However, these differences from traditional contracting do not exempt Owners from the requirement to comply with existing government procurement policies. As discussed in section 2.7 of the Guide, these policies drive the exemplary standards in procurement expected of public officials handling public funds, as well as VfM outcomes for government. In particular, compliance with government procurement policies is necessary to ensure transparency, contestability, and competitiveness. The Owner will need to take each of these overarching government policy objectives into account when designing the selection process for an alliance.
It is understood and accepted that for any publicly-listed company, the key corporate objective is to grow its business responsibly, ethically and sustainably through winning as much profitable work as possible. In order to do this, the Proponents will need to differentiate themselves from competitors so that the Owner selects them over and above others, to perform the work. This drive to differentiate should result in the Proponents being motivated to propose innovative project solutions that are 'better' than their competitors' proposals (but which still ensures they achieve an attractive profit level for the project).
This link between competition and innovation is fundamental to ensuring that the Owner is able to optimise the project's VfM outcomes. Building effective competition52 into the selection process across the four components of the alliance project means there is more incentive and opportunity for Proponents to differentiate themselves and showcase their capabilities and capacities to deliver the project. In addition, the Proponents will be incentivised to provide innovative solutions that put them ahead of their competitors.
A selection process which optimises the opportunity for innovation and differentiation between the Proponents should result in better VfM outcomes for the Owner. It allows the Proponents to prepare and submit the best Project Proposal that they can. As part of a properly structured selection process, competition is an important mechanism by which both the Owner and the Proponents can align and achieve their respective project and corporate objectives.53
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52 Effective competition is not about getting the lowest price through squeezing reasonable NOP profit or margins but through better design solutions, construction methods, high‐capability team members, etc. Simple squeezing of profit and/or margins is seen to be counterproductive to optimising actual outturn cost outcomes.
53 Competitive Edge - The Evidence, The Serco Institute, 2007.