Find Lawyers in Munich, Germany for Public Private Partnership
Public Private Partnership Definition
Public private partnerships are specific long term contractual relationships between public authorities or entities on one side and a private partner on the other side where the private partner takes responsibility for delivering and performing a part of infrastructure and/or services on behalf of such public authority or entity. Typical examples are the construction, operation and maintenance of schools, prisons, administration buildings, hospitals and motorways. There are also IT related public private partnerships.
Public private partnerships are characterised by a life-cycle approach and financing for the initial investment being arranged by the private partner. In respect of the life-cycle approach the private partner is responsible for the (detailed) design, construction as well as operation and maintenance of the asset over the asset’s usual commercial life, usually a time period of 25 to 30 years. The transactions in most cases include a financing of the initial investment (construction or renovation) arranged by the private partner which is only being repaid over the term of the contract with the public party. There are in principle two different financing structures: (i) a true project financing where the debt providers take full project risk and (ii) a forfeiting structure where upon completion of construction the public party undertakes to repay the debt in accordance with a preset repayment schedule regardless of the level of performance of the contract by the private partner.
The benefits of public private partnerships are primarily (i) the fixed price approach from day one (compared to often massive cost overruns in conventional construction projects), (ii) immediately available funds to conduct even large projects in a comprehensive manner (due to the private financing) and (iii) the risk of ongoing operation and maintenance and related costs being transferred to the private partner.
Lawyers being active in public private partnerships need a wide range of expertise as there is significant interdependence of various areas. Since these contracts are tendered by the public sector public procurement law plays a crucial part. Further, detailed knowledge in contract law, in particular in relation to construction as well as operation, maintenance and service contracts is required. In addition, financing aspects are an important part. Finally, aspects of administrative, corporate, employment, tax and competition law need to be taken into account. Most lawyers playing a major role in this market combine at least a number of these areas as it is important to have a coherent structure on all levels. In addition to the pure legal aspects it is important for lawyers in this area to understand the economics of such transactions and bring sector expertise to provide valuable advice to their clients, regardless of whether the client is a public entity, a private investor, construction company or maintenance/service provider or a debt provider. Lawyers are usually involved throughout the whole tendering procedure, take a leading role in the drafting and negotiation of relevant agreements and assist in disputes or questions of interpretation throughout the lifetime of the contract.
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