Country Experience with Unsolicited PPP Proposals: Distinct, Diverse, Disparate
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Don’t we all receive unsolicited advice pretty regularly? This is advice we just didn’t ask for—how we should dress, what we should eat, all the way to fundamental life choices on whom we should marry and when we should raise a family.
On very few occasions, this unsolicited advice sticks and improves our lives. But in most cases, we roll our eyes and forget about it.
This is a common experience for governments as well. Traditionally, infrastructure service delivery has been the responsibility of government. In some cases, government may solicit private partners to help deliver projects; these are solicited PPPs. There’s another way to go about this where the private sector tries to jump start a project by submitting a project proposal without a government request; these are unsolicited proposals (USPs) for projects.
Like unsolicited advice, in some cases unsolicited proposals do genuinely help governments respond to an infrastructure challenge in an innovative and more efficient manner. But many USPs have created challenges related to transparency, governance, and lack of competition—particularly in developing countries.
The World Bank, with support from the Public-Private Infrastructure Advisory Facility (PPIAF), developed policy guidelines for managing USPs in infrastructure projects to provide a framework for considering and managing USPs and for developing a USP policy. The guidelines’ recommendations are based on an in-depth review of global best practices on USP policies and projects in more than 15 countries.
Recently, a World Bank team took advantage of the Asia PPP Network conference organized by the Korean Development Institute (KDI) in Seoul to conduct a workshop in November 2018 on USPs for 12 participating countries: Bangladesh, Cambodia, Cook Islands, Georgia, India, Kazakhstan, Lao PDR, Mongolia, Myanmar, Pakistan, Philippines, and Samoa.
Distinct, diverse, and disparate country experience
We know that international approaches to managing USPs differ and this was reinforced at the workshop. Here are some examples of the diversity:
Disparate areas where USPs are allowed: In countries like Cambodia, USP proponents are encouraged to come up with proposals for infrastructure investments in priority policy areas. Yet in the Philippines and Pakistan USP proponents are specifically not allowed to submit proposals for government priority projects.
Diverse experience: Much like the PPP experience levels of countries, the experience of dealing with USPs has also been diverse. Some countries like Myanmar and Laos do not yet have a framework for dealing with USPs, while countries like the Philippines have had frameworks awhile, which they are now revising based on lessons learned. Countries like Bangladesh and Vietnam have only started regulating USPs since 2015. Cambodia has not enacted specific regulations concerning USPs for PPPs, but unsolicited proposals were outlined in the first draft of the country’s PPP Procurement Manual and Guidelines.
Distinct provisions relating to competition: All countries encourage competition, but in some cases they mandate competitive selection for USPs, while others may allow direct negotiation under specific circumstances. For example, in Bangladesh, if the USP passes all the internal assessments and is given the in-principle approval by the approving authority, the competitive bidding procedure will take place with the original proponent given the status of unsolicited bidder. In Vietnam direct negotiation could take precedence over competitive bidding in the following cases: (1) only one investor expresses interest, (2) only one investor is financially and technically capable of implementing the project, (3) the original proponent fully satisfies the feasibility requirements with the highest efficiency as determined by the prime minister.
We learn a lot from our peers. Remember all those times you didn’t understand a concept discussed by the teacher in school and your classmate helped you understand? Many times you likely preferred this peer-to-peer learning, as it’s more relatable. But there’s also the risk that you end up learning something wrong.
Peer-to-peer learning was baked into the recent USP workshop where we encouraged interactive discussions among the countries within the overall guided framework of the World Bank policy guidelines. As participants included countries with mature PPP markets like India, the Philippines, and Pakistan, as well as those from countries with nascent PPP programs—like Myanmar and Laos—the opportunity to learn from each other on what happens in practice was immense.
For example, a recurring discussion was around the issue of being able to generate competition for a USP project. Countries like Pakistan discussed how they don’t encourage the right to match and sometimes they may also encourage a process where the USP proponent is on par with other proponents and the winning bidder reimburses the USP proponent for the cost of project development.
Stay tuned, because an e-learning platform on USPs being developed by the World Bank, in association with KDI, is coming soon to further this cause.
Until then, you can learn more about USP’s here:
- The PPP Reference Guide: Dealing with Unsolicited Proposals
- Policy Guidelines for Managing Unsolicited Proposals in Infrastructure Projects (Volume 1)
- Guidelines for the Development of a Policy for Managing Unsolicited Proposals in Infrastructure Projects (Volume 2)
- Review of Experiences with Unsolicited Proposals in Infrastructure Projects (Volume 3)
We look forward to hearing from you: The draft updated Guidance on PPP Contractual Provisions is open for public consultation to capture inputs and recommendations by all relevant stakeholders to feed into the new edition. Submit your feedback here by April 30, 2019.
Unsolicited proposals in infrastructure: a balancing act between incentives vs. competition
Managing unsolicited proposals in infrastructure: 5 key questions for governments
The importance of managing unsolicited proposals in infrastructure