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What are Private Sector Partnerships?

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  • Written By: Laura M. Sands
  • Edited By: Heather Bailey
  • Last Modified Date: 26 November 2016
  • Copyright Protected:
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    Conjecture Corporation
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Private sector partnerships are business partnerships between government and one or more private business entities. In such partnerships, a public service is performed as both business and government work together toward a common goal. Private sector partnerships are also commonly referred by the acronym PSP or as public-private partnerships (PPP).

Often, private sector partnerships work within a commonly shared home country for community improvement. Some, however, also work on foreign projects to help improve conditions in other countries. Such private sector partnerships may be formed to build new infrastructures in war-torn nations or may be designed to help create new educational opportunities in impoverished countries. Beyond these examples, the possibilities of such partnerships are only restricted by each agency’s resources and capabilities in accomplishing an end goal. By nature of the PSP design, however, the capacity to accomplish particular goals is drastically strengthened as each company offers levels of expertise, capital and manpower to create a combined unit of force that most companies or governments would not singularly possess otherwise.

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Private sector partnerships can be designed to function in a variety of ways. For instance, some partnerships may involve a monetary investment from a private corporation to help a government achieve a community goal, or governments may hire a private corporation to engage in a project using that particular company’s expertise. Private sector partnerships may even involve a combination of capital resources while working with other companies to supply the manpower or specialized skill to complete a designated project.

While all private sector partnerships involve at least one public and one private entity, some are formed by the use of multiple private and public agencies. A contractual agreement binds all of the agencies together for a common purpose during a specific time period. As such, specific details of each partner’s purpose, expectations and direct duties is clearly defined and agreed upon before the project’s start. By doing so, companies are able to conquer complex and expensive projects that may otherwise be too burdensome to accomplish singularly.

Private sector partnerships generally have a time limit built into the original agreement between private and government entities. Often, these time periods range from a few months to several years. Some, however, span very lengthy time limits and are intended to last for several decades or until a community need or issue has been successfully addressed and is no longer in need of outside support.

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