Public-private partnerships to support the PNRR, the Italian National Recovery and Resilience Plan

Focus on the tender to manage a network of Innovation Technology Infrastructure for radiopharmaceutical production. An innovative project in which multiple institutions that usually travel separately from each other found application

by Adriana Riccomagno TrendSanità - Policy & Procurement in HealthCare (italian article)

The goal was to manage a national network of Technological Innovation Infrastructure for the production of radiopharmaceuticals with a team of experts and funding from the National Recovery and Resilience Plan (PNRR). How to accomplish this? By harnessing the potential of public-private partnerships (PPPs).

This project earned Andrea Stefanelli, lawyer and vice-president of Best In Health Stapa (a joint stock professional partnership), the Professional of the Year Award, Health Category at the 2023 Top Legal Industry Awards, now in its eighth edition. The winning project, led by lawyer Stefanelli on the legal side and by Professor Luigi Recchioni on the fiscal and financial side, involved assisting the University of Pavia in setting up a mixed public-private company to manage a nationwide network of Technological Innovation Infrastructures for the production of radiopharmaceuticals.

The project, worth almost EUR 16 million, is financed by the Italian Ministry of University and Research (MUR) with EUR 7 million under the PNRR's Mission 4 - Component 2 ('From research to business').

Since the scientific-public component has to be combined with the entrepreneurial-private component, the MUR agreed to finance the project on condition that the available funds would be paid into a joint venture in which the public share would not exceed 49%. As regards the selection of the private partner, the MUR imposed a tender procedure in compliance with EU regulations. Therefore, the University of Pavia, with the assistance of Best in Health, launched a Public Private Partnership (PPP) through a competitive dialogue tender to select the party able to propose the best project for the creation of a national network of laboratories as well as the subsequent concession for the production and sale of radiopharmaceuticals to repay the initial investment. Let's find out more with Luigi Recchioni and Andrea Stefanelli.

Recchioni explains: "The project was born on the initiative of the MUR, which issued a call for tenders in which the University of Pavia took part, along with a number of other players. The ministerial call for tenders already stipulated that the subsequent development of the project should be carried out in collaboration with at least one private party. The public-private synergy in this context has a reinforcing role, since the private sector provides not only professional capacity but also additional resources, thus doubling the potential of the PNRR-funded project. The intervention of the team of professionals came at a time when the University of Pavia, after submitting a project worth over 15 million euros to the call, received a positive response from the Ministry, which expected the University to find a partner on the market willing to finance the remaining 51% of the initiative. "This partnership," says Stefanelli, "must of course be established in compliance with the regulations in force and therefore with a public tender, in accordance with the Consolidated Act on State-controlled companies.

The challenges associated with this initiative are of two kinds: one is strictly legal and the other is related to the fact that this type of ministerial funding requires a series of specific rules in order to actually carry out the project, account for it and reap the benefits," says Recchioni. The complexity also stems from the presence of numerous players, gathered around the University of Pavia as the lead partner, and from the fact that business plans of this kind have to be drawn up not only with a view to the project's profitability and expected results, but also to the rules of the PNRR and the specific reporting methods involved'.

"From a legal point of view, the project operates in a very complicated area where several regulations are intertwined: the PNRR regulation, the public procurement regulation, the Consolidated Act on State-controlled companies," says Stefanelli. In this case, moreover, the university was faced with a kind of running change, following a new request from the Ministry to find a private partner willing to finance half of the project for the creation of a national network of Technological Innovation Infrastructure for the production of radiopharmaceuticals, which are particularly sensitive because they decay very quickly. The partner therefore had to adhere to an existing project as described by the university, or present an alternative that would however provide for the availability of at least five production sites distributed in macro-regions.

Here, the complexity has been to adapt the project by setting up a competitive dialogue tender to identify a concessionaire, because at this point another peculiarity comes into play: the private entity, which has to finance 51% of the initiative, will be rewarded with a subsequent concession for the duration of the service, which will be 15 years. This will be partly for the benefit of the public entity, but partly for the production of the radiopharmaceuticals, also intended for the private entity and therefore for the sale of the product, which will allow it a return on the investment".

What were the most innovative aspects? "From a legal point of view, it is almost a case study, in which several institutions which normally act separately were all necessarily involved to achieve the result due to a 'perfect storm'" answers Stefanelli. The competitive dialogue is in itself a less used type of procedure because the confrontation between the contracting authority and the economic operator takes place during the tender. This means that the contracting authority does not initially define a subject of the tender and then look for the entity that will carry it out, but rather defines the best project with the competitors during the procedure itself. In practice, each participating economic operator presents its own project (different from the others) and during the process the administration engages in dialogue with each of them in order to identify the project that best meets its interests.

The selected project is not directly entrusted to the awardee for implementation, instead the awardee acquires the right to set up a mixed public-private company with the contracting authority. The public-private company then has the task of implementing and managing the project (construction and/or management/modernisation of the five laboratories) for the next 15 years following their completion. So, there is an intertwining of different figures provided for in the various regulations, which are rarely seen all at the same time".

"From a scientific point of view, the innovative aspect of the project is the study and application of new radiopharmaceuticals. From an economic and financial point of view, as already mentioned, the plan has been structured taking into account the specificities of the projects financed by the MUR, which provide for specific ways of making purchases, so that, for example, a leasing contract has a different impact than the direct purchase of an instrumental good," explains Professor Recchioni. In light of these considerations, the financial plan has been prepared taking into account not only the prospect of future costs and revenues, but also the particularities and rules underlying the granting of the benefit. This has now been paid to the University, but will be available once the cost statement is approved by the Ministry.

In terms of timing, the Ministerial Notice for the selection of the service provider was published on 28 December 2021. However, it was only later that it was decided that the financing would be done with PNRR funds and therefore in a different way, so that a maximum of 49% of the project would be funded with public money. Hence the need to prepare the call for tender documents, which were published at the turn of spring and summer this year. "The good news is that two projects were submitted on time and the university is now starting the competitive dialogue with the two applicants," says Stefanelli.

This is not likely to remain an isolated case on the national scene. On the contrary, according to the lawyer, ‘this is a clear demonstration of the applicability of the public-private partnership, which is a macro-container within which many types of relations between the private and the public can fit, and the resources of the PNRR can be brought into play at least in some cases through the use of this instrument. After twenty years of decline in the public sector's ability to invest, beginning with the Spending Review, we now have £2 trillion on the way with the PNRR that we have to invest over five years. What better tool does the public sector have than to look to the private sector, which has the planning ability, while the public administration now has the resources? Beyond the technicalities, the PPP is, in my opinion, an instrument that is ideal and applicable in many fields, and especially in the health sector, given the high technological content of the projects to be implemented’.