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Appraising PPP Projects

417 The Procurement Strategy

The procurement strategy determines how the private sector partner will be selected, and it focuses on developing an approach to procurement that helps obtain the best VfM. So, when actual alternatives are legally feasible, the project team should search for a strategy capable of creating the correct incentives for all the players involved.

Many details of the procurement route are designed in the Structuring Phase (chapter 5.7 and 5.8. develops the process of structuring and designing request for quotation [RFQs] and RFPs), but the general procurement strategy should be chosen, at least preliminarily, during the Appraisal Phase. The various procurement routes available are summarized in a table in appendix A to this chapter. Essentially, two relevant issues need to be dealt with;

The approach to qualifications, including:

  • the moment when the request for qualifications is issued, in advance of or at the same time as the RFP;
  • whether to pre-select (short list) or only apply pass/fail qualification criteria;
  • The approach to request for proposals, including;
  • the timing of the finalization and issue of the RFP and contract — whether before or after a period of dialogue and interaction,
  • the approach to bid submittal and evaluation — whether negotiations are allowed.

AND

Generally the main types of procurement routes that can be chosen to incorporate those issues are the following.

  • Open tender or one-stage tender process;
  • Open tender with pass/fail pre-qualification (or two-stage open tender);
  • Restricted procedure (short listing with one bid);
  • Negotiated process (short listing with negotiations); and
  • Dialogue or interaction process.

Appendix 1 presents all these processes and the way they deal with the most relevant issues in procurement routes.

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