PPP Policy
Textbox 2.27 below shows that unsolicited proposals can quickly become highly controversial, in the public domain:
Textbox 2.27: Jamaica North-South Highway: An Unsolicited Proposal Creates Waves Projects procured through USPs can quickly become controversial. In May 2012 the Jamaican Office of the Contractor General (OCG) issued a strongly-worded statement regarding the government’s procurement of the North-South Highway, through an unsolicited proposal received from China Harbor Engineering Company (CHEC). In the statement, the OCG called USPs “a corruption enabling device”. The contracting authority, National Roads Operating and Construction Company (NROCC), had awarded the North-South project to CHEC in the second phase of a larger national toll road project: Highway 2000. The private operator of the first phase, a consortium led by the French firm Bouygues Travaux Publics, held a Right of First Refusal (RoFR) to build and operate the North-South Highway as a toll road, but declined, citing profitability issues and concerns about geotechnical risk. It was around this time that CHEC made their unsolicited offer to NROCC, which, after a period of negotiation and analysis, was accepted. In response to the concerns raised by the OCG and others, NROCC engaged the OCG and civil society in robust debate, on the merits and challenges of procurement approaches under the Highway 2000 project. Sources: http://jamaica-gleaner.com/power/37625; http://www.ocg.gov.jm/ocg/sites/default/files/media239.pdf
USPs demonstrate an interesting paradox. Many governments believe that USPs are a good way to overcome their lack of technical capacity to develop and implement public projects by themselves. However, experience has shown that on the contrary, implementing a USP project is more challenging and requires even more capacity and expertise than developing and procuring a publicly initiated project along competitive lines. Lacking technical capacity while entertaining USPs can be dangerous, and can lead to low VfM for the government and users.
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| Caribbean PPP Toolkit
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Establishing USP management guidelines
Because of the challenges associated with obtaining VfM from a USP project, governments should treat USPs as an exceptional way to initiate projects; only to be accepted in defined circumstances and to follow prescribed procedures. For countries with limited to no PPP experience, it may be advisable to discourage USPs entirely in the early years of the PPP programme. This recommendation acknowledges that successfully implementing a USP project is challenging and requires even more expertise and experience than for a publicly initiated PPP project.
If governments decide to allow unsolicited proposals, they should establish strict minimum requirements for the submission of proposals. Establishing minimum requirements for USPs discourages the private sector from submitting low-quality proposals that drain public sector resources during the evaluation stage. These minimum requirements may include pre-feasibility results, financial models, or business cases. In Jamaica, for example, the government requires the USP proponent to develop a full Business Case, as shown in Textbox 2.28.