KEY FEATURES OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT

A Public-Private Partnership, known as (PPP), is a collaboration between a government agency and a private entity. This partnership can be formed for a term-to-term or project base period. One of the examples could be the Metro Rail project agreement, where the state government of Telangana signed a PPP Agreement with Larsen and Turbo for the construction of the Hyderabad metro rail. Any effective Public-Private Partnership requires an ironclad agreement, which both the parties must agree upon and duly sign.

  Business   Nov 25, 2020   0  Add to Reading List
KEY FEATURES OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT

KEY FEATURES OF A PUBLIC-PRIVATE PARTNERSHIP AGREEMENT

A Public-Private Partnership, known as (PPP), is a collaboration between a government agency and a private entity. This partnership can be formed for a term-to-term or project base period. One of the examples could be the Metro Rail project agreement, where the state government of Telangana signed a PPP Agreement with Larsen and Turbo for the construction of the Hyderabad metro rail.

Any effective Public-Private Partnership requires an ironclad agreement, which both the parties must agree upon and duly sign. Some essential clauses under any Public-Private Partnership Agreement are as follows:

 

  1. Definitions and Interpretations- A definitions clause in any agreement helps both the parties analyze and interpret the contract in the way the parties intend to. Some terminologies get difficult to understand and hence, a definitions clause is added. Some technical terms mentioned in the contract can be described here. In the case of a project that requires details such as measurements, a sub-clause focusing on the metric system that will be used for the measurements can also be added in order to avoid any absurdity.

     

  2. Scope of the Public-Private Partnership- This clause shall mention the extent to which the parties are allowed to work.

     

  3. Obligations of the Government Body- Any form of the agreement requires the parties to list the obligations that they agree to abide by. The agreements shall specify what the obligations are. Obligations for the government body could be for the access to various resources required by the entity, sanction any requirements, provide required information on time, and so on, depending on the needs of the private entity.

     

  4. Obligations of the Private Entity- Any private entity that works with the government body is expected to work efficiently and effectively, as the end result is for the benefit of the citizens, who rely on the government for work. Any private entity that works with the government body under this agreement is also expected to follow certain rules and obligations, such as the delivery of the final result on time, working in good faith, maintaining goodwill, and so on.

     

  5. Confidentiality- Any agreement has to have a confidentiality clause that clearly states that any information provided by the parties is subject to confidentiality, and any form of a leak may lead to legal consequences. This clause is important, as it saves both parties from any form of ill repute and provides protection to the goodwill of the company.

     

  6. Survival- PPP Agreements are either based project wise or are based according to the term that the parties wish for. Hence, a clause mentioning the survival period of their contractual relationship helps the parties decide and work accordingly. If the parties decide to complete all contractual obligations after the completion of the project, then the parties must specify the same in the agreement. A sub-clause regarding the renewal of the contract can also come under this clause or a sub-clause.

     

  7. Liability- In case of a circumstance that raises the question of liability on the parties, the parties shall be ready with an agreement about who bears the same and in what percentage. This helps the parties and avoids any future conflict.

     

  8. Payments and Billing- To avoid confusion and to make all necessary payments on time, the parties must agree upon payment method, currency (if needed), and the time for payment needed. The bills need to be kept safely in records to maintain transparency amongst parties and citizens.

     

  9. Monitoring and Supervision- No matter how much autonomy a party enjoys, the other party must lay down some ground rules for supervising the work being done, which would be legally permissible and would avoid any conflict ahead.

     

  10. Intellectual Property- In case there is any intellectual property that comes out of this agreement, such as logos, designs, plans, and so on, the parties need to agree on which party will enjoy the benefits of the intellectual property and own the same.

  11. Completion Certificate- Several agreements have a clause for a completion certificate that the authority party gets to sign to know that the authority party agreed with the completion and has no objection regarding the work offered by the other party. This certificate is drafted by the parties as per their understanding and common ground agreement.

     

  12. Modifications and Amendments in the Agreement- In case either party decides to make any changes in the agreement, they must come up with the procedure to do the same. The procedure can involve the number of days it might take to make the amendment, the time to accept or reject the amendment, the method of informing the party, and so on.

     

  13. Technology Up-gradation- There might be instances where the party working under the PPP Agreement decides to upgrade the technology in order to work better. This shall be notified to the authorized party.

     

  14. Insurance- The parties shall always keep this clause in case of a situation that arises. The amount, the beneficiary, and other such factors of insurance should be decided by the parties in order to keep the insurance and prevent it from a lapse.

     

  15. Accounts and Audit- This clause should mention the auditing of the accounts on a regular basis, and maintaining proper books of accounts in order to have transparency amongst them. The accounts should be made with a substance of proof that shows the history and the current status of the particular transaction.

     

  16. Breach of Agreement- Breach of the agreement will lead to several losses and damages. Through the clause, the parties must agree upon any form of compensation for the damage caused by the breach. Either the compensation could be a cap, or could be any amount decided ad agreed upon by the parties by signing the contract.

  17. Miscellaneous- There are several small details that could cause major damage. Listing them here as a clause and a warning creates awareness and forms steps that the parties shall avoid.

PPP Agreements are formed for several forms of contracts and projects that vary from their very nature. Any PPP Agreement should be very specific in nature. Any small or huge detail should be clearly specified in the contract to avoid any loopholes and provide the party with 

an ironclad agreement.


 

References-

  1. Government of India NITI Aayog (PPP Vertical) Sansad Marg, New Delhi - 110001 [PDF]. (n.d.).

  2. Model Agreements. (n.d.). Retrieved November 25, 2020, from https://niti.gov.in/documents/model-agreements

  3. PPP Features and Forms. (n.d.). Retrieved November 25, 2020, from https://finmin.lrv.lt/en/competence-areas/public-and-private-partnership-ppp/ppp-features-and-forms

  4. PUBLIC PRIVATE PARTNERSHIP AGREEMENT Entered into between THE GARDEN ROUTE DISTRICT MUNICIPALITY And EDEN WASTE MANAGEMENT PROPRIETARY LIMITED. (n.d.). Retrieved from https://www.gardenroute.gov.za/wp-content/uploads/2018/12/Draft-PPP-Agreement.pdf

  5. Rai, D. (2020, October 28). Key features of public-private partnership agreement. Retrieved October 25, 2020, from Key features of public-private partnership agreement


 

BY-

ADITI GOEL

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