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Focus: Infrastructure Australia releases jurisdiction-specific guidance

8 July 2009

In brief: Infrastructure Australia has recently released the final volume of its National PPP Detailed Guidance Material, setting out jurisdiction-specific requirements and departures from the National PPP Guidelines. Partner Ren Niemann (view CV) and Senior Associate Nicholas Ng report.

How does it affect you?

  • All PPPs throughout Australia are now likely to be assessed and procured using the National PPP Guidelines and the National PPP Policy Framework.
  • The jurisdiction-specific guidance is a useful starting point for government agencies and private sector parties wishing to be involved in PPPs in any Australian jurisdiction.

Background

The National PPP Guidelines, published by Infrastructure Australia, aim to establish a nationally consistent procurement process and risk allocation for PPP infrastructure projects. (Previous Client Updates have discussed the Guidelines and supporting material in some detail.1))

The final volume of the supplementary guidance material to the National PPP Guidelines, Jurisdictional Requirements, was recently published by Infrastructure Australia. It aims to detail the procurement processes that will apply for PPP projects in each jurisdiction, as well as the extent to which jurisdictions have adopted the national Guidelines and associated guidance material.

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Adoption generally

It is very pleasing to note that, no doubt as a result of the Council of Australian Governments' previous endorsement of the material, the jurisdictions have adopted the Guidelines and associated material to a great degree. Indeed, the only notable exception is Tasmania, where the Guidelines' application will be assessed on a case-by-case basis. In addition, the document notes that the ACT has not yet had the opportunity to procure a PPP project, and foreshadows, understandably, that the ACT's specific requirements may be revised to take account of lessons learnt as projects progress.

As a general rule, the Guidelines will apply nationally to projects involving a capital investment of more than $50 million, with some limited stated exceptions (eg certain IT procurement contracts).

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Procedures and approvals

Most jurisdictions describe in detail the internal approval and tendering processes that will apply to their PPP projects. While their approach isn't uniform, their methodologies are broadly similar. In this context, it should be remembered that each jurisdiction's political, economic and social background, as well as each jurisdiction's experience of PPPs, makes a degree of procedural departure not only inevitable but, in some cases, even desirable. No doubt, jurisdictions will continue to work together to take advantage of lessons learnt from each other's processes, which may lead to greater uniformity.

For some jurisdictions, the document also sets out details of key approvals and pieces of legislation. While the list is not (and does not purport to be) comprehensive, it is a useful starting point for private sector bidders looking to do business in a new jurisdiction. It is also a helpful reminder for government agencies, particularly those not accustomed to procuring major infrastructure projects.

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Commercial principles

Possibly the most significant parts of Infrastructure Australia's package of guidelines and guidance material are the Commercial Principles for Social Infrastructure and Commercial Principles for Economic Infrastructure. These documents allow jurisdictions flexibility to adopt one of a number of possible positions on some commercial issues. One matter that the jurisdictional requirements document does not address in detail is the 'default' choice of each jurisdiction for each of those issues. (That said, South Australia (in the document published by Infrastructure Australia) and Partnerships Victoria (in a separately published document) do endeavour to do so for the Commercial Principles for Social Infrastructure.)

One way that the jurisdictional requirements document might be refined is to include a table for each jurisdiction, setting out its policy position on every issue for which a choice is allowed under the Commercial Principles. While compiling the table would be arduous and complex, and jurisdictions will inevitably depart from their standard policy position if a project's needs require it, its inclusion would be very useful for private sector parties, particularly those doing business in a jurisdiction for the first time. It would allow the private sector to gauge quickly the likely risk profile associated with projects in that jurisdiction, with the assessment needing to be revisited only if a particular project deviates from the standard position. In this regard, we expect that undertakings from the relevant jurisdictions to disclose departures in an upfront and clear manner in request for proposal or expression of interest documentation would be greatly appreciated by industry.

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Continuous improvement

Each jurisdiction has committed to engage in a process of continuous improvement of the jurisdictional requirements. Undoubtedly, as lessons are learnt from current and future PPP projects, these will be incorporated into the Guidelines so that they may be refined over time. In the meantime, the Guidelines are a solid base for this development.

Footnotes
  1. See, in particular, our 7 October, 22 December and 4 December 2008 Client Updates.

Published 8 July 2009

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