The Victorian Government has declared Victoria 'open for business' by releasing new guidelines that provide the framework for how it will assess unsolicited proposals from the private sector for the delivery of projects and services. These new guidelines, which build on the previous government's unsolicited proposals guideline, provide strong guidance for proponents in relation to how they may successfully pitch a unique idea to the Victorian Government. In addition, the new guidelines provide greater transparency for the community via the new public register of proposals that are under consideration by the Government. Government sector leader and Partner Paul Kenny, Senior Associate Penny Alexander and Associate Amelia Hanscombe report.
How does it affect you?
- The release of the new Market-led Proposals Interim Guideline (the Guideline) is an encouraging step towards more private sector involvement in large projects in Victoria, reflecting the State Government's increasing openness to the private sector's ideas.
- Although largely based on the previous Government's 'Unsolicited Proposals Guideline', the new Guideline provides a more transparent and structured approach for the assessment of market-led or 'unsolicited' proposals. It also includes a number of new features, including an optional pre-submission meeting to sound-out the proposal, the implementation of a register of market-led proposals to provide greater transparency to the public, and further definition of the Government's option to commence a competitive tender process in respect of proposals that have been submitted under the Guideline.
- In order to be successful, potential proponents will need to progress through a five-step assessment process and demonstrate (amongst other things) that their proposal provides value for money, is sufficiently unique, aligns with government objectives and priorities, provides benefits to the State and is feasible.
- Although the Guideline provides new detail regarding the submission and assessment of proposals, the key issues informing a proponent's decision whether 'to pitch or not to pitch' remain the same: timing is critical, uniqueness and value for money are fundamental criteria, and confidentiality issues and intellectual property protection will remain key concerns for proponents as their new ideas are put in the spotlight.
In recent years, all Australian States and Territories (other than Western Australia) have implemented guidelines in relation to how the private sector can put proposals for the delivery of projects and services to government, and the subsequent assessment of those proposals by government. In line with this trend, the Victorian Government has recently released a new Guideline that frames how it will assess unsolicited proposals, now called 'market-led proposals' in Victoria, for the delivery of projects and services by the private sector, and, in turn, declaring Victoria 'open for business'. Although the new Guideline draws on many features of the previous Government's 'Unsolicited Proposals Guideline', the Guideline brings increased transparency and structure to the process.
At a time when infrastructure projects are providing significant stimulus to the Australian economy, the Victorian Government's renewed commitment to working with the private sector in the delivery of major projects is a further reflection of the value created by such projects, particularly in terms of long-term job creation.
The Guideline sets out the following five-stage process for assessing a market-led proposal:
- Stage One: Filtering of proposals received by Government
The Department of Treasury and Finance will determine whether a proponent's proposal meets the information requirements and is appropriate for consideration under the Guideline.
- Stage Two: Strategic assessment and recommendation
The Government will conduct a strategic assessment of the merits of the proposal in two sub-stages, addressing:
- first, whether it meets key criteria, being uniqueness, alignment with government objectives and priorities, value for money, provision of benefits to the State and feasibility; and
- second, whether it should proceed by way of competitive tender or exclusive negotiations
- Stage Three: Investment case and procurement preparation
The Government will agree with the proponent either the terms of exclusive negotiation or the approach to a competitive tender process.
- Stage Four: Negotiation, development and assessment of final offer
The Government will conduct an exclusive negotiation or competitive tender process to develop a final offer for the Government's consideration and will assess whether the proposal should proceed to contract award, including undertaking a value for money assessment.
- Stage Five: Contract award
The Government will award the contract and publish the executed contract on the Victorian tenders website.
Proposals will also be assessed under the Government's 'High Value High Risk' framework where appropriate.
Although in substance the new Guideline is very similar to the former 'Unsolicited Proposals Guideline', the Guideline includes additional detail around the process and decisions to be made at each assessment stage. This will no doubt assist proponents in obtaining clarity about the purpose of each stage and the necessary information requirements, while also enabling them to more successfully tailor their pitch to meet the Government's needs.
