The government will bar individuals and outfits on the National Treasury’s list of restricted suppliers and those found guilty of professional misconduct and corrupt activities from participating in the unsolicited bid (USPs) regime, which is open for infrastructure projects.
This is part of the guidelines the Treasury has put in place to ensure that the new dispensation is free of corruption and reckless profiteering.
To this end, parties wishing to put forward their unsolicited bids will have to declare upfront whether they have any convictions related to professional conduct, the Companies Act, or the Prevention and Combating of Corrupt Activities Act and whether they are in liquidation.
In the guidelines, the Treasury said it was aware of the possible pitfalls of unsolicited bids, despite the many advantages, such as opportunities for the private sector to innovate in meeting public infrastructure and service needs that may not have been identified by the government.
“Nonetheless, USPs carry potential challenges. They can allow the private sector to influence the government’s infrastructure priorities, potentially aligning them with specific private interests,” the guidelines read.
“Additionally, as a service proposal originates from a single private party, there is a risk of monopolistic pricing. Therefore, the reception, evaluation and development of PPP [public-private partnership] projects stemming from USPs are subjected to clear and well-defined processes designed to safeguard their integrity.
“Subjecting USPs to the same process of approvals and oversight as provided for publicly initiated projects is imperative for objective, transparent assessments and ensuring value for money.”
To manage some of the concerns, parties bringing forward USPs will be required to draw up economic analyses. These entail a clear economic rationale for the project by providing a socioeconomic analysis that quantifies the economic costs and benefits, in order to determine the economic viability and sustainability of the project.
Other details proponents will have to put forward include showcasing their technical capabilities, demonstrated experience in handling similar projects and financial capability, expressed in terms of balance sheet strength or evidence of mobilising project financing for projects of similar scale and complexity.
The guidelines also provide for what would be required from the government’s end. Accounting officers must, within 15 days of having received the USPs, constitute a USP evaluation committee to evaluate the proposal.
The committee will then be required to conduct a preliminary assessment of the USP within 20 days.
The USP evaluation should be completed within 45 days, say the guidelines, a strong indication that the state wants a seamless process that will be attractive to the private sector to make quick investment decisions.
“The guideline provides clarity in terms of the types of PPPs that qualify under the unsolicited arrangement, the format of submission to the government and the management of the process in line with competitive market requirements,” the Treasury said.
“This should facilitate the development of a robust USP pipeline through faster identification and prioritisation of PPP projects and by providing skills and expertise to close the capacity challenges faced by the government.”
Finance minister Enoch Godongwana earlier this year reformed SA’s PPP framework, stating that projects below a value of R2bn will no longer have to clear onerous approval processes intended for large projects before proceeding.
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