The procurement of services and/or associated infrastructure through Public Private Partnerships (PPPs) by any NSW Government agency, including State Owned Corporations (SOCs), needs to comply with:
■ the National Public Private Partnerships Policy and Guidelines (the National PPP Guidelines); and
■ NSW specific requirements in these NSW Public Private Partnerships Guidelines (the NSW PPP Guidelines), as updated from time to time.
All NSW Government agencies, other than SOCs, are also subject to the NSW Government Procurement Policy Framework1 and the associated Strategic Directions and Procurement Board Directions. SOCs are subject to the Commercial Policy Framework2. Local government councils are required to comply with separate guidelines as per Part Six of Chapter 12 of the Local Government Act 1993.
PPP projects procured through an unsolicited proposals process need to also comply with the Unsolicited Proposals: Guide for Submission and Assessment3 (Unsolicited Proposals Guide).
PPPs can be broadly defined as long-term arrangements between the public and private sector for the delivery of service enabling public infrastructure. They include Social Infrastructure PPPs (e.g. availability payment PPPs in health, education, transport and roads), Economic Infrastructure PPPs (e.g. user fee PPPs in roads and water), joint financing arrangements and concession agreements.
In NSW, PPPs are usually joint financing arrangements as defined under the Public Authorities (Financial Arrangements) Act 1987 (PAFA Act) and require the Treasurer's approval4. PPPs usually have the following principal features:
■ create public service-enabling infrastructure assets through public and/or private sector financing;
■ include a contribution by Government through land, capital works, availability payments, risk sharing, revenue diversion or other supporting mechanisms; and/or
■ engage the private sector for a specified period for the delivery of related services.
Any "related services" contracted to the private sector should be determined on a project by project basis at the early planning stage of each infrastructure project. Government retains the overall responsibility to meet its service delivery objectives and goals, regardless of any PPP entered into with a private sector entity.
These Guidelines provide a transparent mechanism to competitively pursue innovative solutions to deliver improved services and better value for money. This is primarily achieved through optimal risk allocation, management synergies, encouraging innovation in operations, design and construction, efficient asset utilisation and integrated whole-of-life asset management. The achievement of "off balance sheet" transactions is not the motivation for the Government to deliver PPPs.
These Guidelines are based on the following principles:
■ ensure PPPs are procured in a professional and transparent manner, minimising tender costs and providing fair opportunity to all prospective private sector participants;
■ ensure consistency of risk allocation between NSW PPPs, except where there are project specific reasons to depart;
■ ensure stability of PPP delivery structures, with sustainable debt financing and robust commercial and financial structures;
■ the Government will not guarantee private sector borrowings;
■ encourage innovation in the provision of infrastructure and service delivery; and
■ ensure the timely disclosure of information on contracts and tenders.
In NSW, any public infrastructure project with a total estimated capital value exceeding $100 million, must be assessed for possible PPP procurement having regard to value for money drivers. This threshold also applies to smaller projects that may be bundled together, for example, a number of new and/or brownfield school projects.
Agencies should consult NSW Treasury as early as possible when developing a business case or procurement strategy for a likely PPP or an infrastructure project with a total estimated capital value exceeding $100 million. This consultation should occur prior to engaging external consultants preparing a procurement options analysis, preliminary risk allocation or commercial principles) or engaging with the market. NSW Treasury maintains pre-qualified lists of consultants with PPP, financial, legal, accounting and probity expertise.
All major capital works projects which include PPP components or procured via a PPP have an exemption from TC16/11: Mandatory Principal Arranged Insurance for all major capital works projects, and are exempt from undertaking Principal Arranged Insurance from icare Self Insurance.
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1 Available at https://www.procurepoint.nsw.gov.au/
2 Available at https://www.treasury.nsw.gov.au/information-public-entities/government-businesses/commercial-policy-framework
3 Available at https://www.nsw.gov.au/contact-us/unsolicited-proposals/
4 Also see Public Authorities (Financial Arrangements) Act 1987, especially Section 5A (meaning of joint financing arrangement).