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open-contracting-extensions / public-private-partnerships

OCDS for Public Private Partnerships (PPPs)
http://standard.open-contracting.org/profiles/ppp/latest/en/
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Add nature/natureDetails adapted from OC4IDS #238

Open duncandewhurst opened 3 years ago

duncandewhurst commented 3 years ago

CoST Honduras collects structured data on the type of each PPP contract in SISOCS APP and they want to include this in their OCDS for PPPs data.

Example

The possible values are as follows, although these can be set/updated by the system administrator:

ES EN (machine translated)
Contrato de Diseno Design Contract
Contrato de Diseno y Construction Design and Construction Contract
Contrato de Diseno y Supervision Design and Supervision Contract
Contrato de Mantenimiento Maintenance contract
Contrato de Supervision Supervision Contract
Contrato de Verificacion Verification Contract
Contrato de Concesión / DFBOT (Diseño, Financiamiento, Construcción, Operación y Transferencia) Concession Contract / DFBOT (Design, Financing, Construction, Operation and Transfer)
Contrato de Fideicomiso Trust Agreement
Contrato de Concesión / DFBT (Diseño, Financiamiento, Construcción y Transferencia) Concession Contract / DFBT (Design, Financing, Construction and Transfer)

Other standards

I couldn't find any relevant models in linked open vocabularies.

There is a quite a lot of cross over with project delivery methods although these describe the project as a whole rather than the contract, e.g. a design-bid-build project would have a construction contract, but a design-build project would have a design and construction contract, and from some brief research I wasn't able to find an authoritative list.

There is also cross over with the contracting process nature field in OC4IDS:

Whether this contracting process relates to the design, construction and/or supervision of the project, from the contractNature codelist. More than one value may be provided if the contract is for both design and construction, or both design and supervision, etc.

Modelling options

1. Local extension

The simplest option is to add a local contractType free-text field, however this does not serve the purpose of standardization.

2. Extend OC4IDS contract nature codelist + natureDetails field

Alternatively, we could reuse the contracting process level nature field from OC4IDS and extend the contractNature codelist with the extra codes needed to represent the values currently used in SISOCS:

This would serve the purpose of standardization and the original value could be disclosed in a natureDetails free-text field, if needed.

However, nature is a closed codelist and these codes are just taken straight from SISOCS, so it would be good to validate them against an existing classification before adding them to the standard. @nadineFernz @EvelynDinora, @jpmckinney are any of you aware of an authoritative codelist we could defer to?

jpmckinney commented 3 years ago

How does verification differ from supervision? There seems to be some overlap in terms of compliance and monitoring.

What are 'trust' and 'concession' contracts?

Adding codes seems like a fine strategy.

duncandewhurst commented 3 years ago

Verification contracts

CoST Honduras said they don’t know what 'Contrato de Verificación' means but they believe it is the same as Supervision.

I checked the SISOCS APP portal and no projects are tagged with this type.

The CoST Honduras First Assurance Report makes reference to a 'Contrato de Verificación de la Sección II y III del Corredor Logístico' but I wasn't able to find this online anywhere. The annexes to the report (page 96) mentions separate contracts for supervision and verification but doesn't particularly clarify the differences:

Process of execution and supervision of the work As this is a project whose design, construction and supervision is carried out under the “turnkey” modality, the information available refers to the design and supervision contract by the company ATP Engenharia Ltda. And the contract of technical and financial verification by the Regioplan company. In this sense, the information disclosed for this type of project is quite limited. However, all the assurance processes have been carried out by the ECA.

So, absent a definition for 'verification' I think we can just map it to 'supervision' for now.

Trust contracts

Trust contracts are described in the World Bank's PPP disclosure diagnostic report for Honduras (page. 34 onwards):

A system of trust funds has been created by the National Congress to support COALIANZA in the PPP procurement and management process. These trust funds essentially “outsource” the responsibilities of project preparation, procurement, and management to domestic fiduciary banks through a competitive bidding process. The rationale behind creating this system of trust funds was that fiduciary banks would be able to carry out project preparation, procurement, and management more efficiently and transparently. Approximately 90 percent of the PPP projects to date have been developed through trust funds, with more trust funds available for future projects.

The report also mentions that:

The parties in a PPP project can be organized in any legal way suitable to the development of the project, including participation contracts, joint ventures, and trust funds, among others.

