Public procurement and PPP

Legislation

Is the legislation governing procurement and PPP general or specific?

The government’s public–private partnership (PPP) framework – Private Finance 2 (PF2), which replaced the Private Finance Initiative (PFI) – was introduced in 2012 and is subject to guidance issued by the UK Treasury. PF2 aimed to represent a more efficient approach to PPP that seeks to improve on previous procurement experience. It is not specific to any industry. In the context of procurement, the government has introduced the Public Contracts Regulations 2015, which could apply to aspects of PPP and PF2 transactions. The Public Contracts Regulations 2015 were enacted pursuant to EU directives concerning the free movement of goods and services.

In the autumn 2018 budget, the government announced that it will no longer use PF2 for new government projects. However, existing PFI and PF2 contracts will not end because of this announcement. A new Centre for Best Practices in the Department for Health and Social Care is now responsible for improving the management of the remaining legacy PFI and PF2 contracts.

Proposal consideration

May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?

Port concessions and joint ventures with the government are not common in the United Kingdom. Generally, the 'National Policy Statement for Ports' (NPS) provides that, where there has been a material change in circumstances that necessitates the review of the NPS in whole or in part and it is in the national interest that a case should be decided quickly, the Secretary of State for Transport has a reserve power to intervene and make the decision, ensuring that proposals for nationally significant infrastructure can be considered without delay. Generally, contracting authorities (ie, state, regional and local authorities, bodies governed by public law and associations formed by one or several of such authorities or bodies) are subject to UK public procurement regulations.

Joint venture and concession criteria

What criteria are considered when awarding port concessions and port joint venture agreements?

The NPS provides the framework for decisions on proposals for new port developments and, for the benefit of planning decision-makers, sets out the approach that they should take to proposals, including the main issues that will need to be addressed to ensure that future development is fully sustainable. It also details the need for new port infrastructure, and the positive and negative impacts it may bring.

The guidance included in the NPS encompasses:

  • economic impacts;
  • commercial impacts;
  • competition;
  • tourism;
  • an environmental impact assessment;
  • habitats and species regulations assessments;
  • criteria for good design port infrastructure;
  • pollution control and other environmental regulatory regimes;
  • climate change mitigation and adaptation;
  • common law nuisance and statutory nuisance;
  • hazardous substances; and
  • health and security considerations.

 

Other relevant criteria include:

  • biodiversity and geological conservation;
  • flood risks;
  • traffic and transport impacts;
  • waste management;
  • water quality and resources;
  • air quality and emissions; and
  • socio-economic impacts.

 

Model agreement

Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?

There is no model public–private partnership (PPP) agreement that is used for port projects.

Approval

What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?

The NPS sets out the broad framework that applies to the ports development policy and details the legislation that applies to the development of ports. In particular, the Planning Act 2008, in combination with the Localism Act 2011, states that a party planning to undertake a nationally significant infrastruc­ture project must submit its plans to the Planning Inspectorate, which will consider the proposals in light of the relevant legislation and the NPS. Following this review, the Planning Inspectorate will send the proposals to the Secretary of State for Transport with a recommenda­tion as to whether permission should be granted or refused. In addition, in most cases port developers must obtain a licence from the Marine Management Organisation, pursuant to the Marine and Coastal Access Act 2009.

Projects

On what basis are port projects in your jurisdiction typically implemented?

Port projects in the United Kingdom are implemented on a case-by-case basis and, in practice, most port projects are based on fully privatised port models.

Term length

Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?

No. As there have been no port PPPs in the United Kingdom, one cannot speak of an average concession term.

On what basis can the term be extended?

As there have been no port PPPs in the United Kingdom, one cannot speak of an average concession term or any extensions to the term of concessions.

Fee structures

What fee structures are used in your jurisdiction? Are they subject to indexation?

Given that most port developments in the United Kingdom have been based on fully privatised port models, there are no fee structures as such. However, the port projects will be subject to taxation.

Exclusivity

Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?

No.

Other incentives

Does the government or the port authority provide any other incentives to investors in ports?

In October 2020, the government provided a £200 million fund for certain ports to build new border infrastructure on their current sites to handle new customs requests under the new Border Operating Model. This funding can be used for a range of infrastructure, from warehouses and central posts to traffic management systems.