The areas of reform include the following.
Expanding the type of services that can be provided
The Government will consider expanding the type of services that can be provided under the PPP model to include services that were previously delivered by the public sector. For example, the Ravenhall Prison Project (for which Expressions of Interest are currently being evaluated) will include custodial services provided by the private sector.
Applying the PPP model to small-scale projects
Projects valued at less than $50 million may use a streamlined PPP model to generate private investment if they have suitable value for money drivers. Alternatively, projects can also be bundled together to attract the PPP model.
Changing how value for money is assessed
The Public Sector Comparator (PSC) will continue to be used as a benchmark to test value for money for PPP projects.
However, if bidders do not meet the risk adjusted PSC cost expectations through the procurement process, this does not necessarily mean the Government will revert to traditional design and construct delivery.
Government must also now develop a scope ladder alongside each PSC. Its purpose is to identify any scope items that bidders can remove or add should bids be over or under the PSC.
Reducing bid costs
The reimbursement of partial bid costs for some PPP projects will be trialed. Government will communicate its approach for reimbursement for a particular project at the time of releasing the Expression of Interest. The Government may also consider reimbursing some bid costs incurred by losing bidders in exchange for intellectual property in their unsuccessful bid, on a project specific basis.
The new requirements are also aimed at process improvements, including to:
- minimise information submission requirements;
- shortlist only two bidders where appropriate; and
- avoid ‘best and final offer’ processes where possible.
Modified financing structures
The Government will consider making partial capital contributions for some PPP projects. Normally, construction of PPPs is financed entirely by the private sector and repaid by the Government over the life of the project. This change in policy is aimed at increasing private sector investment by providing an alternative to full private finance.
Government contributions could be made either as:
- milestone payments during construction (eg for large scale projects); or
- a lump sum payment once construction is complete.
For more information about public private partnerships, please contact
Assistant Victorian Government Solicitor
t 9947 0404