A competitive process is widely considered the best practice method of procuring PPP contracts. Key advantages are transparency and use of competition to choose the best (best blend of quality and price) proposal.
Any PPP procurement requires a set of procurement guidelines or strategy. This is usually defined by the PPP implementing agency (such as a PPP Unit) following the process of developing PPP laws and regulations or it is defined in the countries’ procurement laws themselves.
The guidelines should define the following key aspects of the procurement process:
- Pre-qualification: whether to use a pre-qualification process to select the firms or consortia that will participate in the bidding process
- Bid process: whether to use a single-stage process to select the preferred bidder, or a multi-stage process, in which proposals and the bidding documents may be reviewed and iterated
- Negotiation with bidders: to what extent discussions with bidders may lead to changes in the initial draft contract, either during the bidding process (with multiple bidders), or after final bids have been submitted
- Basis for award: whether to rank proposals and choose the preferred bidder based on a single financial or value-related criterion (after screening for technical merit), or some weighted evaluation of financial and technical criteria
Following these guidelines, the tender process is usually defined by the following four steps:
Step 1: Marketing the upcoming PPP project, to interest prospective bidders (as well as potential lenders and sub-contractors)
Step 2: Identifying qualified bidders through a qualification process
Step 3: Managing the bid process, including preparing and issuing a request for proposal, interacting with bidders as they prepare proposals, and evaluating bids received to select a preferred bidder
Step 4: Ensuring all conditions are met to reach contract effectiveness and financial close.