When the Public and Private Sectors Meet
Article written by Eduardo Marson Ferreira and published in Revista Força Aérea (Air Force Magazine)
Feb/2017
The crown jewels of the Telebrás System, Embratel was privatized in 1998 and has allowed the access of millions of Brazilians to a phone line. Or have they forgotten that one day the telephone was so expensive and restricted that it needed to be declared on the income tax return? The control of the company then passed to the American Worldcom that would file for bankruptcy in 2002 and became the target of greed of several global players, among them the Mexican billionaire Carlos Slim. With this background, a friend of mine who worked in the Defense Ministry told me: “Damn, all the communication in the X-band of the MoD is hanging in the satellites of Embratel, which will now be in the hand of the Citi Group or of the Mexican! It’s ludicrous!” I asked him where the satellite was controlled from and he replied that it was from Mangaratiba/RJ. “Look, dude, if the American or Mexican do not behave, put the troops in the ground control station and you operate it,” I said.
Of course, none of this was necessary and Brasilsat still carries a good part of the provision of Broadband X. Just to illustrate that even in the most critical issues of defense, the encounter between the public and private sectors usually ends in a success story, something that the British discovered a long time ago. Nowhere in the world are the PPPs, or Public-Private Partnerships, used in such large scale to finance the needs of the State. In 2008, 85% of the public purchases of the United Kingdom were already made in this modality.
In a recent article here in this column I talked about new ways of thinking about the “core business” of the Armed Forces, and stated the example of the subjects of Her Majesty who have already equipped the Navy with surface media or your MoD with secure communications, originating from some kind of PPP process. One friend of mine who criticized in 2004 the process of Embratel would be amazed if they knew that the British secure communications pass through the X-band transponders leased from a French satellite.
Here in Brazil things have been so slow since the regulatory mark of the PPP, Law no. 11,079 of 2004. From there, just 121 contracts have been signed in the various levels of government, federal, state and municipal. The lack of consistency of projects and the managerial difficulties of the State have been suggested as probable causes of this reduced number. However, according to the site Radar PPP, in June 2016, there were 734 projects in Brazil, from 29 segments, in 11 stages of the lifecycle of a PPP, which goes from the public intention right through to the signing of the contract.
It is evident that in times of budgetary difficulties the Public-Private Partnership presents itself as an almost solitary option to respond to the investment needs of the State. Since he took over, President Michel Temer has made clear his priority to this activity and literally all the newly elected mayors began talking about PPPs.
In Defense, today there are ten PPP projects, most of them related to health and education, in addition to logistics. The exception is the Integrated Communication Network of DECEA, theme of recent articles in the press. Very little for a sector that is facing serious budgetary difficulties and very shy for the intensions of a continental country, with Armed Forces widespread across the four corners of this vast territory.
To change this state of affairs, it is important for the MoD and individual forces to discuss areas that may be attractive for the private sector and equip them to model the partnerships and their implementation, aiming at a higher number of projects that remain in force. And the most important thing: maintain an open channel of dialog with the private initiative so that there are more and more Procedures for Expression of Interest (PMI) and may ease the hardships resulting from the lack of budget.