Issues to consider in developing a step-in plan include:
• What events have occurred that can trigger the government party's step-in rights?
• What contractual conditions must be satisfied before the step-in rights can be exercised?
• What are the roles and responsibilities of the government party personnel responsible for activating and exercising step-in rights? Do these personnel understand their roles and responsibilities? Do they have appropriate delegated authority for their roles and responsibilities? What are the limits within which step-in rights are exercisable?
• What internal authorisations are required before exercising step-in rights?
• What third-party acknowledgements or consents might be needed to enable the government party to effectively exercise its step-in rights? Should those consents be obtained in advance of any step-in situation arising?
This should be discussed with the government party's legal advisers at the time the step-in rights are negotiated. Should a step-in situation arise, the government party must act quickly. Consequently, the government party may wish to seek an acknowledgment of the existence of the step-in rights from those landlords and suppliers, together with any necessary consent, before any step-in situation arises.
• What obligations and liabilities may be incurred in exercising step-in rights? Is adequate insurance in place? Has the risk of public sector employees being deemed to be directors of the private party for Corporations Act 2001 (Cth) (Corporations Act) purposes been considered? The Corporations Act provides that certain people involved in the management of companies may be deemed to be directors of the company. The risk to individual should have been addressed during the procurement phase and may need to be confirmed at the time of step-in.
• What are the taxation consequences of exercising step-in rights? Step-in may have significant taxation consequences for the private party. These consequences may affect the future of the project or result in taxation costs being passed back to government. Advice should be sought from government's tax advisers at the time the step-in rights are negotiated.
• What resources are required to implement the step-in plan? Does the government party have access to sufficient skilled personnel to enable it to effectively exercise its step-in rights? How will resources and personnel be mobilised? For example, if the private party abandons the project site and the government party steps-in, the government party may need to hire a security company to secure the site.
• What information is required when implementing the step-in plan? The information requirements should be considered when developing the government party's knowledge and information management strategy, discussed in Chapter 7.
• What communications are required to activate and implement the step-in plan?
• What communications to stakeholders and the public are required when step-in rights are exercised? A proactive communication strategy can reduce the incoming queries from concerned end users, the public and the media.
• How will the government party 'step out'? Is step-out possible or feasible in this project?
• Can the government party step in and not step out? If so, can it (from both legal and practical perspectives) re-tender the project? Should the government party step in and not step out?
• Is the step-in plan available to the people who need to invoke it?
If a significant unexpected event triggers a need to step-in, it may be necessary for the contract management team to take action without having the opportunity to fully consider the issues above. Where possible this should be done in consultation with the senior responsible owner and, once the immediate need for action has been met, the contract management team should promptly review any outstanding issues associated with the step-in.
Generally, it is not possible to fully test a step-in plan. However, consideration should be given to 'walking through' a range of step-in scenarios as a means of testing the plan's validity.