NSW Public Private Partnership Guidelines (2012)

14 September 2012

1. Introduction

1.1 The NSW Public Private Partnership Guidelines (2012) (Guidelines) supersede the Working with Government Guidelines for Privately Financed Projects (2006) and complement the National Public Private Partnerships Policy and Guidelines (2008) (the National Guidelines).

1.2 The Guidelines provide NSW government specific requirements for Public Private Partnerships (PPP) procurement. PPPs must be assessed as a potential procurement method for any public infrastructure project with a total estimated capital value exceeding $100 million.

1.3 The Guidelines are effective as of 15 August 2012.

2. Application of the Guidelines

2.1 The procurement of infrastructure and associated services through PPPs by any NSW Government agency, including State Owned Corporations (SOCs), must comply with:

(a) the PPP Guidelines;

(b) the National Guidelines;

(c) (if the PPP involves a NSW Government agency) the NSW Government Procurement Framework and associated guidelines; and

(d) (if the PPP involves an SOC) the Commercial Policy Framework.

2.2 Local government councils are required to comply with separate guidelines as per Part Six of Chapter 12 of the Local Government Act 1993.

3. Roles of Agencies

3.1 The Infrastructure Financing Unit (IFU) of NSW Treasury is responsible for ensuring that procuring agencies adhere to the processes set out in the Guidelines and the National Guidelines. If an agency wishes to depart from the Guidelines, it must obtain approval from the IFU.

3.2 The Auditor General is responsible for certifying the accuracy of the Contract Summary prepared by the procuring agency. The procuring agency may consult the Auditor General early in the process on the likely contract structure and the proposed accounting treatment for the PPP. The involvement of other agencies, such as the Major Projects Coordination Unit of the Department of Premier and Cabinet, is determined on a case by case basis.

3.3 In certain circumstances, the Premier may authorise Infrastructure NSW under Part 5 of the Infrastructure NSW Act 2011 to “step in” to deliver major projects, including where there is no clear majority stakeholder for a project or the particular agency lacks the required skills or capacity.

3.4 Procuring agencies retain the overall responsibility to meet their service delivery objectives and goals, regardless of any PPP entered.

4. Approval process

4.1 Government approval will be required at various project milestones throughout the PPP procurement process.

4.2 Cabinet approval is required for funding public infrastructure projects and for PPP delivery of that public infrastructure and related services. Generally, a Cabinet sub-committee with specific mandates will provide approval at the various milestones. However, Cabinet has discretion over whether a full Cabinet approval is required for a particularly significant PPP transaction milestone(s).

4.3 With respect to PPPs procured by SOCs or other public trading enterprises with a Board of Directors, approval by the Board is required prior to requesting Cabinet approval.

4.4 PPPs also require statutory approvals under the Public Authorities (Financial Arrangements) Act 1987 and, if applicable, the State Owned Corporations Act 1989.

4.5 Environmental and planning approvals will be required throughout the procurement process.

4.6 The Guidelines should be consulted for a detailed explanation of the requirements of each phase of approvals.

5. Project phase

5.1 The Guidelines supplement volume 2 of the National Guidelines, which set out the required documentation and procedures at each project phase.

5.2 There are five project stages:

(a) Project development;

(b) Expression of interest;

(c) Request for proposals;

(d) Negotiation and contract finalisation; and

(e) Post contract execution.

5.3 Public Sector Comparators (PSCs) are the main quantitative benchmark for testing value for money of PPP bids received during the procurement process. A preliminary Public Sector Comparator will be prepared during the project development phase and a fully scoped PSC used to evaluate bids in the request for proposals stage.

6. Disclosure requirements

6.1 All NSW PPPs are now subject to Ministerial Memorandum No.2007-01 Public Disclosure of Information Arising from NSW Government Tenders and Contracts and the Government Information (Public Access) Act 2009, which set out specific disclosure requirements arising from NSW Government tenders and contracts.

7. Conclusion

7.1 The Guidelines are designed to ensure maximum value for money for the acquisition or use of NSW public assets, while appropriately allocating risk between the parties.

7.2 Within Australia, the degree of conservatism adopted by respective State Governments and the speed with which they are able to achieve the necessary financial pre-approvals will dictate where the private sector is likely to want to invest. Beyond Australian borders, PPP investors and counterparties are likely to compare value, risk allocation and procedural hurdles against those applicable in other countries, particularly Asia.

7.3 While the history of successful PPP projects in NSW has been somewhat patchy, in applying the new Guidelines, the NSW State Government will need to have an eye to the competitive environment in which it operates in the current global economic climate. To adopt an overly conservative policy when applying the Guidelines may result in little or no opportunity to utilise the PPP model for infrastructure delivery in this state.

7.4 It will behove Government Agencies which propose PPP delivery models to gain an early understanding of the State Government’s likely risk appetite, in order to appropriately pitch its proposed tender and contract terms.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.

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Christine Covington

Partner. Sydney
+61 2 9210 6428


Louise Camenzuli

Partner. Sydney
+61 2 9210 6621