Negotiation with private sector proponents should focus on the essential information accumulated in the EOI and tender process. Additional information brought to the process should only be permitted in so far as it would be detrimental to the Government's position were it to be excluded. It would be inequitable if proponents were permitted to bring additional information that should properly have been provided at an earlier stage of the process.
Agencies should be mindful of the need to invest sufficient resources in the negotiation process. Negotiations need to be conducted with a view to crystallising points of agreement as early as possible in the process, so that the parties are provided adequate time and resources to negotiate the more difficult or complex issues.
It is essential that project teams retain adequate records of negotiations. In complex projects, different team members may be required to negotiate in matters relating to areas of their particular expertise. The record of negotiations should be minuted, with clear reference to points of agreement and areas of difference. The record of negotiations provides the basis of the contract with the private sector proponent, so that it is imperative that the outcome of negotiations is presented clearly, concisely and unambiguously.
Agencies must be mindful of the impact of negotiations on the financial model of the project and the PSC. Much of the time spent in negotiations will be devoted to the allocation of risks between the public and private sector, which will ultimately be reflected in the service contract. The financial modelling of the project must be conducted dynamically with the negotiating process to properly reflect the outcomes, allocation of risk, incentives and penalties and financial results that the contract will ultimately deliver. Draft contracts must be submitted to Cabinet for approval prior to signature.