Established in 2008 to provide expert advice on public-private partnerships
In late 2007, the federal cabinet decided to establish a company called Partnerschaften Deutschland (“Partnerships Germany”), which would be jointly owned by the public and private sectors. Operating under the name ÖPP Deutschland AG (ÖPP is the abbreviation of the German term for public-private partnerships), the new consulting agency’s main function was to provide qualified, independent and impartial advice on public-private partnerships to public sector contracting authorities that were in the process of preparing procurement procedures. The public sector held the majority of shares in the public joint stock company. Private sector entities served as (indirect) minority shareholders, providing knowledge transfer and helping to develop joint best practices and standards for state-of-the-art public-private partnerships. Public sector entities acting as direct shareholders included the Federation; the Länder of Hesse, Mecklenburg-West Pomerania, North Rhine-Westphalia and Schleswig-Holstein; the Deutscher Landkreistag (association of German counties); the Deutscher Städtetag (association of German cities); and the Deutscher Städte- und Gemeindebund (federation of German local authorities).
Expansion of consulting portfolio
Demand for ÖPP Deutschland AG’s services came from public authorities at all levels – federal, Land and local, including public corporations and companies – who sought advice for building projects (such as schools, hospitals and administrative buildings) and, increasingly, for projects in the areas of information technology and administrative modernisation. As a result, the company grew into a consulting agency that was increasingly involved in conceptual planning and strategic development. One key example here was its integration into a major IT consolidation project for the federal administration.
PD as public limited liability company
In order to better adapt the company’s structure to its growing portfolio and its status as an integral partner for the public sector, it was converted into “PD – Berater der öffentlichen Hand GmbH” in late 2016 (the new title translates roughly into “PD – Consulting Agency for the Public Sector”). Its company form changed as well: from a semi-public joint stock company to a wholly publicly owned limited liability company. PD’s significantly expanded consulting services continue to be offered exclusively to public sector contracting authorities, with a particular focus on helping local authorities implement public investment projects, which are expected to increase significantly in the coming years.
PD’s consultancy services: key examples
PD offers comprehensive consulting services, develops solutions for institutions that are planning to make strategic and/or organisational changes, and provides advice on procurement options. It also offers economic advice across the entire cycle of a project, providing public contracting authorities with active support from initial idea to completion. Experience shows that potential efficiency gains often remain untapped – particularly in the initial stages of a project – because decision-makers fail to consider and examine all available options. Thus, in order to maximise efficiency and positive outcomes, all of the projects that PD works on are guided by teams of experts, who develop practical, client-focused solutions on the basis of best practices drawn from both the private and public sectors. The overriding goal of PD’s roughly 180 consultants, who are based in Berlin and Düsseldorf, is to optimise the functioning of public administrations nationwide and to ensure that infrastructure projects are completed faster and with greater cost-efficiency. PD’s consultants are well-versed in the public sector’s needs, and they use their valuable experience from previous public sector projects to optimise the planning and implementation of new projects.
PD uses the approach of integrated project delivery, which examines options for vertical and horizontal cooperation between public sector contracting authorities and for collaboration with private sector firms. One of the main elements of the consulting process is to identify options in order to ensure compliance with the principles of efficiency and economy.
PD as in-house consultant
PD works exclusively for the public sector. It is wholly owned by public sector shareholders, which means that PD’s public owners can commission its services using in-house contract awards. In principle, all public sector contracting authorities are permitted to hold shares in the company. Holdings management is performed by the Federal Ministry of Finance, which sells shares in PD to interested public authorities. Shares are sold using standardised contracts that do not require purchasers to pay large sums of money (depending on their size, local authorities pay between €250 and €2,500) and that carry no risk of default.
PD is structured in a way that gives all shareholders – including their subordinate authorities and institutions – the option of using in-house contract awards. In this way, public authorities have quick and uncomplicated access to PD’s services, including flexibly designed contracts. This is particularly useful during the early stages of a project.
In-house contract awards
This is an option under procurement law that allows public institutions to award contracts to other entities without having to conduct formal procurement procedures.
|Bremen (state), Hamburg, Hesse, Mecklenburg-West Pomerania, Lower Saxony, North Rhine-Westphalia, Schleswig-Holstein, Baden-Württemberg|
|Deutscher Landkreistag (association of German counties), Celle, Dahme-Spreewald, duchy of Lauenburg, Hochsauerland county, Main-Taunus county, Mettmann, Nienburg/Weser, Paderborn|
Local authorities (32)
|Bavaria: Nuremberg, Holzkirchen|
|Hesse: Bad Hersfeld, Hünfeld, Taunusstein|
|North Rhine-Westphalia: Aachen, Castrop-Rauxel, Dormagen, Duisburg, Ennepetal, Halle, Hamminkeln, Kamp-Lintfort, Lengerich, Merzenich, Monheim, Ratingen, Recklinghausen, Remscheid, Unna, Wuppertal|
|Lower Saxony: Barsinghausen, Brake, Braunschweig, Lachendorf, Lüneburg, Papenburg, Pattensen, Sehnde|
|Deutscher Städtetag (association of German cities), Deutscher Städte- und Gemeindebund (federation of German local authorities)|
Public foundations, agencies and corporations (15)
Other public sector contracting authorities (2)
|regio IT GmbH, Republic of Cyprus|
|Federal Republic of Germany||Federal Republic of Germany (Federal Revenue Administration)|
|Six additional entities (mainly local authorities) were set to become shareholders in 2018.|
|Source : Federal Ministry of Finance|
The basis for commissioning PD’s services is a framework agreement that includes a uniform and transparent fee schedule, a description of billing methods, and standards for all public sector contracting authorities.
