Before the deadline expires, the successful bidder will have to meet certain prior conditions as established in the RFP. The following conditions are typically included.
- Establishment of a Special Purpose Vehicle (SPV) that will be the concessionaire.
- Contracting of insurance policies (or in some cases, proving that insurance is available under the terms required by the RFP and contract) and providing any performance guarantees required in favour of the authority.
- Financial close: In some jurisdictions, financial close (that is, the execution of the financial agreements) is a prior condition in the sense that it is simultaneous to the commercial close (contract signature). Alternatively, contract signing does not occur until all other preconditions to financial close have been satisfied – this matter is explained in the section 13 below.
Once the prior conditions are fulfilled, the PPP contract will be signed with the SPV, and the successful bidder will officially become a contractor.
If the winning bidder is not able to fulfil all of the conditions before the deadline or refuses to sign the contract, the public authority may apply liquidated damages and/or make a call against the bid bond (when a bond or guarantee was required with the bid submission). If that occurs, the authority will usually call the next ranked bidder to sign the contract or may decide to re-issue the tender.