A/HRC/15/31 36. When deciding to delegate service provision, and once that fundamental decision has been taken, the subsequent process of tendering, bidding and contract negotiation also must be transparent. The terms of reference and the final contract should be made available for public scrutiny and commenting. Commercial confidentiality must not jeopardize the transparency requirements provided for under the human rights framework. Both the tender and the bids must be based on accurate information, taking into account all existing relevant facts. This precludes strategic underbidding. Some have asserted that companies have purposely quoted bids less than the actual amount required to implement the contract, with the intention of renegotiating the contract for a higher price once the bid has been won.31 Renegotiations are not generally a problem from a human rights perspective: changes in circumstances and data availability may require that the contract be adapted or amended and renegotiations may also be necessary to adapt contracts to human rights requirements. However, when renegotiations are the result of strategic underbidding and companies secure more favourable terms in the ensuing bilateral negotiations, such as increases in tariffs as well as delays and decreases in investment obligations,32 this is contrary to the exercise of due diligence. 37. The negotiation of contracts is extremely complex, including the need to clearly define responsibilities, allocate risks, set delivery and coverage targets and establish penalties for non-compliance. Negotiation skills are therefore essential. In particular, local governments are usually far less experienced than transnational corporations in negotiating contracts and addressing the issues at stake.33 Any imbalance aggravates the task of ensuring that the contract includes the necessary human rights safeguards. Therefore, strengthening the negotiation capacity of (local) governments and reducing power asymmetries is essential. 38. Any instrument delegating service provision, including contracts, must meet human rights standards. While ensuring this is the primary obligation of the State, non-State service providers are expected to exercise due diligence in this regard. To become aware of, and address, any potential impact on the realization of human rights, service providers have a responsibility to analyse the proposed instrument from a human rights perspective, in order to detect any human rights-related risks and aim to avoid them. As outlined above, exercising due diligence explicitly extends to the relationship with others, including when service providers enter into a contract with the State. While they cannot unilaterally change the terms, they are expected to avoid complicity in human rights abuses, namely by not entering into a contract which seems likely to result in human rights violations. Non-State service providers should proactively engage with the State to identify and address human rights concerns, and in this manner support the efforts of the State to realize human rights. 2. Providing services to previously unserved and underserved areas 39. Particular challenges occur with regard to the provision of services to previously unserved and underserved areas. In these cases, the operator is faced with not only the recurrent costs of operation and maintenance, but also the need for substantial investments. The private sector has often been criticized for selectively serving attractive areas within regions, countries, cities and neighbourhoods, where a high rate of return can be expected. However, the geographic coverage of services provided by non-State actors is the result of a political decision and a contract proposed by the public authorities – non-State service 31 32 33 J. Luis Guasch, Granting and Renegotiating Infrastructure Concessions: Doing It Right (Washington, D.C., World Bank, 2004), p. 37. Ibid., p. 18. Marin, Public-Private Partnerships (see footnote 7 above), p. 131. 13