Over the past decade, many countries have witnessed a steadfast shift in the procurement of PPP projects under an alternative procurement strategy of Suo Moto/Unsolicited Bidding.
To delimit such proposals attenuating the competitiveness of the procurement process, the public sponsor induces competition to reinforce some competitive pressure back in the process.
While exposing the public sponsor to various risks, this procurement strategy may also bring in numerous benefits like rapid mobilization of investment, stronger project pipelines, and improved efficiency.
Broadly, the unsolicited proposal (USP) approach may be categorized into two strategies:
- Swiss Challenge
- Margin of Preference
The growing global popularity of USPs can be witnessed by their employment in the following recent transactions in the Transport Sector:
- In April 2023, San Miguel Holdings Corp. (SMHC) secured the concession for the construction of the 27.06 KM Cavite-Batangas Expressway (CBEX) PPP Project in the Philippines, estimated to cost USD 491 MN. In June 2022, the Provincial Government of Cavite accepted the USP submitted by SMHC, granting it Original Project Proponent (OPP) status. A Swiss Challenge was subsequently launched in November 2022, following which SMHC was accorded the right to match the best comparable proposal.
- In October 2022, the Pennsylvania Department of Transportation (PennDOT), USA, announced the launch of Phase 1 for accepting USPs for a host of transportation projects across a variety of modes, including roads, bridges, rail, aviation, and ports, to attract innovative ways to deliver such projects. The next phase of accepting such USPs is planned for Q2-2023.
- In September 2022, SPIA Development Consortium was awarded the concession for the development of the Sangley Point International Airport (SPIA) PPP Project in the Philippines, estimated to cost USD 11 BN. In January 2022, the Provincial Government of Cavite accepted the USP submitted by the Virata-Yuchengco-led SPIA Development Consortium, granting it the status of OPP. A Swiss Challenge was launched in July 2022, but no other parties registered for the challenge.
- In September 2022, the Indonesian Ministry of Transportation and PT Suryo Dhoho Investama signed a cooperation agreement for the development of Kediri Airport in East Java under an unsolicited PPP model. The estimated capex for the project is USD 725 MN, the concession term is 50 years, and the airport is expected to be operational by the end of 2023.
To know more about USP methodologies and surrounding global policies, please visit:
https://www.linkedin.com/pulse/unsolicited-proposals-paving-way-alternative-procurement-1f/
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