New Victorian Market-led Proposals Guideline encourages private sector proposals to Government

By William McKelvie
Government Infrastructure

In-depth guidance for a successful proposal 7 min read

The Victorian Government has recently released an updated version of its Market-led Proposals Guideline (also known as 'unsolicited proposals' or 'exclusive transactions' in other states) which affirms its continued focus on market-led infrastructure and services projects.

The changes look to position Victoria as a leading jurisdiction in this space by providing increased certainty to proponents, including by replacing the previous 'uniqueness' test, streamlining the assessment process and confirming areas of priority for the delivery of market-led proposals in Victoria.

How does it affect you?

  • The new Market-led Proposals Guideline (the Guideline) reflects the continued commitment of the Victorian Government to remain open to the private sector's ideas, by giving proponents clear and transparent guidance on how their proposals will be assessed.
  • The general processes and requirements for the assessment of market-led proposals are broadly the same as under the previous Guideline released in 2017. However, the Guideline has been restructured with the aim of reducing assessment times, improving the quality of proposals and ensuring proposals deliver the best value for Victorians.
  • Justifying exclusive negotiation with the Government is now the key prerequisite for a successful market-led proposal, replacing the former 'uniqueness test'. Demonstrating that a proposal offers value for money, is aligned with Government policies and priorities, and is deliverable are the other key factors proponents need to focus on in their proposals.
  • The release of the Government's new priority areas for market-led proposals will also help proponents ensure their proposals are likely to be successful.


The Victorian Government first introduced a market-led proposals guideline in 2015 for infrastructure projects and services from the private sector, which was subsequently updated in November 2017. A revised Guideline was published in August 2021, which affirms that the Victorian Government continues to welcome market-led proposals.

Since the Guideline was released there have been a number of successful market-led proposals in Victoria, including the new West Gate Tunnel Project and the development of the new Victorian Police Centre.

The new 2021 Guideline continues the Victorian Government's provision of the most extensive guidance in Australia to proponents of market-led proposals, with a three (plus two) stage process in place that seeks to establish a clear framework for how these proposals will be considered and assessed, thereby providing certainty and transparency for both proponents and those in the broader community who may be impacted by, or otherwise interested in, the proposal. Importantly, the Guideline provides that Government may, however, tailor the assessment process to specific proposals if this is deemed appropriate.

The three (plus two) stage process

The 2021 Guideline sets out the following three stage process (plus one pre-process stage and the final Contract Award) for assessing proposals:

Stage 0: Pre-submission Meeting

Proponents are required to meet with Victorian Department of Treasury and Finance (DTF6,i) officers prior to submitting a proposal.

Stage 1.1: Proposal Filtering

At this stage, a formal proposal is submitted and the Government conducts an initial assessment to determine whether the proposal is within the scope of the Guideline and has the potential to meet the assessment criteria. Proponents should also justify why the proposal should be considered under the Guideline rather than through standard procurement processes.

At the end of this assessment, the proposal may proceed to the second part of Stage 1 or not proceed.

Stage 1.2: Due Diligence Assessment

At this stage, the Government conducts a more detailed and rigorous assessment of the proposal according to the following criteria:

  • meets a service need aligned with Government policy objectives;
  • represents value for money;
  • affordable and a relative priority for budget funding;
  • deliverable; and
  • has characteristics that justify exclusive negotiation.

At the end of this assessment the proposal may proceed to Stage 2, not proceed, or be referred to another Government process. High-level disclosure of all proposals on the DTF website occurs at the end of Stage 1.

Stage 2: Investment Case and Negotiation

During this stage, the Government seeks to complete its assessment of whether the proposal is affordable and of sufficient priority for government funding and whether it is deliverable, and further advance its value for money analysis.

The proponent or the Government may start developing a procurement strategy and preparing tender documentation. If a proposal meets the assessment criteria in Stage 2, it will progress to Stage 3. If a proposal does not meet the assessment criteria, it will not proceed or will be referred to another Government process.

DTF publicly discloses detailed descriptions of all proposals at the end of Stage 2.

Stage 3: Exclusive Negotiation

Stage 3 involves completing an exclusive negotiation in order for a proponent to present a final offer for the Government to consider and to finalise all outstanding issues. The value for money assessment is finalised at this stage. The Government will put appropriate probity, governance and other arrangements in place for the proposal to progress.

At the end of this stage, a proposal either proceeds to the contract award stage or does not.

Contract Award

In this final stage, the proponent and the Government enter into a binding contract based on the terms and conditions approved by the Government at the conclusion of Stage 3. The executed contract must be published on the Victorian Government Tenders website within 60 days after contractual or financial close.

