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Client Update: New guidelines for unsolicited proposals for State-owned land in WA

28 January 2016

In brief: The WA Government has issued its formal guidelines for unsolicited proposals for the sale or lease of State-owned land. By embracing the possibility of unsolicited proposals, as opposed to encumbering every development opportunity with a procurement process, and by expressing a willingness to engage with private sector proponents on an exclusive, non-competitive basis, the WA Government is seeking to encourage the private sector to bring innovative development proposals directly to the State. Partner Andrew Pascoe (view CV) looks at the new guidelines.

Limited application

The guidelines are limited in their application. They apply only to State-owned land (including vacant land, and land and buildings):

  • where the estimated cost of the proposal (excluding the value of the target land) is at least $5 million; or
  • that Cabinet, the Premier or the Minister for Lands directs should be dealt with under the guidelines.

The guidelines will not apply to proposals for contemporary, non-unique forms of residential, commercial and industrial development. We will need to see how this exclusion is applied in practice.

Criteria

The criteria for assessment of unsolicited proposals include:

  • The proposal must be unique – having unique characteristics that will result in an outcome that could not otherwise be obtained through a competitive process.
  • The proposal will have a significant and beneficial impact on the economy, community or environment.
  • The proposal must deliver value for money to the State. We think this is an opportunity for developers to bring ideas such as 'value capture' directly to Government.
  • The proposal must be demonstrably feasible, which presumably includes technical as well as financial feasibility.
  • The proposal must align with relevant Government policy.

In addition to these matters, the WA Government will assess whether the relevant land is required by the Government for core Government business. In other words, the land must be available for sale/lease to a private party. Finally, the unsolicited proposal cannot relate to land in relation to which there is a known competing proposal.

The process

The process for submitting an unsolicited proposal involves:

  • An initial meeting with the Department of Lands.
  • Preparation of a brief overview of the proposal, including the checklist appended to the guidelines.
  • Following the initial meeting, the formal proposal can be submitted.
  • The formal proposal must include (among other things):
    • confirmation that the pre-submission meeting has occurred;
    • identification of the relevant land;
    • an outline of the proposal;
    • estimated costings;
    • a detailed description of the unique characteristics of the proposal;
    • a summary of the benefits to the economy, community or environment;
    • a description of the proponent's capacity and experience; and
    • identification of the content of the proposal that is 'commercial in confidence' and should not be publicly released and areas that involve the proponent's intellectual property.
  • On receipt of a proposal, the Department will conduct a preliminary assessment to ensure the formalities have been satisfied and will include a recommendation to the Minister for Lands as to whether the proposal should proceed to the second stage of assessment. Brief details of the proposal will be published on the Department's website. If rejected at this stage, a proposal will not be reconsidered.
  • The Minister will decide whether the proposal should proceed to the next stage of detailed assessment. This is a more detailed and formal assessment process, that may be undertaken under a formal participation agreement between the State and the proponent.
  • The final decision will be made by Cabinet upon recommendation of the Minister.
  • If the proposal is successful, the Department will negotiate the sale or lease of the land on an exclusive basis.

The Minister retains the discretion to require a meritorious proposal to go through an open competitive process. The guidelines do not specify what steps (if any) the State will take to preserve the proponent's intellectual property, but notes that the proponent enters the process at its own risk.

How does this compare with unsolicited proposal guidelines in other States?

There are a number of important differences between the WA guidelines and those operating in other states.

  • The key difference is that the WA guidelines apply only to the sale/lease of land. Guidelines in other states and territories also cover proposals for the delivery of services and infrastructure.
  • The WA guidelines allow for the WA Government to initiate a competitive public tender process where the proposal has merit, but the Government nonetheless wishes to allow other parties to bid. This emphasis mirrors the new Victorian guidelines. (For further detail on the Victorian guidelines read our Focus: Market-led Proposals Guideline – a new framework for assessing unsolicited proposals in Victoria.)
  • The mandated preliminary meeting with the Department of Lands is a unique component of the WA guidelines.
  • The criteria under which proposals are assessed in the WA guidelines are broadly similar to those of other states and territories, with some differences, including the consideration of whether the land to be transferred is required for core Government business, and if there are any competing proposals for the use of the land.

Conclusion

This is an important development for the WA Government procurement framework. It establishes a means for prospective land developers to bring good, proprietary ideas to the Government outside formal and cumbersome processes. Hopefully, these guidelines will generate confidence within Government to extend the unsolicited proposals into new areas for infrastructure development and service delivery.

For further information, please contact:

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