I found an example of a PPP trust contract in Honduras which creates a trust for the structuring, development and financing of a PPP for improvements to a port.

So in the case of Honduras, rather than adding 'trust' to the contract nature codelist, we can either"

  1. Add codes for 'preparation', 'procurement' and 'management' to represent the functions covered by the contract
  2. Introduce a new field to represent how the parties in the project are organized
  3. Use natureDetails to disclose that the contract is a trust contract

Until we see demand from other publishers, I propose we just go with 3.

Concession contracts

I checked Honduras' PPP law and accompanying regulations and whilst both use the term 'concession' neither define it.

The PPP Knowledge Lab Glossary has the following definitions relevant to concession contracts:

Concession The right granted by the host government for a private company to undertake an otherwise public sector project and operate that project over a period of time.

Concession Agreement The agreement with a government body that entitles a private entity to undertake an otherwise public service. See also constituent documents; project documents.

However, according to the PPP Knowledge Lab's PPP Reference Guide, a concession can mean different things in different jurisdictions:

Concession is used for a range of types of contract, as described in Delmon (Delmon 2010, Box 1 on page 9). In some jurisdictions, concession may imply a specific type of contract; while in others it is used more widely. In the PPP context, a concession is mostly used to describe a user-pays PPP. For example, in Brazil, the Concession Law applies only to user-pays contracts; a distinct PPP Law regulates contracts that require some payment from government. On the other hand, concession is sometimes used as a catch-all term to describe a wide range of PPP types—for example, all recent PPPs in Chile have been implemented under the Concession Law, including fully government-pays contracts

Helpfully, the paper referenced above states that 'The word "concession" is the most common and probably the least precise of the PPP terminology.'

I'll ask CoST Honduras again what a concession contract is in their context.

Codelists to defer to

The PPP Knowledge Lab Reference Guide lists the following typical functions which may be covered by a PPP contract:

  • Design (also called engineering work)—involves developing the project from initial concept and output requirements to construction-ready design specifications.
  • Build, or Rehabilitate—when PPPs are used for new infrastructure assets, they typically require the private party to construct the asset and install all equipment. Where PPPs involve existing assets, the private party may be responsible for rehabilitating or extending the asset.
  • Finance—when a PPP includes building or rehabilitating the asset, the private party is typically also required to finance all or part of the necessary capital expenditure, as described further in How PPPs Are Financed.
  • Maintain—PPPs assign responsibility to the private party for maintaining an infrastructure asset to a specified standard over the life of the contract. This is a fundamental feature of PPP contracts.
  • Operate—the operating responsibilities of the private party to a PPP can vary widely, depending on the nature of the underlying asset and associated service. For example, the private party could be responsible for:
    • Technical operation of an asset, and providing a bulk service to a government off-taker—for example, a bulk water treatment plant
    • Technical operation of an asset, and providing services directly to users—for example, a PPP for a water distribution system
    • Providing support services, with the government agency remaining responsible for delivering the public service to users—for example, a PPP for a school building that includes janitorial service

This aligns well with the existing contract nature codelist and the proposed additions of 'maintenance', 'financing' and 'operation' but suggests we should probably keep 'trust' and 'concession' separate.

jpmckinney commented 3 years ago

I agree that trust and concession seem to have less to do with activities (design, build, operate, etc.), and more to do with the types of entities (trust) and the rights accorded by the government to the company (concession).

I'm not sure they really belong in natureDetails, but since it's free-text, it's not expected to be high quality. Users can expect to have to do some cleaning if they were to use that field, and if not they can use the better quality nature.

duncandewhurst commented 3 years ago

I'll ask CoST Honduras again what a concession contract is in their context.

CoST Honduras explained that, in Honduras:

‘Contrato de concesión’ refers to the type of contract in which the concessionaire is granted the execution and commercialization of the infrastructure works. So after they finish building the project they are in charge of the administration and collection of user-payments (users could be citizens or even the government).

I'm a little confused about how this definition fits with the 'Concession Contract / DFBT (Design, Financing, Construction and Transfer)', i.e. concessions which don't include operation of the asset, as an option in SISOCS, but that isn't a blocker to using natureDetails.