Key changes

Importantly for those who are familiar with the 2017 Guideline, the new 2021 Guideline incorporates the following key new features:

  • Government's priority areas: The Government has published an updated one-page document that sets out its current areas of interest and priorities for market-led proposals. This list may be updated periodically, so it's a valuable resource for ensuring that proposals are appropriately targeted and tailored for success. Current areas of interest include medical technology, health infrastructure, transport distribution and logistics, social and community infrastructure and services, and environment and sustainability.
  • Justifying exclusive negotiation: The assessment criteria in the 2017 Guideline required a proponent to demonstrate that their proposal was unique so as to justify exclusive negotiations rather than through another Government process. This 'uniqueness test' has been reworked in the new 2021 Guideline and the optional public consultation process has been removed. A proponent is now required to detail characteristics of its proposal that justify exclusive negotiation, such as demonstrating it has a significant competitive advantage through intellectual property or ownership or access to strategic assets. This follows the Victorian Auditor-General's report in 2019 that raised issues about the clarity of how uniqueness was measured. The reworked assessment criteria of justification for exclusive negotiations is in line with changes made to Queensland's guidelines after industry concern that the uniqueness test set too high a threshold for proponents.
  • Innovative ideas: The separate assessment process for innovative ideas has been removed and innovative ideas are now assessed via the same process as that for proposals. Following Stage 3, the Government may decide not to proceed with the proposal but use a proponent's intellectual property relating to the idea. A proponent is now entitled to compensation when this occurs, whereas payments under the previous Guideline were discretionary.
  • Adjustments to stages and assessment criteria: The 2021 Guideline has reduced the number of assessment stages from five to three (not including the Pre-submission Meeting and Contract Award). The assessment criteria have also been standardised across the different stages. In addition, some aspects of the previous Guideline have been moved from one stage of the assessment process to another, while others have been streamlined.
  • Greater certainty of exclusivity: The 2021 Guideline builds in a level of certainty for proponents by providing that where a proposal meets the assessment criteria in Stage 1 and 2, it may only proceed to exclusive negotiation and will not be referred to a competitive tender process. Under the previous Guideline, a proposal that met the assessment criteria could still be referred to a limited tender process. This will provide greater certainty to proponents who bear the cost and risk until at least Stage 2.

Key issues for proponents

The new 2021 Guideline builds on the same fundamental requirements as the previous Guideline. To be successful, proponents will need to successfully navigate the following key issues:

Justifying exclusive negotiationicon_justifying.png

Demonstrating the characteristics of a proposal and a proponent's significant competitive advantage is fundamental. A proposal merely having merit or a proponent's ability to implement an idea quickly are not sufficient. Proponents need to demonstrate that the idea can only be delivered by the proponent itself or, if the proposal can be delivered through an alternative process, what would be gained by Government so as to justify not conducting an alternative process.

Value for moneyicon_value-for-money.png

Proponents need to demonstrate how the proposal clearly defines the benefits, risks and contingencies associated with the proposal and that the costs to Government are reasonable and evidence based. It is also important for proponents to establish that pursuing exclusive negotiations with the proponent provides better value for money than a competitive tender or Government delivering the proposal itself.


By continuing the requirement for compulsory, formal pre-submission meetings, the Government is providing an opportunity for proponents to develop an in-depth understanding of the assessment process and what is required for a proposal to be successful. Given the early stages can be extensive and the proponent bears the cost and risk until at least Stage 2, this benefits proponents by helping to ensure both that their resources are expended in a targeted manner and that proposals are more likely to progress.

Protection of confidential information and intellectual propertyicon_protection.png

There will usually be some level of commercial sensitivity in any innovative idea put forward under the Guideline. The Guideline includes various mechanisms to ameliorate proponents' concerns about sharing their ideas with Government, including clear guidance around when and what information will be made available to the community about the proposal. Further, should an agreement not progress at Stage 2 or 3, the proponent will be entitled to negotiate compensation for, and treatment of, intellectual property rights.


As the Government will be assessing whether any given proposal is consistent with its current policy objectives and priorities, proponents need to time the submission of their proposal as best they can to accord with the objectives and priorities of the day, bearing in mind state government electoral cycles.


The latest evolution of the Victorian Market-led Proposals Guideline provides proponents with in-depth guidance about the process and requirements necessary for a successful proposal and reinforces the Victorian Government's commitment to partnering with the private sector on innovative projects that provide value for Victorians.