NSW Treasury is to be consulted as soon as the Responsible Agency becomes aware of likely or proposed material contractual or commercial (risk exposure or allocation) changes to an existing PPP contract. This also applies to any material issues relating to the ability of the private party or the Responsible 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 NSW Treasury. 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. NSW Treasury should be consulted prior to engaging external advisers.
Consultation with the NSW Treasury may be informal (a phone call or email) or formal depending on the circumstance.
Early and timely consultation is to occur to avoid and aid in the management of 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 NSW Treasury through existing project communication, reporting and governance arrangements.
Where NSW Treasury considers the issue to be minor, no further consultation may be required after the Responsible Agency has informed NSW Treasury of the issue. If NSW Treasury and the Responsible Agency consider that the issue or change is significant, Ministerial or Cabinet approval may be required. Responsible Agencies must consult NSW Treasury prior to the commencement of any negotiations in connection with such changes to the PPP contract where Cabinet approval is required, prior to renegotiating any significant areas of the PPP contract.
Material commercial changes may or may not lead to a change in the contract but may lead to a change in risk allocation, such as refinancing, waivers of abatements and waiving conditions precedent. In some cases these likely or proposed changes may also require the approval of the Treasurer or Cabinet.