Governments wish to ensure a competitive PPP procurement process, so as to encourage best value for money outcomes in the delivery of public infrastructure, by:
• maintaining competition amongst existing Australian PPP players, and
• encouraging potential new domestic participants and experienced international participants into the Australian market.
Factors affecting participation (and therefore the level of competition) of existing market players in PPP projects released to market include:
• challenges in their ability to manage and co-ordinate resourcing appropriately, due to a lack of national co-ordination regarding the orderly release of PPP projects to the market;
• concerns in relation to different jurisdictions' commitments to the PPP procurement process and/or eventual commitments to project delivery following commencement of the procurement process;
• variances in the efficiency of different jurisdictions' procurement processes and time taken to make a decision on a preferred bidder;
• exclusivity arrangements, particularly in regard to financiers and specialist advisors (to either Government or competing consortia); and
• an assessment of the chance of winning in respect of the number of bidders short-listed during tender prequalification processes.
PPP procurement processes are complex and require significant upfront investment by new domestic entrants in the skills and knowledge of the personnel involved. For experienced international participants, there are significant set up costs associated with the development of an Australian enterprise. Accordingly, factors affecting new PPP market entrants include:
• lack of a clear and consistent pipeline providing certainty that there is an ongoing opportunity to achieve a return on initial investment;
• a perceived preference during pre-qualification processes for both:
ο local experience, even where interstate or international organisations believe themselves to be appropriately paired with locally-experienced participants; and
ο top tier contracting parties (in particular, with regard to Building and Facilities Management organisations), in relation to balance sheet strength and concerns regarding bankability, irrespective of their relevance for small to medium PPP projects; and
• prohibitive bid costs, particularly given the above-mentioned issues.