Unlike the procurement of computers or certain management and integration services, where the needs are well defined and the risks are known and quantifiable, many of DOE's privatization projects carry uncertainties with regard to programs and policy, waste characterization, and project integration with other site activities and DOE programs (to name a few). As a result, these procurements do not lend tiiemselves to significant standardization and have been appropriately dubbed "thinking persons' contracts." Therefore, there is no recipe that can be prescribed which will guarantee success. Instead, crafting a successful partnership requires an iterative process that studies market indicators and adjusts accordingly.
In order to properly evaluate the available options, it is first important to define the government's objectives in the transaction. Based on these objectives, then it is possible during the procurement process to determine what creative steps the government can take to move the transaction as close as possible to those objectives. Depending on the project, these objectives may include shifting specific risks to the private sector, reducing costs of delivering the service, or "fast tracking" a project to completion. In the Philippines, for example, a priority for the government was to eliminate the brown-outs that had been plaguing the country's energy supply. To encourage the private development of power facilities, the government adopted privatization guidelines that left key risks with the government, including currency risk, force majeure, revenue risk, hydrologic risk (for hydropower facilities), and a number of others. However, construction and performance risks remained with the private contractors including, in one case, the fixed-price construction of 13 miles of tunnels through a mountain (see Case Study 4 in the Appendix). The privatization guidelines mobilized significant private investment in the Philippines and met its objective of solving its chronic power problems.
As depicted in Figure 6, having defined its objectives, the government can begin designing the procurement based on trends in the marketplace, recent experience, and procurement policies and guidelines. Often, through distributing a draft request for proposal (RFP), holding pre-bid conferences, and/or soliciting expressions of interest, the government can obtain stakeholder input. After validating this feedback, the stakeholder concern can be evaluated against the government's objectives. In some cases, the procurement design can satisfy the stakeholder concerns and the government's objectives, and modifications to the conceptual design can be implemented before the release of an RFP.
This process can continue after receiving responses to the RFP. To the extent the government has been able to foster competition in the solicitation, these responses will be an excellent indication of the market's ability to address the government's requirements. As the government enters into negotiations with the contractor, the process of validating feedback and identifying creative solutions will continue. Through mis process, the government will determine the risk profile for the project that best achieves the government's objectives. The secret to a successful negotiation is identifying those options for participation which, when included in the transaction, improve the overall cost position of the project and significantly enhance the chances of the public-private partnership going forward.