Unsolicited proposals are a means by which the private sector can propose new ideas to the State to deliver capital requirements outside normal procurement processes.
Governments generally procure projects, goods and services of any size by direct tendering through a competitive process.
However, another approach is through an unsolicited proposal, initiated by the private sector.
Allowing private sector firms to propose new projects, even if a proposal has not been requested can drive innovation and can improve service delivery.
With the exception of Western Australia and Tasmania, each State and Territory now has its own guidelines on how proposals can be put to Government – see Figure 1. Several governments also have websites that provide template documents to assist organisations prepare an unsolicited proposal.
A key feature of the guidelines is that, if certain criteria are met, the Government (at its discretion) may enter into direct negotiations with an individual or organisation and conduct an assessment of the proposal without a tender process.
Guide for Submission and Assessment of Unsolicited Proposals (January 2012, updated in August 2012)
|QLD||National Public Private Partnership Guidelines Annexure 1 – Queensland departures (2011) and Public private partnerships guidance material, Supporting document – Value for money framework (2008)|
|SA||State Procurement Board Market Approaches Guideline Version 3.0 (August 2012, to be reviewed in August 2014)|
Unsolicited Proposals Policy (October 2013)
Guidelines for Unsolicited Proposals (January 2014)
Unsolicited Proposal Guideline (February 2014)
Western Australia and Tasmania have not yet adopted specific guidelines.1 For these states, private sector proponents should use the National Public Private Partnership Policy and Guidelines, which provide general guidance on unsolicited proposals.
How are unsolicited proposals assessed?
The assessment process for evaluating proposals is set out in each jurisdiction's guidelines.
A common feature is that an unsolicited proposal must be "unique" and "innovative".
In New South Wales, proposals must include "unique elements that provide justification for entering into direct negotiations with the Proponent".2 In the Northern Territory, the proposal must contain qualities that are "new, unique or innovative"3, and in Victoria, an unsolicited proposal will only be pursued where it has "a degree of uniqueness that means it could not reasonably be delivered by another private party or achieve the same value for money through a competitive process within acceptable timeframes"4.
The extent of the requirements in each jurisdiction varies. In New South Wales, there is a three stage assessment process, as compared to a five stage assessment process in Victoria. The processes generally cover similar assessment by the Government, at different points in time. A summary of the assessment processes in each jurisdiction is set out in Table 1. The New South Wales three stage assessment process is set out in Figure 2.
A feature of the Victorian guideline is that it allows for the Government to contemplate a competitive process at the conclusion of stages two and three. In the absence of competition, a "value for money" evaluation is required, whereby the Victorian Government is required to consider appropriate costing mechanisms, such as building a cost comparator, seeking independent assessment of a proposal, using an open book approach or using benchmarking data.5
The Australian Capital Territory guidelines contain a "six ways" framework, in which the assessing committee and proponent determine a procurement structure for the proposal from six procurement models outlined within the guidelines.6
Will IP rights be protected?
There are obviously sensitivities in bringing new ideas to market. The guidelines suggest that intellectual property rights will be protected through agreement with proponents throughout the process.
The New South Wales guidelines provide that the approach to protecting intellectual property rights will be agreed with the proponent during stage one.7
In South Australia the Government can test an unsolicited proposal through a competitive market, "subject to the protection of any intellectual property rights or confidential information, as agreed with the proponent"8.
What is the current status of unsolicited proposals in Australia?
The NSW Government has received over 80 unsolicited proposals since January 2012.9 Approximately 90% of those proposals have not proceeded beyond stage one, and the Government has stated that "a great many of these were considered not sufficiently unique to warrant a direct dealing"10.
Unsolicited proposals in New South Wales over the last couple of years that have progressed beyond stage one include:
- Brookfield Office Properties Australia Pty Ltd's proposal to combine a commercial and retail development on Carrington Street with improvements to the public access areas for Wynyard Station, which is currently in stage two of the New South Wales Government's unsolicited proposals assessment process;
- the proposal from private motorway operator Transurban and the Westlink M7 shareholders to construct a tunnel link between the F3 and M2 Motorways, which is currently in stage three of the New South Wales assessment process;
- the Crown Sydney Resort Project for the development and operation of an iconic six star hotel and subsequent commencement of VIP gaming in Barangaroo South, Sydney, which has been approved by the Government.
The interests of the New South Wales Government were enhanced by the inclusion of detailed securities and guarantees, and a licence fee payment of $100 million to be paid by Crown Group to the New South Wales Government upon the issue of the licence. The project is subject to a number of conditions and approvals, including the passing of amending legislation, planning approval under the Environmental Planning and Assessment Act 1979 (NSW) and licence approval by the Independent Liquor and Gaming Authority; and
- the sale of the Queen Mary Building, Camperdown, which will be used for affordable student accommodation, to the University of Sydney.
In Victoria, a private sector proposal from MTR, John Holland Construction and UGL Rail Services for an approximately $2.5 billion upgrade of the Cranbourne- Pakenham suburban rail line (including the delivery of 25 high capacity trains) is the first project approved under the new Victorian government guidelines.
In Victoria, a private sector proposal to build an 18km road from the Eastern Freeway to the Western Ring Road (which would be longer than the Government's proposed 6km East West link) for less than $12 billion was rejected by the Victorian Government. Victorian Treasurer Michael O-Brien said the Government was committed to a competitive tender process and that an unsolicited proposal to finance and operate the East West Link was not good value for money.11
Unsolicited proposals are not without controversy, and the application of the New South Wales guidelines to the Crown Sydney Resort proposal caused debate around the circumstances in which it is appropriate for the Government to deal with a private party exclusively and without an open tender process.12
However, Government issued unsolicited proposals guidelines provide a framework for the Government to recognise innovative contributions by the private sector that potentially benefit the economy. As stated by Victorian treasurer Mr Michael O'Brien "the public sector doesn't have a monopoly on good ideas"13.
1The Western Australian Government previously
provided guidance on unsolicited proposals from the private sector
for a PPP, in its publication Partnerships for Growth: Policies and
Guidelines for Public Private Partnerships in Western Australia in
December 2002. However, there is no longer any specific Western
Australian guidance as these guidelines were surpassed by the
National PPP guidelines in 2008.
2NSW Guide for Submission and Assessment of Unsolicited Proposals (August 2012), p 4.
3NT Unsolicited Proposals Policy (October 2013), p1.
4VIC Unsolicited Proposal Guideline (February 2014), p2.
5VIC Unsolicited Proposal Guideline (February 2014), p7.
6ACT Guidelines for Unsolicited Proposals (January 2014), pp 9-10.
7NSW Guide for Submission and Assessment of Unsolicited Proposals (August 2012), p 4.
8SA State Procurement Board Market Approaches Guideline Version 3.0 (August 2012 p 10.
9NSW Government, Supplementary Information for proponents, February 2014, p1.
10NSW Government, Supplementary Information for proponents, February 2014, p1.
11www.abc.net.au/news: 'Treasurer says East West Link proposal 'not good value for money', 15 August 2013.
12Lenny Roth, NSW Parliamentary Research Service August 2013 e-brief, p1 and pp 7-9.
13Victorian Government Media Release, 'Private sector's big ideas welcome in Victoria', 13 February 2014.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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