Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50873
the expertise to do themselves. "Say, if you are a hospital, probably your expertise is not building a new hospi- tal," says Wilson. She says the general trend of public entities using P3s has not gone up much in recent years, but the number of municipal P3s is still growing. "Getting the project done on time and on budget — I don't think there is much doubt that that has been the source of some success." But it's a success that requires a lot of legal work because reaching and maintaining P3 agreements can be very complex. "They are pretty intensive legal processes," adds Wilson. "That's because they are often quite big-ticket projects." At the York Region Rapid Transit project, for example, there are many lawyers involved on all sides of the P3, both in-house and external. Vanderburgh works with her external counsel at WeirFoulds LLP not only to negotiate with the private partners but also to work out the contractual details with Metrolinx, the provincial agency funding the rapid transit project as part of its mandate to co-ordinate the inte- gration of transportation in the Greater Toronto and Hamilton, Ont., areas. Despite the legal complexities, for municipalities like York Region and Ottawa, which often run several P3s at the same time, things get easier as legal procedures and documentation become standardized. Some provincial agencies use precedents from previous deals, for example. That approach can lead to greater cost efficiencies and a better level of understanding by the investors who are considering these P3 projects, according to Salim. And P3s work best when they have a straightforward procurement proc- ess. "Very often, the problems that are inherent in these big infrastruc- ture transactions are really caught up on how well the procurement proc- ess goes, so that's an important issue," Wilson says. "Where the procurement project is straightforward, where the bidders trust the organization, that really helps." Clarity is important because P3 projects can come under scrutiny to make sure the agreements and bidding processes are transparent and properly monitored. "A pitfall that is often cited is that P3s are less accountable. An appropriate level of disclosure is a key foundation for an accountable process," says Salim. "The P3 model employed should provide for appropriate sharing of information in a form useful for tax- payers to hold governments to account and ensure best value for money." He adds a lack of contracting expertise can also be a significant problem for gov- ernments with limited P3 experience, leading to inappropriate risk trans- fers and opportunistic behaviour by included in the total cost of the project, and transferred in part to the private- sector partners, cost and time savings can be achieved," says Gilles Rhéaume, the organization's vice president for public policy. The study notes P3s also result in efficiency gains, lower costs, quicker completion, and higher service levels due to a number of factors. That's because these deals involve perform- ance-based contracts and a transfer of risk to private-sector providers, which also often finance some of the costs of the project. "Some of the myths surround- ing public-private partnerships for The reward you get from a good partnership is not something that you can easily quantify, but it comes out in the product. JANIS VANDERBURGH, York Region Rapid Transit Corp. private-sector bidders and partners. But the benefits outweigh the risks, according to advocates of the P3 model. The Canadian Council for Public-Private Partnerships says these deals have public support, based on the findings of a recent Ipsos Reid coun- trywide public opinion survey on atti- tudes about private-sector involvement in certain sectors. The results indicate two-thirds of Canadians support the use of P3s to deliver infrastructure and some public services. The poll also notes nine in 10 Canadians feel gov- ernment cannot keep pace with their country's infrastructure needs. That support comes as P3s for infra- structure projects are delivering savings in costs and time compared to conven- tional procurement approaches used by Canadian governments, according to a recent report by the Conference Board of Canada. "The two major benefits of P3s are cost savings and time savings. When all the project risks that the public sector bears are fully costed and infrastructure appear to be just that. P3s are not the privatization of public assets, and there is no evidence that service standards suffer under P3s," says Rhéaume. "Contrary to a widely circulated view, the transparency of P3 procurements is considerably better than for conventional procurements, because an abbreviated form of the P3 project agreements is made available to the public, which is seldom the case for conventional contracts." In the end, say lawyers interviewed for this story, successful P3s take time, effort, and building the right relation- ships with the partners. "A lot of suc- cess is based on developing an honest partnership with the other party," says Wilson. Vanderburgh agrees. "Building a rapid transit system is a very com- plex and comprehensive exercise, and if you are working with the same peo- ple, they acquire all that knowledge and expertise about your projects," she says. "That's where you come up with a superior product." IH INHOUSE APRIL 2011 • 37