PPP, when they are short duration.

Design-build or "turnkey" contracts

Design-build or turnkey contracts include PPP-like output-based specifications; however, as shorter-term contracts they do not create the same long-term performance incentives as PPPs.

Financial lease contracts

Financial lease contracts are long-term contracts for providing public assets. However, these contracts transfer significantly less responsibility for the project to the private party than PPPs.

Note: these definitions above, rely on the distinction between the long- and short-term, begging the question, what is long and what is short? Not surprisingly, there is no agreed-upon definition of this, but PPP practitioners would probably agree that anything less than five years is short and anything more than ten is long, with a grey area in between.

Other partnerships between the public and private sector

The expression public-private partnership is often applied to other types of arrangements between public and private entities that contribute to public policy goals. These can include, for example:

  • Information-sharing mechanisms, such as a PPP against healthcare fraud in the United States involving the federal government, state officials, several leading private health insurance organizations, and other health care anti-fraud groups
  • Voluntary activities undertaken by private companies towards public ends and in coordination with relevant authorities, such as community health or education projects attached to major foreign direct investment projects
  • Private funding of public investment projects on a philanthropic basis, which may involve some private involvement in project execution
  • Jointly-run projects for research and innovation, formed to draw on skills and information in both the public and private sectors
  • Government interventions to support private sector development in general, or in particular target sectors—such as providing land, assets, debt, equity or guarantees to otherwise fully private enterprises that are not involved in provision of public services.

 

Learn More

For legal and regulatory resources go to PPPIRC

Explore PPP Cycle