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PANOECONOMICUS, 2006, 3, str. 299-311 UDC 336.13 Public Private Partnership as a Last Resort for Traditional Public Procurement Viktorija Bojović∗ Summary: This paper discusses recent changes in the way public services are deliv- ered. A marked increase in the cooperation between the public and private sector in the realisation of complex projects, mostly concerning development of infrastructure, is the main characteristic of present-day developing economies. The creation of new, innova- tive agreements is driven by the limitation of public funds and an ever-growing demand for an increase in the quality of public services. Looking upon the western economies experience, alternatives to the traditional public sector procurement are identified in the public/private partnership. The public/private partnership can be seen as one component in the rearrangement of the public sector with a management culture that focuses on the citizen or customer. Also included in this are accountability for results, investigation of a wide variety of alternative service delivery mechanisms, and competition between public and private bodies for contracts to deliver services consistent with cost recovery and the achievement of value for money. The partnership can be realised through an array of models and in this paper priority is given to the DBFO (design-build-finance-operate) model, due to its importance in implementation. The DBFO model is considered to be a synonym for the public/private partnership, as it is the most suitable for complex projects and gains the most benefits. Key words: Public private partnership, Public procurement, New public management, DBFO model (design-build-finance-operate). JEL: R42, H57, L33, P35 1. Introduction Societies and economies are changing and there is a need to bring together the best elements and best practic