The ISFU is to be consulted as the agency becomes aware of a likely or proposed material contractual or commercial (risk allocation) changes to an existing PPP contract. This also applies to any material issues relating to the ability of the private party or the agency in meeting its performance obligations under the contract.
A materiality level for proposed changes may be agreed between the government entity's contract manager/director and ISFU. This may form part of a protocol between these parties to ensure communication expectations are clear and appropriate mechanisms are in place.
Consultation is required regardless of whether the likely proposed material change may occur within the bounds of the current contract, e.g. refinancing or change in control, or could lead to a change to the contractual terms. The ISFU should be consulted prior to engaging external advisers. Consultation with the ISFU may be informal (a phone call or email) or formal depending on the circumstance.
Early and timely consultation is to occur to avoid and manage material commercial and contractual issues before they become significant or contractually time-limited, restricting the potential solutions that could be applied. If timely, government entities should consult with ISFU through existing project communication, reporting and governance arrangements.
Where the ISFU considers the issue to be minor, no further consultation may be required after the agency has informed the ISFU of the issue. If the ISFU and the agency consider that the issue or change is significant then Ministerial or Cabinet approval may be required.