NO

ASPECTS

DESCRIPTION

4.

Available Sectors

There are a variety of sectors for which PPP procurement has been pursued in Canada, by all levels of government. These sectors include:

Transportation (e.g. roads, highways, public transit)

Water & Wastewater

Solid Waste Treatment

Justice and Corrections

Government accommodations and services

Health (e.g. hospitals)

Education (e.g. schools)

Recreation and Culture (e.g. recreational centres, concert halls, sports facilities)

5.

Eligible Tender Participants / Project Initiator

Requirement to join the PPP tender process:

Business entities are pre-qualified to join the Request for Proposals (RFP) phase though a Request for Qualifications (RFQ), where private sector entities are evaluated against a set of mandatory and rated criteria. The three (3) most highly ranked entities (consortia) are then identified to participate in the RFP phase of the project. In line with Canadian PPP best practices, project sponsors (governments) must adhere to all domestic and international trade obligations to promote an open, fair and transparent procurement process - a guiding principle in delivering value for money through a competitive process.

Requirements to initiate PPP project:

PPP projects in Canada may differ from those in other countries as the project sponsor is usually a municipal, provincial or federal government entity. Furthermore, the asset is usually owned by the project sponsor for the duration of the Project Agreement with no transfer of ownership.

6.

Types of PPP Structures/ Contract Types

The definition of PPP can vary slightly by various governments but the standard models used across Canada includes:

Design-Build-Finance, Design-Build-Finance-Maintain, Design-Build-Operate-Maintain, Design-Build-Finance-Operate-Maintain; the type of contract is selected based on what is the optimal allocation of risk to generate the best value for money proposition.

7.

Types of Project

In Canada, PPPs are used for public infrastructure. A public sector entity must identify the need for a given public infrastructure asset and determine through careful analysis and planning that a PPP model would be the best approach to deliver it. The private sector provider is then chosen by the public sector sponsor following an open and competitive selection process.

8.

Project Stages and Implementation for Solicited Proposals

1. Project Definition: The public sector sponsor identifies the need for a given public infrastructure asset. This is done through a preliminary needs assessment, and a preliminary business case that highlights the high-level merits and funding requirements of the project.

2. Pre-procurement: The public sector sponsor then identifies and assesses various procurement options (including traditional and PPP delivery models), conducts market soundings with the private sector to determine overall market capacity and interest, develops a detailed business case and seeks formal authorities to proceed as a PPP where both qualitative and quantitative analyses identifies merit in proceeding as a P3. At this phase, sponsors may retain external PPP expertise and engage a fairness advisor to oversee the entire procurement process to ensure an open, fair and transparent process.

3. Procurement (RFQ): The public sector sponsor issues a Request for Qualifications (RFQ)to select the three most qualified private sector consortia that will be invited to submit detailed project proposals through a Request for Proposals (RFP) process.

4. Procurement (RFP): The RFP process is a lengthy phase of the procurement that allows proponents to review all technical requirements, output specifications, and draft Project Agreements, and submit a detailed costed proposal. The public sector sponsor then undertakes a rigorous technical and financial evaluation process to identify a preferred proponent. The PPP project agreement is signed between the public and private sectors (commercial close) and comes into full effect once the financing is in place and fully secured (financial close).

5. Project Implementation: the private sector consortium (typically comprised of a design-builder, operations and maintainer, and financier) completes the design of the project and begins construction of the project. Payments are made to the private sector during the construction phase, generally through a substantial completion payment once the asset is deemed completed and available, which represents a partial payment for the project and ensures sufficient capital (both debt and equity) is at risk for the private sector to remain incentivized in the performance of its obligations defined within the project agreement. Operational Phase: The private sector consortium operates and maintains the project in a manner that meets pre-determined specifications set out in the Project Agreement. Annual service payments are paid to the private sector throughout the concession period (typically 25-30 years), and are subject to financial deductions in the event that the private sector fails to meets the performance requirements of the project during the operation phase.

6. Handback: Following the end of the concession period, the responsibility for the operations and maintenance is prepared to be handed back to the sponsor. Provisions within the project agreement ensure the project reverts back to the sponsor in a suitable condition and is enforced through the use of financial holdbacks at the tail end of the concession period.

9.

Project Stages and Implementation for Unsolicited Proposals

See #7

10.

Mechanisms to Engage Private Sector at Project Development Stages

Typically, market soundings will be used as part of the procurement options analysis to assess whether there is enough capacity and interest in the market for a proposed project, and therefore support a competitive PPP procurement process. Changes to the scope of the project or its structure can be considered in light of that market feedback. If there is not sufficient capacity or interest in the market for a given project, this undermines the value of pursuing the project as a PPP and must be taken into consideration prior to deciding on the procurement approach.

A Request for Expression of Interest can also be issued to more formally engage the private sector prior to launching the procurement process.

11.

Project Appraisal and Selection Process

Projects are generally screened against a standard set of criteria to determine if the project has the potential to be a viable P3 project. Criteria include project size, complexity, potential for contract integration, or the availability/accessibility of output and performance specifications for the construction and the operations and maintenance of the asset.

Projects that screen positive for PPP viability move to the development of a PPP Business Case or Procurement Options Analysis. A Procurement Options Analysis evaluates a range of infrastructure asset delivery models against qualitative and quantitative criteria and recommends an optimal model on the basis of Value for Money for the public sector. It also presents the Procuring Authority's procurement plan, which identifies the roles and responsibilities of the various project stakeholders, procurement activities, key milestones and timelines. This upfront planning will help inform the decision-making process and will ensure successful procurement, effective project delivery and sustainability of the infrastructure throughout its operational period.