On 18 July 2017, the Queensland Treasurer Curtis Pitt released revised guidelines for the Queensland Government’s Market Led Proposals (MLP) framework.
The revised guidelines offer more certain and structured criteria, and replace the previously applied ‘uniqueness’ test with a different threshold test. They look to be a great way for businesses and government to work together to use MLPs to generate economic development and fulfil community needs.
What does Queensland’s MLP framework look like?
Queensland’s MLP framework provides a three stage process for the private sector to submit proposals to government to provide a service or provide infrastructure to meet a community need:
Stage 1: initial proposal;
Stage 2: detailed proposal; and
Stage 3: final binding offer.
There is also an optional ‘informal pre-submission’ stage where a proponent may contact Queensland Treasury to discuss a potential proposal before submitting.
WHAT HAS CHANGED?
Replacement of the ‘uniqueness test’
Previously, proposals had to satisfy a ‘uniqueness test’, which required the proponent to demonstrate that their proposal was unique (and that they were uniquely placed to deliver it).
Market participants and lobbyists (including the Property Council) strongly advocated that the uniqueness test was the biggest hurdle to MLPs and that the high threshold it posed hindered the process and undermined the MLP framework driving economic opportunities.
The uniqueness test has been replaced with a new requirement to ‘justify direct negotiation’ with the government. The emphasis is now on proponents to show why government should directly negotiate with them (as opposed to engaging in a competitive process).
Revised guidelines and new criteria
Stage 1 criteria
To progress beyond the first stage of the assessment process, a MLP must satisfy the following four criteria:
1. Alignment with government policy, priority and community need
Common examples include proposals regarding health, public transport and community services, as well as areas of innovation, bioenergy and regional development. The emphasis of this criterion is that the proposal be ‘low cost – low risk’ for government.
2. Justification for direct negotiation
Justifications may include that the proponent has an existing right or possesses Intellectual Property that the services/infrastructure could be provided in a timeframe that competitors could not deliver where there is value in progressing the proposal as soon as possible.
The proposal should offer good value to government and a benefit that competitors cannot.
3. Value for money
This criterion assesses the balance between what is being sought from the government and what the government receives in return.
In the absence of a competitive process, this can be assessed by reference to independent valuations, estimates, open book processes or through the proponent competitively tendering aspects of the proposal.
4. Capacity and capability to deliver the project
The government will look at the financial capacity of the proponent, as well as its demonstrated capability, competency and experience and how robust and reasonable any financial assumptions are.
Stage 2 criteria
Once the above criteria are met, the proposal can progress to Stage 2 (the detailed proposal phase).
At this point, the following further criteria will be considered:
5. Risk and cost allocation
If a proposal seeks to attribute risk or cost to government, the proponent will need to demonstrate significant and proportionate benefits to the State.
6. Feasibility of the proposal
The proposal must show that the project is feasible: technically, commercially and practically.
Is there a competitive market?
At all stages of the process, Government will consider whether there are other active proposals that address the same need or propose a similar outcome.
If two proponents advocate the same need but offer different methods of delivery, this may demonstrate that there is a competitive market and would therefore require greater justification for a direct (exclusive) negotiation.
The new criteria are complemented with Supplementary Guidance Notes which provide more information on the rationale of the assessment criteria and practical examples under each criteria to ensure it is more user-friendly. These are available here.