Transparency is about inclusive processes that ensure all stakeholders - such as consumers, voters, labour organisations, bidders and the municipality - have proper information about potential impacts, policies, partnership objectives and procurement criteria and processes. It is concerned with awareness building. Quality information enables stakeholders to engage in informed debate about private sector participation options and decision-making, and then helps ensure fair procurement and pricing. This requires that services policies and priorities are well debated and publicised, and delivery options publicly explored. For example, the issue of differential levels of services to make services more affordable for poor people should be raised early and openly so that poor people have a role in decision-making and understand the implications of these partnership decisions. The reporting requirements for partnerships should be regular and appropriately detailed to ensure information sharing. Operating contexts with more democratic and participatory policy requirements have extensive requirements regarding information sharing (about bidders and financial flows) and the consultation of stakeholders. A local government should initiate such requirements in its own right to ensure that policy debates and procurement processes are as open as possible. In Gweru (see Box 9.4) the municipality created a particularly transparent process involving all urban stakeholders for the design of a water and sanitation concession.
In order to meet the highest international standards, the Greater Johannesburg Metropolitan Council chose a two-stage process for the procurement of the management contractor (operator). The first stage was a request for qualifications (RfQ), the purpose of which was to produce a shortlist of adequately qualified bidders. Applicants were invited to form consortia and submit a response to the RfQ that demonstrated that they met predetermined minimum criteria for financial strength and technical experience. The financial criteria related to turnover in the water and sanitation business, and consistent profitability. The minimum technical experience required revolved around operating water and wastewater systems for populations of over 1 million, and of managing a water-related meter-reading and collection operation serving at least 350,000 connections. The optimal size for a PSP shortlist will depend on the circumstances of project, the level of appetite among bidders, and the anticipated cost of submitting a bid. A long shortlist can deter good bidders from bidding, while a too-short shortlist reduces competition and can result in bid failure if some of the shortlisted firms decline to bid. For the Johannesburg project, the RfQ criteria were developed with the objective of producing a shortlist in the range of five to seven firms. By setting clear minimum criteria for shortlisting, the RfQ evaluation became a simple and transparent pass/fail process. There was no need to undertake comparative scoring of applicants and little need for the evaluators to exercise subjective judgement. A total of seven applicants applied, met the minimum criteria requirements and were shortlisted. The shortlist included a Who's Who of international water companies. Each shortlisted bidder was led by an international water company, and included one or more local South African partners. Experience has shown that the complexity of managing a large consortium can become a distraction to an operator, and for this reason the RfQ document limited the number of partners in any consortium to a maximum of three. The second stage in the process was the the request for proposals (RfP). RfP documents were issued in June 2000. Five bids were submitted. The bid evaluation was based on a combined technical and financial score, with 60% of the score being allocated to the technical bid, and 40% to the financial bid. A two-envelope system was used. Technical bids (envelopes) were opened in public on the submission date. Financial bids were stored in a secure environment to be opened after the technical evaluation was complete, and bidders had been informed of their technical scores. The technical score was based on experience (25%), work plan (35%), staffing plans and the CVs of management staff (40%). It was important to the council that the process was professionally done and demonstrably transparent. This was achieved in a number of ways including: • Joint oversight of the evaluation by a specially convened Council Adjudication Panel (comprising members of the council) and the Water and Sanitation Advisory Board (comprising members who were mostly not members of the council). • Using a professional evaluation led by external consultants. The council was concerned that there might be an external perception that its own officials could have a conflict of interest if they were directly involved in scoring the proposals. However, officials were involved extensively in a non-scoring capacity to challenge the findings of the scoring team, and to provide local knowledge. • The appointment of an external probity auditor to monitor the evaluation at every stage and to report on issues of probity, process and fairness. • Every stage of the technical evaluation was reviewed and challenged by a third party. Some parts of the bids, such as the CVs of key staff, were scored independently by two evaluators. The RfP specified a minimum hurdle of 75% for the technical score. Three of the bidders scored more than 75%, and were thus defined as qualifying bidders and progressed to the next stage of the evaluation. Two bidders scored less than 75% and, in accordance with the rules of the RfP, their financial bids were returned to them unopened. The opening of the three financial bids took place in public in October 2000. The combined scores were calculated in accordance with a formula specified in the RfP. A consortium comprising Northumbrian Water (UK), Lyonnaise des Eaux (France) and WSSA (South Africa) achieved the highest combined technical and financial score and became the preferred bidder. Following successful negotiations in November and December 2000, the consortium formed a local company under the name 'Jowam'. Jowam commenced services under the contract in April 2001. The procurement for the Johannesburg contract took only 15 months from the issuing of the RfQ documents to the signing of the contracts. The reasons for this include political commitment, strong leadership, a flexible and responsive consultancy structure (see Box 6.22), strong interest from local and international companies, and a demonstrably transparent and fair procurement process.
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