In the tendering stage, governments should theoretically be able to choose between a number of competitive private bids. However, the number of bids for large-scale infrastructure projects is often low, and competition is limited. It is costly and time consuming to submit a bid on a massive project, and it is not realistic to expect a consistently significant level of competition. It was reported to Britain's House of Commons in October that since 2004, the the proportion of projects receiving only two bidders has more than doubled, meaning that competition becomes nonexistent if one bidder is weak or drops out.
Recent garbage and water management projects in the regional municipalities of Temiscamingue and Beauceville in Quebec have received zero bids.
The recent bid to build Edmonton's entire Southwest Recreation Centre complex as a P3 was unsolicited, meaning that one private company was able to dictate the parameters of the project with no competition. Even if other firms are then invited to bid, the first unsolicited bid has set the project parameters.
Once a municipality has entered into a long-term contract with a private provider, flexibility is limited, and termination of contracts is either impossible or very costly. When Guelph had to take over its failed arena P3, it absorbed approximately $9 million in unanticipated debt. Ottawa took on an extra $12 million in debt in 2007 when it was forced to bail out one arena P3 and take over another.
P3s are supposed to provide long-term cost certainty and planning stability, but after so many examples have saddled governments with massive unforeseen costs, that argument is impossible to support.
More:
Cost and Quality: P3s Lead to Higher Costs and Lower Quality Than Public Service
Risks to the Public Partner: P3s Are Not a Low-Risk Option
How P3s Erode Transparency and AccountabilityGet Informed and Take Action
Current P3 Projects in Alberta: More Expensive, Less Effective
