Agency For the purpose of these Guidelines, the term includes NSW Government departments, statutory authorities, statutory corporations and Government business enterprises.
Bidder A respondent to a request for expressions of interest or an invitation to submit a bid in response to a call for detailed proposals. Typically a bidder will be a consortium of parties, each responsible for a specific element, such as constructing the infrastructure, supplying the equipment, or operating the business. Government will normally contract with only one lead party (bidder), which is responsible for the provision of all contracted services on behalf of the consortium.
Business case A business case sets out a preliminary view on how the project will be delivered. It also provides an analysis of the various impacts of the project and an indication of the likely level of market interest. The business case provides information, allowing Government to decide whether to support a proposed project before significant resources are spent on its development.
Capital A generic term for an asset. Capital sometimes refers to financial investments and at other times to physical capital, such as land and buildings, earthworks, machinery and vehicles.
Capital expenditure An amount used during a particular period to acquire or improve long-term assets, such as property, plant or equipment.
Commissioning The proving processes involving the start-up of operations to deliver the contracted services as specified.
Competitive Neutrality Removal of any net advantages (or disadvantages) that accrue to a Government business simply by virtue of being owned by Government.
Default The failure of a party to perform a contractual requirement or obligation, including failures to meet deadlines, to perform to a specified standard, to meet a loan repayment or to meet its obligations in relation to a risk that has materialised.
Demand management The use of pricing mechanisms or other methods to manage demand eg. to delay the need for new infrastructure.
Detailed Proposal A response by a short listed bidder to a call for detailed proposals. A call for detailed proposals details Government’s objectives, service delivery requirements, policy and commercial matters, material background information and the processes for lodging and evaluating submissions. It also sets out Government’s role and intentions for the infrastructure to be built and explains how checks and balances are observed in the process to ensure impartiality.
Discount rate The rate used to calculate the present value of future cash flows, usually determined on the basis of the cost of capital used to fund the investment from which the cash flow is expected.
Economic infrastructure Fixed assets that support economic activity and development in a fundamental way. Typical examples of economic infrastructure are networks of roads and telecommunications facilities, airports, ports, water storage distribution and sewerage, railways, electric power generation and distribution facilities.
Expression of Interest (EOI) A response to a call by a Government department or agency for expressions of interest from the private sector in a project. EOIs are used to evaluate the capability of bidders to deliver a project and may be used to gather some information from bidders on particular approaches that may be accommodated in the call for detailed proposals. Based on the information presented in EOIs, bidders are short listed to provide a detailed proposal (see above).
Force majeure Acts of God and other specified risks (eg. terrorism), beyond the control of the parties to the contract, which prevent or delay performance of a party’s non-financial obligations under the contract.
Intellectual Property (IP) Inventions, original designs and practical applications of good ideas protected by statute law through copyright, patents, registered designs, circuit layout rights and trademarks; also trade secrets, proprietary know-how and other confidential information protected against unlawful disclosure by common law and through additional contractual obligations, such as confidentiality agreements.
Loan Council A body with Federal and State representation, which aims to constrain the public sector’s call on national savings primarily through the limits it places on borrowing by the public organisations.
Loan Council Allocation (LCA) The LCA is the borrowing allocation to be nominated to Loan Council by the Commonwealth, States and Territories. It is based on the deficit/surplus in addition to some memo items. Final negotiations and endorsement of each LCA are the responsibility of the Loan Council.
Output specification The output or performance specification sets out the services that Government is seeking to procure, and the performance levels required for each of those services.
Outsourcing The practice of contracting out Government services to the private sector.
Preferred bidder A bidder selected by Government to develop its proposal during the negotiation period in sufficient detail to enable the execution of the final contract.
Private party The private sector entity with which Government directly contracts. Traditionally the private party has been a company, known as a special purpose vehicle, created specifically for the project. The private party is not limited to this form and can be set up under a number of structures, including a joint venture and a trust structure.
Probity Uprightness, honesty, proper and ethical conduct and propriety in dealings. Used by Government to mean good process.
Probity auditor An independent expert retained to audit the bidding process at critical stages. The probity auditor will assess and report on whether the process has been conducted according to the required standards of probity. Before a contract is executed, the probity auditor reports to the agency CEO and the project steering committee on the bidding process.
Project manager The project person who has overall responsibility for delivery of the project and leadership of the project team, including external advisers and consultants.
Project team Under the guidance of the steering committee, the project team is responsible for the day-to-day administration of the project until commissioning, to ensure deadlines are met and technical difficulties resolved.
Public Sector Comparator (PSC) The hypothetical risk-adjusted whole-of-life cost of Government delivering the project output specifications. As well as adjustments for retained and transferable risks, the PSC includes an adjustment for competitive neutrality. The PSC is used as the benchmark for assessing the potential value for money of private party bids in PFP projects.
Raw PSC The hypothetical whole-of-life cost of Government delivering the project output specifications, with no adjustment for risk or competitive neutrality.
Reference project The most likely and efficient form of public sector delivery that could be used to satisfy all elements of the output specification. It forms the basis of the PSC (see above).
Retained Risk The value of those risks or parts of a risk that Government proposes to bear itself under a PFP arrangement.
Risk allocation The allocation of responsibility for dealing with the consequences of each risk to one of the parties to the contract; or alternatively, agreeing to deal with a particular risk through a specified mechanism which may involve sharing that risk.
Risk management The identification, assessment, valuation, allocation, mitigation and monitoring of risks associated with a project. The aim is to reduce their variability and impact.
Risk matrix A method of presenting all possible significant risks likely to be encountered in a project, the magnitude and likelihood of the risks occurring, their areas of impact, the allocation of risks between parties and the risk mitigation techniques to be employed.
Social infrastructure Although loosely used, this term generally refers to items of physical infrastructure that aid the provision of social, rather than economic or industrial, services. Hospitals, schools, police stations, day care centres and prisons are examples of social infrastructure.
Special purpose vehicle (SPV) In establishing a project consortium, the sponsor or sponsors typically establish the private party in the form of a special purpose vehicle (SPV). The SPV is simply an entity created to act as the legal manifestation of a project consortium. The SPV itself has no historical financial or operating record that Government can assess.
Steering committee A committee that directs the development of a project.
Transferable Risk The value of those risks (from Government’s viewpoint) that are likely to be allocated to the private party under a PFP delivery method.