Transparency Guidelines for Public-Private Partnerships (DE0046)

What is the public problem that the commitment will address? The public discourse in recent years has revealed a persistent scepticism in politics and society regarding public-private partnerships (PPPs). At the heart of the public criticism levelled at PPPs is the fear that long-term economic benefits and risks are divided unequally between the state and private-sector partners. That fear is fuelled primarily by a lack of information about how the actual economic outcomes of these projects develop.

What is the commitment? The Federal Ministry of Finance will draw up transparency guidelines. For its own PPP projects, the Federal Government is to have an obligation to set out in an understandable form, and publish, the services, expectations and outcomes of PPP projects (e.g. user satisfaction and actual operating costs) that are of relevance to the public interest. The actual development of PPP projects in relation to what was assumed beforehand is also to be communicated clearly and openly.

How will the commitment contribute to solving the public problem? This improved communication on the above-mentioned subject matter is intended to give people a better insight into PPP mechanisms and consequently lead to greater public approval for this variety of procurement and similar forms of cooperation.

Why is this commitment relevant to OGP values? The project will generate transparency around information that serves as a basis for opting for and designing PPPs. The planned guidelines will therefore establish a transparency standard for federal PPP projects for the first time, which will make information available that was not accessible before. The objective is moreover to ensure, through the plans for participation and input from civil society, that the transparency guidelines are drafted in a way that reflects the justified information needs of the public.

Additional information: Implementation of an obligation formulated in the coalition agreement; connected to the Federal Government report on ongoing PPP projects (due in the third quarter of 2023; for previous reports (in German), see Bundestag printed papers 18/6898 and 19/25285)

Milestone activity with a verifiable deliverable | Start date - Implementation by

Agreement on a draft containing key points | August 2023 - December 2023

Public consultation on the agreed key points of the guidance | February 2024 - August 2024

First draft of the transparency obligation; internal and external consultations with stakeholders | September 2024 - July 2025

Legally binding establishment of the transparency commitment | August 2025 - December 2025

Action Plan Review

Commitment 3. PPP transparency guidelines

Federal Ministry of Finance (BMF)

For a complete description, see Commitment 3 in Germany’s 2023–2025 national action plan: https://www.opengovpartnership.org/wp-content/uploads/2023/08/Germany_Action-Plan_2023-2025_June_EN.pdf.

Context and objectives

With this commitment, the federal government aims to increase the transparency of its public-private partnerships (PPPs). Driven by public scandals and lack of transparency, parliamentarians and the public have been critical of PPPs. [35] Some argue that PPPs involve an unequal division of costs and benefits between the public and private sectors, highly prone to corruption, negotiated without sufficient transparency, and can be used to obscure debt statistics. [36]

In 2005, Germany passed a law to accelerate public procurement via PPPs. In 2008, the consulting company Partnerschaften Deutschland, later ÖPP Deutschland AG, was founded with the explicit goal of increasing the share of PPPs in Germany. The German government held a majority stake in the company. [37] The company has been criticized as a lobbying organization that exists within the state and accused of conflicts of interest, although a previous investigation by the Federal Audit Office found no wrongdoing. [38] Most of the ongoing PPPs at the federal level were established between 2005 and 2012. In 2014, a report by the Federal Audit Office found that PPPs in the construction of highways failed to meet the expected costs and were more expensive than traditional procurement. [39] Had the actual costs been expected, the PPPs would not have been established.

This commitment aims to implement the first legally binding transparency guidelines for all PPPs at the federal level. Numerically, most PPPs are at the subnational level, mainly in the renovation and construction of schools and kindergartens, but the financial figures of federal PPPs greatly surpass those at the subnational level. [40] In 2023, the federal government was engaged in ten PPPs in the construction and maintenance of highways, four in the construction or renovation of buildings, and one in defense—roughly totaling EUR 12 billion. [41] The commitment takes up a promise from the coalition agreement [42] and was incorporated into the action plan at an early stage. There was no prior consultation with civil society, who nevertheless welcomes the measure. Consultations are planned in the later stages of the commitment.

Legally, PPPs need to demonstrate that they can improve the efficiency of public procurement through expected cost savings. The proposed guidelines are intended to make this assessment transparent to the public. Currently, the government reports on ongoing federal PPPs every four years at the midway mark of the legislative period. [43] The 2023 report describes all ongoing PPPs, the characteristics of the contracts, the expected and current costs, the rationale behind the choice of a PPP over conventional procurement, and user satisfaction. [44] The Ministry of Finance (BMF) states that feedback from the action plan consultation period was used to develop the questionnaire for the 2023 report. In addition, federal ministries have adopted a set of voluntary transparency measures, such as the Federal Ministry of Transport and Digital Infrastructure (BMDV) which published their PPP contracts, albeit with partial redactions. [45] They also published a sample economic feasibility study, arguing that the publication of real examples harms the fiscal interests of the state. [46] Other federal bodies have not adopted such measures. [47] While PPPs are also subject to FOI requests, in practice relevant information is rarely shared due to the protection of trade secrets and fiscal interests. [48]

Potential for results: Substantial

The commitment answers a strong public demand for more information on PPPs. The legally binding nature of the guidelines gives the commitment substantial potential for results, as the increased transparency of federal PPPs will be sustained over time. Given its cost-intensive characteristic, better communication and accountability of federal PPPs bear significant importance. Previous scandals illustrate why more transparency is needed to assess PPPs, hold politicians accountable for exaggerated claims, and scrutinize the involvement of lobbying and consulting organizations such as ÖPP Deutschland AG.

The commitment represents a significant improvement to current transparency practices. It enables a continuous assessment of PPPs instead of reporting every four years. More coherent practice across federal ministries could improve the accessibility of information. The BMF aims to coordinate this initiative with Commitment 1 to avoid dual obligations. However, the transparency measures in the coalition agreement are more ambitious than those under this commitment, promising the disclosure of contracts and economic feasibility studies. [49]

The BMF states that while the content of the guidelines is still under development and the pledges from the coalition agreement remain under consideration, the goal is to establish a legally binding norm below the level of a law. The commitment calls for the involvement of civil society in determining the content of the guidelines. The process will feature two rounds of consultation and workshops, including internal consultation with relevant ministries to assess which information can be disclosed. Given their application in different sectors, different models, and contractual differences, external consultations can help determine adequate standards for transparency across all PPPs that reflect both administrative practice and public demands.

Opportunities, challenges, and recommendations during implementation

The transparency guidelines are an important first step towards a more open conversation around procurement via PPPs. The guidelines should support the disclosure of a large scope of information in a usable and open format. It will also be important to assess to what extent the current grounds for non-disclosure are legitimate. In the federal government’s most recent PPP transparency report, several ministries expressed concerns regarding the publication of contracts and economic assessments, [50] which are priority areas for civil society. This is indicative of the discrepancy between the coalition agreement and current administrative practice. The federal government should ensure that exceptions to transparency are only allowed in legitimate instances. To achieve these goals, the IRM recommends the following: