Unsolicited PPP projects have been implemented in many countries, but some countries do not entertain such proposals because of the problems associated with them, especially the risks they involve for competition and transparency. In fact, the legal provisions of many countries do not allow consideration of such project proposals.
There are some merits in keeping provision for considering unsolicited project proposals. Often, such proposals are based on innovative project ideas. The difficulty with unsolicited proposals however, lies in getting the right balance between encouraging private companies to submit innovative project ideas without losing the transparency and efficiency gains of a competitive tender process.
Considering the merits of unsolicited proposals that they may often have, some governments have developed procedures to transform unsolicited proposals for private infrastructure projects into competitively tendered projects.
There are two main approaches that have been developed to deal with unsolicited proposals. These are:
• In a formal bidding process, a predetermined bonus point is awarded to the original proponent of the project.
• The Swiss challenge system in which other parties are invited to make better offers than the original proponent within a specified time period. If a better offer is received, the original proponent has the right to countermatch any such better offer.
A third approach has also been suggested by some practitioners. The government can purchase the project concept and then award it through a competitive bidding process.
The government agencies are in a better position to handle unsolicited proposals if a transparent procedure is already in place for the purpose. Such a procedure may include an initial screening to determine the merit of the project and its conformity with the existing legal, regulatory and policy environment of the country.
A thorough examination of the submitted feasibility study may then follow with a focus on matters that include suitability of the project and its likely effect on the concerned sector and market; assessment of risks and their proposed sharing; responsibilities of, and liabilities on government; the financing proposal; the main terms of the contract; and competency of the project sponsor. Some countries (for example, the Republic of Korea) have institutional mechanisms for thorough examination of unsolicited project proposals.
The implementing agency after thorough examination of the proposal may consider separate procurement processes for unsolicited proposals that do not involve proprietary concepts or technology and those that involve proprietary concepts or technology. Given the scope of the present Guidebook, no further discussion on unsolicited projects is considered necessary.