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What the PACT?!

What the PACT?!

In public-private partnerships (PPPs), there are the two “PACTs”. The first one refers to the arrangement itself and the second one pertains to the manner by which the parties to the arrangement are determined.

Every PPP project must be embodied in a pact or formal agreement. The parties to a PPP—the public entity and the private-sector proponent (PSP)—consensually enter into a
contractual arrangement.

The PPP contract discusses the role of each party, the nature of the project and its performance targets, the appropriate PPP modality, and the contractual obligations and contributions. This pact governs the present and the future of the partnership, i.e., what happens after the effectivity date.

What the first pact does not cover, but is mentioned in the whereas or preambulatory clauses, is another pact. The second pact refers to the past or the necessary antecedents and prerequisites that led to the execution of the first pact. The legality of the PPP, the first pact, is determined, among others, through the legality of the process by which the PSP is chosen. In order to be valid, the selection of the PSP must comply with four core requirements—the P-A-C-T—where P stands for Public Advantage, A for Accountability, C for Competition and T for Transparency.

  • Public Advantage. The PSP selection process is anchored on the purpose of PPPs. All PPPs must advance the true north of all development initiatives, i.e., the public good. The procedure cannot be dissociated from the substance. The “P” is the tie that binds the “A”, “C” and “T”.
  • Accountability. The PPP arrangement must serve a purpose and is, therefore, accountable to this purpose. The PPP must be responsive to the needs of the people, and the people who enter into this pact must be responsible for this. This is performance accountability.

Accountability can also be measured through rule-following. The Build-Operate-and-Transfer Law, 2013 Guidelines on Joint Ventures, the Government Procurement Reform Act, local ordinances and other regulations must be observed. Depending on the applicable modality and relevant law, competitive bidding, limited negotiations and competitive challenge through unsolicited proposals may be followed.

  • Competition. To avoid tailor fitting and monopoly, there must be competition for the market where a level playing field among eligible proponents is promoted. In a public bidding, there must be an offer to the public, an opportunity for competition and a basis for an exact comparison of bids. In an unsolicited proposal under current rules, a proposal can be challenged by other proponents, giving the original proponent a right to match the superior offer or improve upon an earlier offer.
  • Transparency. The selection process must be open to scrutiny. PPP processes should not be exclusive or selective, but must be inclusive where the general public sees the whole process. Transparency is not confined to giving access to documents that report on concluded processes, but should permit stakeholders to have access to information about the process that led up to the decision or action.

So, what’s the PACT? The first pact brings us hope for a better future, whereby the second pact infuses integrity in the process.

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