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Public Private Partnership Contract
Public-Private Partnership Contracts: A Tale of Two Cities with
Different Contractual Arrangements
Rui Cunha Marques Sanford V. Berg
Centre of Urban and Regional Systems Public Utility Research Center
Technical University of Lisbon University of Florida
January 6, 2010
This paper analyses regulation by contract in public-private partnerships (PPPs) for
infrastructure services. Although the benefits of competition for the market and subsequent
regulatory contracts are recognised, the literature also identifies contract design failures.
When considering these limitations, it is useful to distinguish between contracts associated with
purely contractual PPPs (concessions) and contracts for institutionalised PPPs (mixed
company). Two cases from the Portuguese water sector are used to illustrate problems arising in
the preparation of public tender documents: the "best" bidder is often not the winner. Often,
risks are not allocated correctly nor is effective monitoring ensured. Comparisons between the
two types of contracts show how external regulation can be useful in mitigating contractual
problems. This examination of bidding procedures and contract design yields several
implications for policy-makers; in addition, the study presents recommendations for improving
regulatory contracts.
Keywords: public-private partnerships; water utilities; concessions; mixed companies; contract
This paper is a shortened and revised version of Public-Private Partnership Contracts:
A Tale of Two Cities (June 2009PURC Working Paper)
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Public Private Partnership Contract