Review of Unsolicited Proposals in NSW

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Wednesday, April 13th, 2016
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Unsolicited Proposals
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The New South Wales acting Auditor-General, Tony Whitfield, recently conducted a performance audit on the Department of Premier and Cabinet’s management of unsolicited proposals. The audit presents some interesting data and recommendations and also raises a few questions.

In January 2012, the New South Wales Government launched a formal process and a guide for the submission of unsolicited proposals. The guide’s stated aim is to promote government engagement with the private sector in developing and delivering new infrastructure and services. It sets out how market-led proposals for public-private partnerships are handled and assessed.

Four years down the track, the NSW acting Auditor-General has conducted a performance audit and found the current governance arrangements to be adequate. Recommendations have been provided on changes that could be made to improve the process.

Key recommendations include:

  1. Revising the Unsolicited Proposals Guide to clarify terms, require probity advisers to be appointed at Stage 2, and to provide clear options for proposals that do not successfully gain an exclusive mandate
  2. Addressing a lack of understanding across government
  3. Increasing disclosure and public reporting around the proposals received

Revising the guide

A number of the Auditor-General’s recommendations relating to the revision of the guide are fairly straightforward: clarify the oversight role undertaken by the Department of Premier and Cabinet (DPC); better define the term ‘government’; and better explain the ‘value for money’ criterion.

It is also recommended that probity advisers are required to be appointed for any proposal that reaches Stage 2. This would generally mirror what has already occurred in practice.

A final recommendation relating to the guide is for clear options to be provided for proposals that do not gain an exclusive mandate. Adopting this recommendation would greatly improve the process for private proponents, as it would provide other formal avenues, especially  for proposals that provide value-for-money and meet government needs but that may not meet the high bar of ‘uniqueness.’

After all, in a review conducted in 2013, of 69 unsolicited proposals received by the NSW Government, 44 had been knocked back for not meeting the uniqueness criteria. NSW may like to look at the ACT Government’s ‘Six Ways’ Framework, outlined in their Guidelines for Unsolicited Proposals, which outline six possible procurement models, one of which is to enter into exclusive negotiations.

Increasing government understanding

The audit recommends facilitating whole-of-government education of the process, citing a lack of understanding across the NSW Government, especially in those agencies not commonly approached about unsolicited proposals.

While the audit recommends releasing a Premier’s Memorandum on the topic, further education should be considered. For a process that aims to bring unique private sector ideas to public sector infrastructure and service delivery, it is simply not good enough that some agencies have limited awareness or understanding.

Increasing public reporting

The Auditor-General makes three sensible recommendations around increasing public reporting. A very pertinent recommendation is for the DPC to publish aggregate data about the unsolicited proposals they receive.

Reporting aggregate level data on the numbers of proposals received each year, descriptive information regarding the types of proposals, and (where applicable) information on which assessment criteria were not met, would be in the public interest. It would also aid potential proponents when they are considering or developing initial proposals.

Other comments

While the recent performance audit focussed on the governance arrangements for unsolicited proposals, it is also important to consider the stated goals of the NSW Government’s policy. If the Government’s stated aim is to “promote government engagement with the private sector in developing and delivering new infrastructure and services,” is this being achieved?

Over more than four years, 117 proposals have been received, of which only three have successfully completed the process. Two have been for billion-dollar projects – the $2 billion Crown Sydney Resort and the $3 billion NorthConnex twin tunnel motorway project.

This may indicate that the process is not well navigated or well understood by many proponents, especially proponents of small-to-medium sized projects. This would limit the process’ ability to attract some truly innovative and unique market-led proposals for PPPs.

While increasing government understanding of the process is important, it may also be important for the NSW Government to consider whether some public education is required. Education for prospective proponents could increase private sector understanding, reassure the private sector that commercially sensitive ideas will be carefully managed through a well-delineated process, and ultimately attract more unique, innovative and value-for-money proposals.

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