In August 2012, the NSW Government released the “Unsolicited Proposals – Guide for Submission and Assessment” (Guide) to:

  1. assist Government in the evaluation of private sector unsolicited proposals for Government sponsored projects, and
  2. increase transparency and provide confidence to the private sector by demonstrating how such proposals will be assessed.

The NSW Government intends that the release of the Guide will stimulate the submission of Unsolicited Proposals in an effort to obtain the “best ideas and solutions”1 for the development of new infrastructure and services in NSW. These changes have recently received substantial media attention due to those projects being considered under the Guide (such as the Transurban tunnel link between the F3 and M2 and the Crown Sydney Resort Projects).

Guiding principles

The predominant form of procurement is through the competitive tendering process. Sometimes there is “direct dealing with the private sector” following an approach by Government or the private sector.

The Guide “sets out the processes to be followed by both Government and Proponents in developing Unsolicited Proposals or Direct Approaches”. The Guide provides a number of principles for the Government entering into direct negotiations with the Proponent, including:

  • evaluation against a standard set of Assessment Criteria
  • ensuring that probity issues are considered, and the assessment is carried out in a fair, open and impartial manner
  • consideration of resource/cost commitments by the Government and Proponent in progressing the project
  • preparation of a Governance Plan to define the Government’s role in participating in Stage 2 of the assessment process (discussed below) and the project approval process, and
  • preparation of a Participation Agreement between Government and the Proponent to ensure the alignment of expectations regarding participation in the process.

Assessment of proposals

The Guide sets out a three stage assessment process for the receipt and consideration of Unsolicited Proposals comprising of:

Stage 1 – Initial Submission and Strategic Assessment:

Government undertakes a comprehensive initial assessment of the proposal to identify the potential benefit to Government of further consideration and development with the Proponent

Stage 2 – Detailed Proposal:

The Proponent and Government work cooperatively in the development and assessment of a detailed proposal, and

Stage 3 – Negotiation of Final Binding Offer:

The Proponent and Government finalise all outstanding issues with a view to entering into a binding agreement.

Roles and responsibilities

The Guide states that the Department of Premier and Cabinet (DPC) will take the lead role in the receipt and coordination of the consideration of Unsolicited Proposals and will be assisted by various entities including:

  • a Steering Committee comprised of representatives from DPC, NSW Treasury, Infrastructure NSW and a relevant agency representative as required
  • a Proposal Manager to receive and progress consideration of Unsolicited Proposals
  • an Assessment Panel comprising of appropriately qualified representatives to undertake the assessment
  • Infrastructure NSW (if the Unsolicited Proposal relates to the provision of major infrastructure)
  • where the Unsolicited Proposal affects a particular agency, that agency will be required to commit appropriate resources to fully participate in the assessment process, and
  • appropriate legal, financial, technical, environmental and probity advisers as required.

Direct approach by government

Whilst the focus of the Guide is on the responsibilities of Government and the Proponent when developing and assessing Unsolicited Proposals, it also sets out the process (similar to Stages 2 and 3 set out above) to be followed when Government conducts a Direct Approach to an organisation that it considers is best placed to provide the required outcomes.

The process involves obtaining approval from Government (Cabinet) through demonstrating the rationale for why a Direct Approach is appropriate and how value for money will be demonstrated. The Guide sets out that the considerations to be taken into account when considering whether a Direct Approach is appropriate may include:

  • ownership of intellectual property rights
  • ownership of physical property, software or technology that is integral to meeting Government Objectives
  • the organisation may be capable of clearly demonstrating that it will provide optimal value for money
  • the organisation can meet a strategic objective of Government within a timeframe not achievable by another organisation, and
  • an open market tender process will take too long to address a critical need of Government and one organisation is positioned for expeditious delivery.

The Guide does not address the procurement of those goods and services covered by the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Act 2012 (NSW).

Summary

With the introduction of the Guide, the roles and responsibilities of those entities engaging in the application or assessment of Unsolicited Proposals and Direct Approaches is less ambiguous. Compliance with the contents of the Guide should therefore be the starting point for both Government and the private sector when assessing or proposing those projects that fall outside the traditional path of being put to market.