Republic of the Philippines

SORSOGON STATE UNIVERSITY

Graduate School
Sorsogon City

Subject : PA 506 – LOCAL GOVERNMENT FIELD SERVICE

ADMINISTRATION
Semester : First Semester, 2023-2022
Professor : GILBERT G. GILE
Discussant/s : MARLON B. MARTINEZ
Topic/Title : Theoretical Foundation of Public Administration.
Public-Private Partnerships in Service Delivery

I. OBJECTIVES
 To be able to differentiate the Public and Private Sectors.
 To be able to define Public-Private Partnership (PPP).
 To be able to define Public Service Delivery.
 To be able to learn the advantages and disadvantages in engaging PPP.

II. INTRODUCTION

The word Public means “(of a service or industry) provided by the state rather
than an independent, commercial company.”

The word Private means “(of a service or industry) provided or owned by an

individual or an independent, commercial company rather than the state.”

And the word Partnership means “an arrangement in which parties agree to
cooperate to advance their mutual interests”.

The above definitions lead us to believe that PPP is about a partnership between
the State and a Private Enterprise. The objective of a private company is to maximize
shareholder wealth, whereas the role of the State is to ensure welfare of its citizens.

As society progresses, the obligations on part of the government to meet the

expectations of its citizens are ever increasing. Therefore, while the Government on the
one hand is obliged to provide certain services to its citizens, it is also constrained by the
extent to which it can raise the money required for these expenses through taxes.
Governments resort to borrowing to make up the gap. A high level of fiscal deficit might
result in doubts rising about the ability to repay the loans.

It is here that the PPP comes to the rescue. It aims to exploit the synergies
between
the public sector and the private enterprise to deliver quality infrastructure and services
to the citizens at affordable price

III. TOPICAL OUTLINE

 I. Public Sector Vs. Private Sector: What’s the difference?
II. What is Public-Private Partnership (PPP)?
III. Elements of Public-Private Partnership
IV. General Forms of PPP
V. Types of Public-Private Partnership
VI. Advantages and Disadvantages of PPP

IV. DISCUSSION

I. Public Sector Vs. Private Sector: What’s the difference?

Public Sector

The Public Sector consists of businesses that are owned and controlled by the
government of a country. The ownership and control of the central or state governments
in these organizations are either complete or partial. But it still holds a majority stake and
makes every single decision regarding running the entity. These organizations include
government agencies, state-owned enterprises, municipalities, local government
authorities and other public service institutions.

Some of them can be non-profit organizations while others participate in

commercial activities as well. It generally focuses on providing goods and services to the
general public at relatively cheaper rates than private companies. Its main aim is to
ensure the welfare of the general public within a country.

Private Sector

The Private Sector enterprises are owned, controlled and managed either by
individuals or business entities. It can be small-scale, medium-scale or even large-scale
organisations. These get formed to earn a profit from their business operations, and they
can raise funding from individuals, groups, and the general public.

The different entities within the private sector include sole proprietorship,
partnership, cooperative societies, companies and multinational corporations. They also
focus on taking care of the needs of their customers to survive in the long run.
Differences between Public and Private Sector

The main differences between Public and Private Sectors are as follows:

Public Sector Private Sector

Definition

Public sector organizations are owned, Private sector organizations are owned,
controlled and managed by the government controlled and managed by individuals,
or other state-run bodies. groups or business entities.

Ownership

The ownership of the public sector units can The ownership of private sector units is by
be by central, state or local government individuals or entities with zero interference
bodies, and this ownership is either full or from the government.
partial.

Motive

The main motive of public sector The main motive of the private sector is to
organizations is to engage in activities that earn profits from their business operations.
serve the general public.

Source of Capital

The capital for public sector undertakings The capital for private sector entities comes
comes from tax collections, excise and other either from its owners or through loans,
duties, bonds, treasury bills etc. issuing shares and debentures, etc.

Employment Benefits

Public sector units provide several Private sector units offer benefits like higher
employment benefits like job security, salary packages, better chances of promotion
housing facilities, allowances and retirement and recognition, competitive environment and
benefits. greater incentives in terms of bonus and other
benefits.
 Stability

Jobs within the public sector are very stable Jobs within the private sector are not very
since the chances of getting sacked due to secure since non-performance can lead to
non-performance are very low. sacking. Companies can also fire people in
case of cost cutting or scaling down of
operations.

Promotions

The criteria for promotion in the public sector The criteria for promotion in the private sector
units is generally based on the seniority of units is generally based on the merit and job
the employee. performance of the employee.

Areas

Some of the main areas that come under the Some of the main areas that come under the
public sector are police, military, mining, private sector are information technology,
manufacturing, healthcare, education, finance, fast moving consumer goods,
transport, banking, etc. construction, hospitality, pharmaceuticals,
etc.

Public service

The activities and services done in any government capacity in the interest of the
public domain and for the benefit of the general public. Such services include policing,
defense, healthcare, education, etc.

Service Delivery

This refers to the extent to which the services provided by the listed sectors meet
or exceed the expectation of the beneficiaries (general public).

Public Service Delivery

Delivery of public services to the general public is a function of the distribution of

duties and responsibilities to various bureaucratic orga-nizations. The ability and
capacity of bureaucracy to effectively carry out the assigned task depend on the
relationship and motivation put in place.

II. What is Public-Private Partnership (PPP)?

 Public-Private Partnership (PPP) can be defined as a contractual agreement
between the Government and a private firm targeted towards financing, designing,
implementing and operating infrastructure facilities and services that were traditionally
provided by the public sector. It embodies optimal risk allocation between the parties –
minimizing cost while realizing project developmental objectives.

