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Structuring and Drafting the Tender and Contract

51.1 Objectives of the Phase

Through a proper structuring and drafting process (of both of the contract and the RFP package), the government is aiming to ensure that the procurement of the PPP Project will be a success by launching an affordable and feasible project that will deliver the desired levels of service and a Value for Money (VfM) outcome, while reducing the risk of failure to a minimum. This can be specified as follows.

  • Structuring and designing qualification criteria defines the minimum level for what is regarded as sufficient capacity to deliver the project and operate it. This must avoid the risk of failure due to any insufficient preparation or lack of capability of the awardee, given that the balanced requirements are consistent with the characteristics of the project;
  • Structuring and designing the RFP provides clear instructions to proposers about the documents needed for the assessment of proposals. This also provides clear evaluation criteria to guarantee the comfort of proposers regarding transparency and equality in the selection process, as well as understanding the tender process and timing;
  • The structuring of the contract must protect and maximize the potential VfM by defining the most appropriate financial and risk structure. This includes the most suitable payment mechanism or revenue structure, and the appropriate risk allocation arrangement to optimize VfM, with risks allocated to the party that is best placed to manage them. This also includes an appropriate balance between risk and reward.
  • By properly drafting the contract, government will seek the following;
  • To incorporate the structure into the contract, in the clearest and most enforceable way;
  • To ensure the contract will be a valid and effective tool for successful contract management (contract management is covered in chapters 7 and 8), especially with regard to the potential changes that may occur during the contract life; and
  • To ensure that sufficient protections/safeguards are put in place, both for the procuring authority and the bidder to align the investor's interests toward achieving the government’s objectives for that particular PPP.

 

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