A New Dimension to PPPs: Sub-Subcontracted Operators in BLTs
Over the last decade, major developments in the applicable legal framework have led to the fast-tracking of development projects based on privatization and public private partnership models.
Project companies are the leading private actors in PPP projects, as the entire structure stems from project agreements executed between project companies and Turkish administrative bodies. These project companies are expected to complete projects on time and provide uninterrupted services during the operational phase, in compliance with the conditions set forth by the relevant ministry under the project agreements. To accomplish these goals, project companies must often rely heavily on the work of subcontractors. Due to the extensive variety of operational service assignments to subcontractors, assignments to sub-subcontractors become inevitable, especially in PPPs based on the BLT model.
Although the contractual relationship established between project companies and administrative bodies is crucial to ensure the sustainability of PPP projects, the vertical relationship between project companies and subcontractors plays an increasingly important role in implementing fundamental aspects of projects, particularly with respect to the fulfilment of operation and maintenance (“O&M”) services undertaken by the project companies.
Now that the construction phase of some BLT projects is approaching completion and the operational phase is about to begin, the focus has shifted to new players in the PPP game, specifically sub-subcontractors who specialize in O&M services. Each particular type of service within a PPP project is being assigned to sub-subcontractors depending on their area of expertise. These O&M services may be of a general nature, such as security, cleaning, and catering, or they may be specific to the relevant project type, such as providing medical support services (e.g., sterilization, imaging, and laboratory) or information technology systems in a hospital. Overall, the services of sub-subcontractors comprise a much needed part of PPP projects, especially when maintaining a flawless operation phase.