PPP offers monetary and non-monetary advantages for the public sector. It
addresses the limited funding resources for local infrastructure or development projects
of the public sector thereby allowing the allocation of public funds for other local
priorities. It is a mechanism to distribute project risks to both public and private sector.
PPP is geared for both sectors to gain improved efficiency and project implementation
processes in delivering services to the public. Most importantly, PPP emphasizes Value
for Money (VfM) – focusing on reduced costs, better risk allocation, faster
implementation, improved services and possible generation of additional revenue.

III. Elements of Public-Private Partnership

 Strategic mode of procurement

 A contractual agreement between the public sector and the private sector
 Shared risks and resources
 Value for Money (VfM)
 Outcome orientation
 Acceleration of infrastructure provision and faster implementation

IV. General Forms of PPP

Generally, there are two common forms of PPP structure: availability and
concession-based PPPs. The two forms could be distinguished from each other based
on what the public or private parties assume within the partnership, e.g. rights,
obligations, and risks.

1. Availability PPP

A form of PPP wherein the public authority contracts with a private sector
entity to provide a public good, service or product at a constant capacity to the
implementing agency (IA) for a given fee (capacity fee) and a separate charge
for usage of the public good, product or service (usage fee). Fees or tariffs are
regulated by contract to provide for recovery of debt service, fixed costs of
operation and a return on equity.

While there are no usage fees in this project, an example is the PPP for School
Infrastructure Project (PSIP) Phase I wherein the private sector is responsible for
making available classrooms (consisting of design, financing, construction and
maintenance) for a contract fee with the Department of Education (DepEd).

2. Concession PPP

A form of PPP wherein the government grants the private sector the right
to build, operate and charge public users of the public good, infrastructure or
service, a fee or tariff which is regulated by public regulators and the concession
 contract. Tariffs are structured to provide for recovery of debt service, fixed costs
of operation, and return on equity.

An example of a concession PPP is the Ninoy Aquino International Airport

(NAIA) Expressway (Phase II) wherein the Department of Public Works and
Highways (DPWH) granted the private sector the right to build and operate the
expressway. Under the contract, the private sector was given the right to collect a
toll (user charge) from the users of the expressway.

V. Types of Public-Private Parnership

 Build Operate Transfer (BOT): A government hands over all construction and
operations to a private party for a set number of years (often several decades or
more). After that period of time, it is transferred to the government.
 Build Operate Own (BOO): The same as a BOT, but the private entity is not
required to ever transfer the project to the government.
 Design-Build (DB): A government contracts with a private party to design and
construct a project for a fee. The government retains ownership and may either
operate it itself or contract out operations.
 Buy Build Operate (BBO): a government sells a pre-existing project that has
already been completed and may have been operated by the government for
some time to a private party, who will take it over fully. The private party may
need to invest in rehabilitating or expanding the project

VI. Advantages of PPP

Spreading Of Risk

Public-Private Partnership is formed for large infrastructural projects. These

projects require large finance & risk. When public & private organisations join together,
this risk is diversified among two.

Timely Completion

The project undertaken under these partnerships are of huge size. These require
large human effort & time. Timely completion of the project is a bigger challenge.

When private companies consisting of high professionals join a public corporation, it

becomes possible for timely completion. The efficiency of the project is increased due to
high efficient peoples in the group.
Funding

Finance is one of the major problems for any project. Public sector projects
require a large amount of funds. Sometimes government can’t arrange for the required
amount of funds. It is private organisations who arranges all the finances & undertakes
the whole risk.

Reallocating Funds

Public-private partnership makes it possible to utilize funds in different projects.

Government can utilize its funds elsewhere in more important projects. As projects are
funded under this partnership by private corporations.

Disadvantages of Public-private partnership

Expensive Charges

The private corporations invest a huge amount in public projects. They undertake
large risk associated with these projects. There is a top professional who are working in
private corporations team. They charge huge prices for their services. This result in an
increase in prices charged from the users of these infrastructures.

Downfall In Employment Of Public Sector

This partnership decreases the roles & responsibilities of public sector

organisations. Most of the work is done by the private sector decreasing the government
role. This decreases the employment opportunities in the public sector.

Division Of Return

Under these partnerships, the government is required to share return from

projects with private organisations. Private sector invests in public sector projects in
return for income from these projects. After completion of the project, private companies
charge high prices for providing services.

Limited Influence By Public Sector

When public sectors join private sectors, it shares the responsibility &
management of project with them. Public sectors cannot directly influence the activities
of the project. Private sector after investing large amount enjoys rights & power of
control over the activities. They employ their staff & managers according to their
decisions.
VII. CONCLUSIONS and RECOMMENDATIONS

Our government focus on quality service delivery and good public administration,
It always aim efficient and emphasizes high quality services that will satisfy the needs of
the people by improving their quality of life.

Our government comes up with private partnership because every projects and
service that they deliver to the public needs capital. We know that our government have
limited budget allocation for them to deliver those service. The government cannot meet
the demands of the people not just in infrastructure but also in service delivery. So our
government becomes resourceful by means of engaging Public-Private Partnership
(PPP). By this means they exploit the management disciplines and expertise that the
private sector has to offer.

I think when entering a partnership with private sector, the government must be
clear in terms of their contract, both parties should understand clearly to avoid future
conflicts.

VIII. REFERENCES

https://byjus.com/commerce/difference-between-public-and-private-sector/
https://www.researchgate.net/publication/
272998665_What_is_a_Public_Private_Partnership
https://ppp.gov.ph/ppp-program/what-is-ppp/
https://www.researchgate.net/publication/
344493632_Public_Service_and_Service_Delivery
https://ppp.gov.ph/ppp-program/what-is-ppp/
https://commercemates.com/advantages-disadvantages-public-private-partnership/