NIGP Certified Procurement Professional (CPP) Module B Practice Exam

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What is the primary risk of poorly managed public-private partnerships (P3s)?
Correct Answer:
Reduced competition and potential favoritism
Explanation:
Open, fair competition in PPP procurement is essential for getting value for money and accountability over a long-term, complex partnership. When a public entity enters a public-private arrangement, the process to select a private partner should be open, transparent, and based on merit. If poorly managed, the competition can be dampened: bidding opportunities become limited, evaluation criteria unclear, and decision-makers influenced by insider relationships. That creates opportunities for favoritism, which harms impartiality and can lead to selecting a partner not because they offer the best overall value, but because of connections or politicized choices. Over time, reduced competition and favoritism erode efficiency, drive up costs, and undermine trust in both the procurement process and the project. Other issues like higher administrative costs, limited contractor innovation, or longer legal review times can arise in poorly run PPPs, but they are largely symptoms of the same root problem—weak governance of the procurement process that allows competitive integrity to degrade.

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