Procurement processRelevant procedure
What procedures normally apply to a PPP procurement? What evaluation criteria are used to award a PPP transaction?
PPP procurements are currently subject to EU procurement law. Selection criteria are used to determine if parties are considered suitable to participate in the procurement, based on suitability to pursue a professional activity, economic and financial standing, technical and professional ability and certain mandatory exclusion criteria. Under the Public Procurement Directive 2014/24/EU and the Public Contracts Regulations (SI 2015/102), the contract will be awarded on the basis of the most economically advantageous tender, with the government deciding an appropriate weighting between quality and cost to calculate this. The evaluation criteria used must be disclosed in the contract notice or tender documents. The government has made clear its intention that the jurisdiction of the European Court of Justice in the UK will come to an end with Brexit. In the event of a managed withdrawal, the current rules will apply until the end of the transition period, while in the event of the UK leaving the EU without a withdrawal agreement, the UK has put in place amendment regulations to ensure continuity of the existing frameworks.Consideration of deviating proposals
May the government consider proposals to deviate from the scope or technical characteristics of the work included in the procurement documentation during the procurement process, without altering such terms with respect to other proponents? How are such deviations assessed?
Variant bids may sometimes be permitted in addition to the required bids (eg, to encourage innovative proposals) or where the procuring entity is unsure about the best solution for its project.
If variant bids are permitted, this will be stated in the tender documents and will apply to all parties. The criteria used to assess the variant bid will be the same as for the required bid.
Variant bids may be either mandatory (where the procuring authority requires a specific alternative proposal) or may be voluntary, where a bidding party may propose an alternative proposal if it wishes, but is not obliged to do so.
In certain circumstances, the government may also be open to proposals from the private sector providing innovative technical solutions that may offer the government the opportunity to make further savings or increase revenue. However, where such deviations are not included as part of the evaluation criteria, they will not be evaluated and therefore may only be considered once a preferred bidder has been appointed.Unsolicited proposals
May government parties consider unsolicited proposals for PPP transactions? How are these evaluated?
The requirement to comply with EU procurement rules means that the government is unable to accept unsolicited proposals from contractors for PPP transactions without considering whether the contract in question would be subject to the applicable EU directives.
The position after Brexit remains unclear. However, it seems unlikely that the UK will repeal the procurement rules in their entirety, owing, in part, to the public policy benefits of regulating procurement and also because of significant UK input into the EU directives that gave rise to the current procurement regime. Yet, it remains a possibility that the government may take the opportunity to amend procurement regulations to encourage participation and account for UK-specific concerns. The Labour Party has voiced its opposition to PPP transactions, having previously expressed a desire to nationalise existing PPP transactions and not allow any new PPP transactions. The type of government party in power after Brexit is therefore likely to impact on the future of PPP transactions.Government stipend
Does the government party provide a stipend for unsuccessful short-listed proponents or otherwise bear a portion of their costs?
Government policy is generally to not pay any bid costs for unsuccessful bidders; however, it retains discretion to do so where it considers this to be appropriate. Claims may be brought against the government where its procurement obligations have been breached.Financing commitments
Does the government party require that proposals include financing commitments for the PPP transaction? If it does not, are there any mechanisms during the procurement process to ensure that the applicable PPP transaction, once awarded, is financeable?
The requirement for financing commitments will depend on the nature of the PPP in question. To the extent that any private financing is required, the government needs assurance that the financing will be delivered. This may include evidence of commitments from lenders or that adequate corporate finance is available. Once procured, there is limited scope to revise projects in order to make them more financeable. Bidders should, therefore, raise their potential financiers’ concerns during the bidding process.Legal opinion
May the government ask its counsel to provide a legal opinion on the enforceability of the PPP agreement? May it provide representations as to the enforceability of the PPP agreement?
The government generally does not ask its counsel to provide opinions on the enforceability of PPP contracts, nor does it generally provide representations as to enforceability. Bidders must take their own view as to enforceability and bear the risk themselves.
The government will generally provide confirmation that its proposed signatory is authorised to execute the PPP agreement; however, it will not typically provide any representations as to the enforceability of the PPP agreement, on the basis that it is for the bidder’s lawyers to advise their clients on enforceability.
However, specific comfort may occasionally be offered regarding contracts entered into by certain types of public entities, such as the deeds of safeguard issued in respect of NHS Foundation Trusts, and the Local Government (Contracts) Act 1997 certificate. These are usually provided to certify that a local government counterparty has the power to enter into the contract and to allow for compensation to be payable if there is a subsequent successful challenge by way of judicial or audit review.Restrictions on foreign entities
Are there restrictions on participation in PPP projects by foreign entities? May foreign entities exercise control over the project company?
Foreign entities are not generally prohibited from participating in PPP projects as contractors or subcontractors, or exercising control over the project company. Exceptions are typically made if a project entails particular national security concerns or for any entity to which sanctions may be applied.
Due diligence will be carried out by the government client on any private-sector contracting party, regardless of their country of origin, because the government client needs to be comfortable with the ultimate ownership of any private-sector party before contracting with them.