Public-Private Partnership (P3) procurements

A Public-Private Partnership, or P3, is a long-term contractual relationship between a public authority and the private sector. The government specifies the goods or services it needs as defined outputs, and the private partner delivers them. CanadaBuys lists four core features: a defined output specification, integration of multiple project phases, transfer of risk to the private sector supported by private capital at risk, and performance-based payment mechanisms.

A P3 is an infrastructure delivery and procurement model. It is not a commodity category or a single procurement procedure. In conventional procurement, government may contract separately for design, construction and maintenance. In a P3, those lifecycle phases are combined in one long-term, performance-based agreement. "PPP" is an alternative abbreviation for the same term.

The Project Agreement at the centre of a P3

A P3 is governed by a single contract, commonly called the Project Agreement. According to CanadaBuys, it integrates design, build, finance, operations and maintenance, often over approximately 25 to 30 years.

The agreement describes what the private partner must deliver rather than prescribing exactly how to do it. That is the role of the output specification. Payments depend on meeting the performance requirements, and the private partner carries the risks assigned to it under the contract.

A full-lifecycle P3 is the model in which the private sector designs, builds, finances, operates and maintains the infrastructure for a fixed term.

The federal P3 screen and who runs the procurement

Treasury Board guidance sets out when a federal project is assessed for P3 delivery. Infrastructure projects that create an asset with a lifespan of at least 20 years and capital costs of $100 million or more are subject to a P3 screen. The screen determines whether P3 delivery may be an appropriate option. The requirement is set out in the Treasury Board guidance.

Public Services and Procurement Canada (PSPC) is responsible for project procurement triage, procurement-options analysis and the procurement process for PSPC projects involving P3s, as described on CanadaBuys. PSPC has also developed best practices for P3 procurement projects, including a streamlined Project Agreement template, as reported in its 2020-21 departmental plan.

Federal P3 examples and how the bidding runs

Federal P3 procurements can use a Request for Qualifications (RFQ) followed by a Request for Proposals (RFP). The Energy Services Acquisition Program shows the sequence. PSPC ran a competitive P3 procurement to modernize the National Capital Region district energy system. Pre-qualified companies received an RFP with the project conditions and specifications for their technical and financial bids. The result was a P3 agreement giving the private partner design, construction and operating responsibilities. Innovate Energy was selected as the partner. The 2019 announcement and the program question period note describe it.

The New Bridge for the St. Lawrence Corridor Project was delivered as a P3 covering design, construction, financing, operation, maintenance and rehabilitation over a 34-year period, according to Housing, Infrastructure and Communities Canada.

What a P3 means for a supplier bidding on Canadian public contracts

P3 obligations depend on the specific procurement documents, so read the RFQ, the RFP and the draft Project Agreement closely. A supplier typically needs to:

• demonstrate qualification during the RFQ;
• submit technical and financial proposals in response to the RFP;
• accept responsibility for the specified combination of design, construction, financing, operations and maintenance;
• meet the defined output and performance requirements; and
• assume the risks assigned to the private sector under the Project Agreement.

Because of the scale and length of these contracts, many suppliers take part through a consortium or as a subcontractor to the selected partner. Track the opportunities on CanadaBuys and plan for the RFQ stage early, since only pre-qualified teams receive the RFP.