Procurement of Goods and Services Using Public-Private Partnerships

Since the 1990s, governments in Canada have experimented with new, innovative procurement approaches, including different types of Public-Private Partnerships (P3). Under the P3 model, project phases (decision, contracting, design, construction and operation) are usually integrated in single, long-term contract (sometimes over 30 years) and a number of project risks (e.g. financing, construction delays and cost over-runs, infrastructure performance) are assumed by the selected private sector partner in exchange for a risk premium. The private partner can be offered incentives to meet or exceed performance targets and penalties can be applied when performance does not meet expectations. Though private partners play a larger role in project execution than under the traditional approach, the public sector still retains control and ownership of the infrastructure. The number of P3 agreements has been steadily increasing in Canada in recent years.