Responsible Agencies should contact NSW Treasury for templates on PPP tender evaluation plans.
All evaluators should have appropriate technical skills to undertake the task and be experienced in PPP evaluation, or provided with training to undertake the evaluation.
Evaluation of PPP bids is undertaken by:
■ assessing bids against the non-price criteria;
■ comparing price proposals; and
■ making a value judgment on which bidder provides the best value taking into account both the non-price assessment and the price comparisons of each bidder.
If the evaluation panel cannot reach consensus on the value decision then the panel has the option to undertake interviews and subsequently update the assessment.
A proposal is value for money if it achieves the required project outcomes and objectives in an efficient, high quality, innovative and cost-effective way with appropriate regard to the allocation, management and mitigation of risks. Value for money takes into account quantifiable and non-quantifiable benefits, costs and risks.
While a flexible approach to value for money is needed given each project and proposal will need to consider unique issues and risks, consideration will likely be given to the following non-price related factors such as:
■ Quality of all aspects of the proposal, including: achievable timetable, clearly stated proposal objectives and outcomes, detailed appropriate commercial and/or contractual documentation (including service scope and key performance targets), and a clearly set-out process for obtaining Planning or other required approvals.
■ Optimal risk allocation and contractual or other risk mitigation strategies (quantifiable risks should be taken into account when assessing the price aspects of the proposal-refer below).
■ Innovation in service delivery, infrastructure design, construction methodologies (including impact on community) and maintenance.
■ Non-quantifiable benefits gained (economic, environmental and social) and costs incurred.
■ Any time benefits that would not otherwise be achieved.
■ In the case of contract variations, competitively tendering aspects of the proposal where feasible or likely to yield value for money.
In addition, evaluation of value for money will include, but not be limited to the following quantitative analysis and/or assessment of price:
■ Interrogation of the proponent's financial models to determine the reasonableness of any infrastructure, land acquisition, service and maintenance cost estimates and, if relevant, revenue estimates (including the appropriateness and acceptability to the Government of any user fees or prices; and including reasonable estimates for forecast quantity levels).
■ This evaluation may include the use of independent experts or valuers, benchmarking analysis, sensitivity testing, and where appropriate, the use of comparative financial models like PSC or SBM, based on a Reference Project.
■ An appropriate return on the private sector's investment.
■ Formal risk adjustment of the cost and revenue estimates where appropriate.
■ The amount of any contingency provision, particularly in the case of infrastructure related proposals.
■ Ensuring there is no double-counting for risk adjustments across each of:
- the individual cost line items (or revenue line items)
- an appropriate rate of return
- the amount of the contingency provision.
NSW Government does not use a formulaic approach in evaluating bids because weightings and formulas may place undue emphasis on price rather than overall value for money drivers, including design or operating innovation and efficiencies. For example, formulas cannot take proper account of the fact that a bidder may have deficiencies on essential requirements that would be too timely, risky and costly to overcome, if the bidder also offers a substantially lower price.
Premier's Memorandum M2014-11, also requires bidders to "demonstrate their capacity for successful collaboration with the NSW Government by providing details of two appropriate referees. Referees will be asked to verify past performance, confirming that bidders have the ability to achieve outcomes, the extent of any legal and contract disputes, and demonstrated commitment to working constructively with the NSW Government to resolve commercial issues."