In addition, shareholders can benefit from PD’s expertise – including knowledge transfer and training – outside the regular realm of project work. For example, PD organises an annual summer school, publishes proceedings of board meeting discussions on relevant issues (such as “digital technology” in 2018), and regularly informs shareholders about new trends and issues.
Since its conversion into a limited liability company, PD has gained 59 new shareholders (as of 1 December 2018), which means that the firm has acquired a highly diversified structure of public sector shareholders in just under two years.
Current consulting assignments: key examples Investment consulting assignments commissioned by the Federal Ministry of Finance
In the past, the Finance Ministry has hired PD to do work in the area of governmental research, tapping its expertise on the issue of economic efficiency in government procurement. For example, the Finance Ministry commissioned PD to advise public sector contracting authorities at the federal, Land and municipal level in the preparation, planning and implementation of roughly 450 infrastructure projects. A central aim here was to detect deficits – in knowledge and in the concrete implementation of projects, for example – that are common among public sector actors when it comes to ensuring cost-effective procurement. Thanks to PD’s input, the Finance Ministry was able to address these deficits by adapting and updating the relevant regulatory frameworks. The consulting assignment that PD was originally given focused on promoting the inclusion of cooperative, lifecycle-oriented procurement options (in particular, public-private partnerships). Now, the Finance Ministry has commissioned PD with a follow-up assignment that takes a broader approach. This follow-up assignment again analyses projects that were advised by PD but this time places a stronger focus on procurement outcomes, with the aim of improving the effectiveness and efficiency of infrastructure investment. To ensure that the study’s findings are as representative as possible, it will analyse projects that are spread across a broad range of regions and sectors. The projects selected for study accounted for an estimated €15bn in total investment in the years from 2015 to 2018. 90% of these projects have already been expedited and implemented.
Helping the Land of North Rhine-Westphalia safeguard the effective provision of hospital care
The Land of North Rhine-Westphalia is in the process of preparing a new hospital strategy. The strategy’s chief aim will be to ensure reliable, accessible and high-quality hospital care across the entire Land . To this end, the Land ’s Ministry of Labour, Health and Social Affairs has charged PD with preparing a hospital planning study that analyses the current structure of hospital care in North Rhine-Westphalia and that delivers a projection of the hospital system’s needs through the year 2030. This study will be used as the basis for the formulation, by mid-2019, of an action plan that complies with federal and Land standards.
PD’s consulting services:
In commissioning the study, the Ministry of Labour, Health and Social Affairs wants to ensure that North Rhine-Westphalia’s hospital system places a renewed priority on needs and quality.
PD’s analysis will focus in particular on the issues of accessibility, quality assurance and cost-effectiveness in order to aid the process of putting an up-to-date, needs-based hospital infrastructure into place.1
Integrating former industrial sites into sustainable urban development programmes
As part of its preparations for hosting the Landesgartenschau 2020 (LAGA 2020, a regional horticultural show), the German town of Kamp-Lintfort plans to refurbish the Zeche Friedrich-Heinrich , a former coal mine. Plans include the construction of housing and businesses at the former industrial site. In this way, the town is integrating the horticultural show into its sustainable urban development programme and thereby expanding the available space for residential construction.
LAGA 2020’s many sub-projects, together with the various refurbishment measures at the former mine site, present Kamp-Lintfort with a complex, challenging managerial task. The town hired PD to develop a work breakdown structure, together with a management tool that takes into account the interfaces between the various sub-projects. Kamp-Lintfort’s main objectives here were to gain an overview of the activities that will be necessary over the course of the entire project and to identify potential conflicts and risks that could prevent project deliverables from being completed according to plan.
PD’s consulting services:
In consultation with the participating administrative bodies, PD developed the requested tools and delivered them on schedule. In addition, PD is currently compiling a study on the feasibility of linking up Kamp-Lintfort with the regional public railway transport system. PD is also developing measures to improve road safety for cyclists and pedestrians and to optimise the town’s traffic flow while LAGA 2020 is taking place.2
By building up PD, Germany has succeeded in establishing a partner that provides effective support in the planning and implementation of major public sector projects. The increasing acceptance of PD’s services, together with the large number and broad variety of consulting requests, has enabled PD to become increasingly effective in tailoring its services to the specific needs of its public sector clients and replicating best practices, i.e. applying successes from individual projects to other relevant projects. PD plans to package this experience into scalable consulting products whose deliverables can be offered to other public sector clients that intend to carry out similar projects. This will make it possible once again for PD to significantly enhance the impact and breadth of its services.