Critics: PPPs are a threat to SMEs - Dossiers

Under a PPP, the private partner commits to awarding part of the project’s execution to SMEs.

The legal texts framing both partnership and concession contracts include provisions aimed at awarding a portion of the works or services to SMEs.

The portion of works or services awarded to small and medium-sized companies is, in fact, one of the selection criteria used for the award of a partnership contract. The new legal texts applicable to partnership contracts further strengthen the protection of SMEs by setting the minimum portion of the contract to be awarded to SME’s or sole traders at 10% of the projected value of the contract. Under concession contracts, the law allows the public authority to require that bidders award a minimum of 10% of the total estimated contract value to SMEs or third parties. In reality, however, the portion reserved for SMEs can be bigger. On the South Europe Atlantic high-speed line between Tours and Bordeaux, for instance, SME’s were awarded 25%.

Moreover, as in conventional public procurement contracts, SMEs may form a joint venture in order to broaden their potential market..

Under a PPP, the private partner commits to awarding part of the project’s execution to SMEs

The public authority also defines how the private partner’s performance against its commitments is verified.

The company is contractually required to meet its commitments

The private partner must comply with the commitments set out in the partnership contract, which includes the minimum percentage of the works reserved for SMEs.

The public authority also defines in the partnership contract how the private partner’s compliance with its commitments will be verified and the sanctions to be applied in the event of non-compliance.

SMEs are supported and protected by the legal texts governing concessions and partnership contracts

The recently adopted texts transposing the 2014 European directives into French law further strengthened the measures aimed at boosting the involvement of PMEs in both concessions and partnership contracts.

A study carried out by the Economics of Public Private Partnerships Chair (ePPP) in 2016 revealed that making procedures more flexible has had a positive impact for SME’s by improving the effectiveness of their participation in this type of contract without negatively affecting the price. (Chaire ePPP, 2016)