For likely PPPs, Responsible Agencies, in consultation with NSW Treasury, and consistent with the probity framework, may conduct a market sounding or similar interactive process as early as the Business Case or Procurement Strategy stages or prior to EOI release. Market soundings are particularly useful if a project is likely to be a suitable candidate for PPP procurement, or for very complex projects.
Market soundings should be conducted as a genuine opportunity to receive input from the private sector to:
• establish private sector interest and market capacity, including:
- advisers and the role of equity
- debt and equity providers
- design and construct contractors; and
- operation and maintenance contractors.
• help develop key project objectives, taking into account NSW Government priorities
• help inform project and service scope
• help inform, develop and resolve complex design, engineering and commercial risk allocations and mitigations, which may include feedback on any proposed:
- conditional Debt Pay Down (CDPD) (see Section 6.5.1.1.) structure or other NSW Government funding such as capital contributions
- intended flexibility within the structure
- optimal project packaging; and
- interface risks.
Additionally, market sounding offers Responsible Agencies an opportunity to outline its role in the definition of design and interface requirements.
The level of input received from the private sector will depend greatly on the stage of project development and the amount of detail that Responsible Agencies can provide.
In conducting a market sounding, Responsible Agencies should ensure that they:
• have prepared a Market Communication Strategy (refer to section 5.4)
• have clear objectives regarding the outcomes of the market sounding process and communicate these objectives to the potential bidders
• provide information on the status of the project (for example, Business Case phase, to communicate that a procurement decision has not been made)
• do not set expectations regarding the project if they have not received approvals for Government funding or Procurement Strategy
• use the opportunity to inform the development of, or revisions to, the Market Communication Strategy to be used during any Tender Process; and
• have potential bidders sign an appropriate confidentiality deed poll.