Proposal

  1. Add a nature field at release level, adapted from the nature field on the OC4IDS ContractingProcessSummary object. New description in italics:
Path Title Description
nature Nature The activities this contracting process relates to, from the contractNature codelist. More than one value may be provided if the contracting process relates to multiple activities. For example, a contract for both design and construction, or both design and supervision, etc.
  1. Add a natureDetails field at release level:
Path Title Description
natureDetails Nature details Additional details on the activities this contracting process relates to. This field can be used to provide a value from a local classification.
  1. Add a contract nature codelist with the following codes, adapted from the OC4IDS contractNature codelist. This seems like a good opportunity to improve the code descriptions from OC4IDS, which just restate the title of the code. New codes and descriptions in italics.
Code Title Description
design Design Developing design specifications for works related to an infrastructure asset.
construction Construction Carrying out building or construction works related to an infrastructure asset.
supervision Supervision Supervising or monitoring works related to an infrastructure asset.
maintenance Maintenance Maintaining an infrastructure asset to a specified standard over the life of the contract.
operation Operation Technical operation of an infrastructure asset and/or the provision of services related to an infrastructure asset. This can include providing bulk services to a government, direct services to users, or support services related to an asset.
financing Financing Financing of all or part of the capital expenditure for works related to an infrastructure asset.
jpmckinney commented 3 years ago

Looks good. I'd like input from @EvelynDinora or @nadinefernz on the code descriptions, and/or references to existing definitions.

EvelynDinora commented 3 years ago

@jpmckinney and @duncandewhurst, apologies I have missed your discussion. Please find here my inputs:

The https://pppknowledgelab.org/guide/sections/6-ppp-contract-types-and-terminology is the one that I know best and it is a good reference.

In Honduras, the developer included in the SISOCS PPP all the options available in the SISOCS including contrato de verificación. This type of contract is very specific to road maintenance and it is not a supervision. It is another layer of quality control or a technical audit to the Supervision company. It is something done based on a random selection and not to every project.

Regarding to PPPs, at least in Honduras, you can find different types of contracts. One is the main contract is called the PPP contract awarded to the private party that will invest in the project, but then you have the trust fund contract to manage the funds collected by a PPP intervention in a "transparent" but expensive manner. Another important contract is the Supervision one, since this is awarded by a different Procuring Entity. The institutional framework in Honduras divides the responsibilities of a PPP in 2 PEs: Coalianza (that has been closed by the Government) and SAPP in charge of monitoring, surpevising and control the performance of the PPP.

Also, like in many LA countries one practice has been that the Government builds a project and then handover the operation, maintenance, upgrade and extension to a private party. That is called "contrato de concesion" that is not a good practice when we are talking about PPPs because of the risk allocation. I can explain more about this in a call if you don't mind.

I arree with the proposed codes considering that a PPP can include a combination of 2 and more of them.

Many thanks for this great discussion and all your thougtful inputs!

duncandewhurst commented 3 years ago

Evelyn clarified that verification contracts are not relevant to PPP projects, the code was added to SISOCS APP in error.

duncandewhurst commented 3 years ago

@EvelynDinora thanks for your input. Should we add 'verification' as a code for OC4IDS then?

jpmckinney commented 3 years ago

@EvelynDinora: In Honduras, the developer included in the SISOCS PPP all the options available in the SISOCS including contrato de verificación. This type of contract is very specific to road maintenance and it is not a supervision. It is another layer of quality control or a technical audit to the Supervision company. It is something done based on a random selection and not to every project.

@duncandewhurst: Evelyn clarified that verification contracts are not relevant to PPP projects, the code was added to SISOCS APP in error.

I'm having trouble reconciling these comments. If verification contracts are relevant to PPP projects, then we should add a code, adapting the explanation Evelyn provided. if they are not relevant to PPP projects – and are just accidentally included in the SISOCS app – then a code shouldn't be added.

duncandewhurst commented 3 years ago

if they are not relevant to PPP projects – and are just accidentally included in the SISOCS app – then a code shouldn't be added.

This is the case, so the proposal in https://github.com/open-contracting-extensions/public-private-partnerships/issues/238#issuecomment-732547466 stands.

My question in https://github.com/open-contracting-extensions/public-private-partnerships/issues/238#issuecomment-744102857 is about whether we should add the code to OC4IDS (since verification contracts are relevant to non-PPP projects).