As Partnerships Victoria project deeds are typically for long-term asset-based service provision, it is important that the State understands the financial health and sustainability of the contracted counterparties. During the procurement phase, the State will have carried out detailed due diligence on the private party and its consortium members. This is to understand:
• the capabilities of each consortium member;
• the role each consortium member will undertake within the consortium;
• how the consortium plans to effectively work together to provide service outcomes;
• the reputation of each consortium member for service provision;
• the financial stability and capability of each consortium member and the consortium's ability to meet its financial obligations under the project deed (including parent company guarantees; and
• any historical legal disputes, or if any are currently outstanding.
Prior to contractual close of a Partnerships Victoria project, the private party is required to confirm the structure of its consortium and provide a warranty or assurance to the State of the legal and beneficial ownership of each member. Maintaining this structure minimised counterparty risk. However over the life of the contract, changes are likely to occur and the State consent provisions in the project deed enable the government party to conduct adequate due diligence on the proposed changes in control or ownership.