In addition to enhanced process requirements, the Guideline also includes the following new features:
- Pre-submission meeting: The option of a pre-submission meeting or telephone discussion with relevant Departmental officers responsible for administering the Guideline to sound-out key aspects of a potential proposal and obtain a clear understanding of how the Guideline will be applied.
- Checklist: A checklist for proponents to use prior to submitting a proposal.
- Register: A new public 'register' of market-led proposals under consideration. This register will include information relating to a proposal under consideration from Stage Two onwards, with increasing disclosure as the process continues:
- at Stage Two: the title of the proposal and name of the proponent will be disclosed;
- at Stage Three: a detailed description of the proposal (including scope, benefits and why a competitive or an exclusive negotiation process was pursued) and the probity plan will be disclosed, although the Government has committed to consult with the proponent regarding the terms of disclosure and any information which will 'pose a risk' to the negotiation will not be disclosed; and
- at Stage Five: a 'project summary' will be released along with the executed contract, summarising how the proposal was evaluated, the value for money that was achieved for the Government and an assessment of the proposal's compliance with the probity plan.
- Assessment criteria: Further detail about the assessment criteria at each stage in the evaluation process.
- Probity: Direction about how the probity process will interact with consideration of the proposal.
- Competitive Tender: An increased emphasis on the Government's ability to initiate a competitive tender process at Stage Two or Stage Three of the assessment, instead of pursuing exclusive negotiations with the proponent. The possibility of a competitive tender process was a feature of the previous guidelines; however, the Guideline now establishes that a competitive tender can be pursued by way of either of the following two procurement models and makes clear the circumstances when they will each be implemented:
- 'Swiss Challenge' procurement: a competitive tender is conducted and if the proponent is unsuccessful, the proponent has the option to match the winning bid and deliver the project; or
- 'Development Manager' procurement: the proponent develops the project and conducts the procurement process, and receives a development fee from the successful bidder.
The complete Guideline is available at http://www.dtf.vic.gov.au/Infrastructure-Delivery/Market-led-proposals.
While the new Guideline provides welcome clarity to the process for submission and assessment of market-led proposals, the typical issues affecting such proposals remain the same. Generally speaking, proponents will need to grapple with the following key issues:
- Demonstrating uniqueness: Demonstrating the unique characteristics of a proposal and the unique ability of a proponent to deliver the project is fundamental. The proposal having merit alone will not be sufficient – proponents need to demonstrate that they have a unique idea and that the ability to implement the idea can only be delivered by the proponent itself.
- Value for money: Proponents need to demonstrate how the proposal provides enhanced value for money compared to other approaches, their clear understanding of risks associated with the proposal and the reasonableness of costs to the Government. Under the new Guideline, it will also be in the interests of proponents to establish the savings that will result from pursuing exclusive negotiation compared to the costs of a competitive tender, assuming this is their preferred procurement method.
- Protection of confidential information and intellectual property: There will undoubtedly be some commercial sensitivity in putting a unique idea forward under the Guideline, particularly if there is a prospect that the idea will be subject to a competitive tender process if the proponent is unable to convince the Government that an exclusive negotiation is warranted. The Guideline's numerous references to consultation with proponents before making disclosures on the proposals register, along with providing compensation for use of intellectual property in the event the proposal does not proceed, suggest that the Government will take into account a proponent's concerns regarding protection of its ideas and information.
- Timing: As the Government will be assessing whether any given proposal is consistent with its policy objectives and priorities, proponents need to time the submission of their proposal as best they can in order to accord with the objectives and priorities of the day, bearing in mind State Government electoral cycles.
The Victorian Government's new Guideline provides a clear framework as to how it will receive and assess market-led proposals for projects and services pitched to it by the private sector. At a time when investment in infrastructure is the focus of all governments around Australia, this is further positive encouragement of private sector project delivery which will hopefully drive development of innovative and more efficient ways to deliver projects for the benefit of the public.
For the private sector, the key challenges in preparing an unsolicited or 'market-led' proposal will be to establish that the proposal is sufficiently unique, that the proponent is uniquely placed to deliver the proposed project, and that exclusive negotiation is the best procurement approach for the proposed project. Alignment with current Government policy and objectives is also likely to be a key factor for the success of any proposal.