For much of the past decade, privately initiated proposals have dominated the public-private partnership landscape—that is, concession contracts that allow the market to be involved in financing and managing public investments.
Privately initiated proposals (that is, the procedure the Public Contracts Code calls project finance) allow an economic operator to spontaneously submit a PPP project to the public administration, even outside ordinary planning. If the proposal is deemed to be in the public interest and feasible, it becomes the basis for the actual tender process aimed at awarding the contract. Thanks to a right of first refusal, the promoter—that is, the party that submitted the proposal or emerged as the top-ranked bidder in response to the notice—has the option to match the best offer submitted during the tender and take over the award.
In practice, the right of first refusal has generated an interesting wave of proposals in the market, pushing public administrations to engage with projects that they likely would not have had the energy (or funding) to initiate independently. However, it has also led to the use—or attempted use—of concession contracts in areas where a concession is not a contract but an authorization, such as beach services or urban regeneration.
It should be noted that the Italian model is an exception. Elsewhere, from North America to emerging markets, the tendency is to reimburse proposal costs rather than grant structural advantages to the first proposer. Spain offers an interesting case because it introduced an incentive system based on additional scoring to “reward” the market’s entrepreneurial and proposal-development effort.
Since 2018, PPPs have consistently accounted for around 10–13% of the procurement market, with a peak of 16% before the pandemic. Even more significant is the growth of privately initiated projects: from less than a quarter of PPP tenders to around 60% today, reaching nearly 90% in larger contracts.
This instrument has taken hold because it has made up for the public administration’s limited capacity to design PPP contracts—not only complex ones, but also those generally outside the radar of systems accustomed to thinking only in terms of public procurement tenders, which typically emphasize investment rather than management. However, this procedure has also led public administrations to accept contracts that do not necessarily add value, which is fairly normal when there is a skills gap between the public sector and private promoters.
This procedure has also raised awareness that traditional tender models—those in which the public administration defines a project as the basis for bidding, with no dialogue or interaction—cannot work for complex projects, where it is necessary to estimate not only investment costs but also, and above all, operating costs, which clearly depend on the business model.
Today, a ruling by the Court of Justice of the European Union—arising from an appeal against a procedure concerning the installation of public toilets in Milan’s parks (sigh!)—requires this right to be eliminated.
The market is deeply concerned because there is a real risk of undermining the country’s ability to carry out investments, for example, in the energy efficiency of public assets. In this sector, the instrument has enabled tenders—crucial for the energy transition—worth about $1.5 billion in 2024–2025. Indeed, this is a sector where PPPs have consolidated precisely thanks to the right of first refusal, also driven by the availability of incentives (such as the Conto Termico), which has helped build a highly competitive market.
Until now, with the right of first refusal in place, a public notice inviting market proposals in the energy efficiency sector (an option introduced by the legislature to foster greater competition where such a right exists) could lead public administrations to receive more than five proposals, featuring diverse and tailored solutions. Competition helps generate better proposals and, in turn, enhances the instrument’s reputation. Ultimately, this means more public administrations being encouraged to adopt it, thereby expanding investment opportunities.
The possibility of receiving multiple proposals has also pushed public administrations to roll up their sleeves, move beyond rigid and conventional procedures, and engage with the market by comparatively evaluating the proposals received. Some administrations, led by capable technical leaders, are managing these procedures very well, demonstrating capabilities they may not have realized they possessed; others are doing so with greater difficulty. What we are witnessing is a virtuous process of change, which is exactly what is needed to grow the PPP market from a residual instrument into a model for innovating public investments and services. It is now quite clear that managing complexity requires hybrid models in which public and private capital merge—and capital here refers not only to financial resources but also to human capital.
The ruling appears to speak clearly: rights of first refusal and additional scoring advantages to be used during the tender process in favor of the promoter are not permissible. Reimbursement of expenses for the party that develops the best proposal therefore becomes essential—provided the amount is appropriate—to ensure that the market continues to put forward high-quality proposals. But will this be enough to incentivize economic operators? A market that developed under the right of first refusal is seeking something more than simple reimbursement of costs, for example an additional score for the promoter to be used during the tender phase. In reality, a limited scoring advantage is not decisive, especially when administrations are sophisticated and manage the proposal evaluation phase through a dialogue with the market aimed at identifying the best proposal and tailoring it accordingly. The real problem arises when these procedures are handled by administrations that lack the expertise needed to manage complex procedures for sophisticated projects.
The new regulatory framework is currently the subject of discussions between the European Commission and the Italian government. The stakes are high: preserving the ability to continue making investments with private capital, while designing a mechanism that is balanced, capable of ensuring transparency and competition, and able to allow the sector to evolve without short-term disruption.
Beyond the regulatory issue—which all stakeholders recognize as highly sensitive—the real challenge lies in identifying the governance, financial, and contractual models best suited, sector by sector and context by context, to consolidate an instrument that is essential for driving investment, attracting private capital, and attempting to innovate services. The real issue is consolidating a model, not patchwork regulatory incentives.
Three points should guide the agenda: allocative efficiency, ensuring that scarce public capital is not used where private capital can step in; the pursuit of innovation—technological, social, contractual, and financial—to make PPP less of a residual financing tool and more of a structural, acceptable, and sustainable solution; and, finally, institutional alliances to overcome the fragmentation typical of a quasi-feudal system and to enable PPP to become a strategic policy tool.
All of this requires one thing above all—and it is the most difficult: a new class of leaders capable of engaging competently at the partnership table, on both the public and private sides. A class of leaders that can navigate contractual and financial complexity, speak the language of the market without losing sight of the collective interest. What is needed is a serious institutional effort to train them—not reliance on technical assistance, nor fragmented, hourly reimbursed training, nor the conference circuit, given that there are now more conferences than projects.
The themes of this article are investigated by the Monitor PPP Energy and Facility Management among those addressed in the Partnership Pubblico Privato per investimenti e servizi executive program (in Italian).
