Embed Size (px)
Citation preview
1 Allens is an independent partnership operating in alliance with Linklaters LLP.
Legal and Enabling Framework
for PPPs in Australia
Leighton O’Brien
Partner
Transport & Infrastructure Sector Leader
14 August 2015
2
1. Background to PPPs in Australia
2. Procurement process
3. The Project Deed
4. International best practice
Agenda
3
The Philippines
• The Build-Operate-Transfer (BOT) Law of 1990 as amended by Republic Act No. 7718 (the Amended BOT Law) and its Revised Implementing Rules and Regulations 2012 (the Revised IRR) authorises the financing, construction, operation and maintenance of infrastructure projects by the private sector, and for other purposes.
Australia
• Less regulated; no overall set of rules.
• Various Commonwealth/State government entities.
• Various laws and policies govern procurement process.
• Contractual provisions in relation to financing, construction, operation and maintenance are usually based on precedent deals (deals of similar type and scope).
Comparison: PPPs in the Philippines and Australia
4
http://www.peo.gov.au/learning/fact-sheets/three-levels-of-law-making.html
5
Background to PPPs in Australia
General PPP framework
• No legislative framework or overall set of rules governing PPPs.
• Decision on project and procurement method is decentralised to
“line agencies”.
• Control over funds is centralised within each Treasury.
State, Territory and Commonwealth government may have a centralised
PPP unit associated with Treasury.
Treasuries take a similar, but not uniform, approach.
• Tension between “line agencies” and Treasuries.
6
Background to PPPs in Australia
Key bodies (States)
• Centralised PPP authorities associated with treasury department (e.g. Major Projects Victoria) – function varies between jurisdictions.
• In most jurisdictions, individual projects are procured by specific government departments or “line agencies” (e.g. Transport for NSW, RMS, Commonwealth Department of Defence).
• Infrastructure NSW assists the NSW Government in identifying and prioritising the delivery of critical public infrastructure for NSW.
7
Background to PPPs in Australia
Key bodies (Commonwealth)
• Infrastructure Australia is a national statutory body that develops strategy for delivering infrastructure and modernising assets and provides advice to the Commonwealth, state, territory and local governments on infrastructure matters.
• The National PPP Policy and Guidelines, administered by Infrastructure Australia present a unified national policy framework for the procurement of PPPs.
Attempt to capture “best practice” but not a legal requirement.
Useful for benchmarking purposes.
• Public Works Committee (constituted by the Public Works Committee Act 1969 (Cth) (the Act))
All public works for the Commonwealth estimated to cost more than $15 million must be referred to the Committee.
Reports on the need for the work, cost effectiveness of the proposal, (if relevant) the amount of revenue it will produce and the current and prospective value of the work.
8
Procurement Process
Procurement process for PPPs
• Typically procured through a competitive tender process, carried out with strict probity rules.
Different procurement rules / processes apply in different States and Territories.
• Bid costs usually not reimbursed.
• Few legal restrictions on foreign entities.
Foreign Investment Review Board approval may be required.
Legal considerations can be highly complex.
Foreign investors and participants will require local legal counsel.
9
Procurement Process
Internal Government rules (NSW)
• Approval process governed by NSW Public Private Partnerships Guidelines (2012) +
National Guidelines.
• Procuring agency has responsibility for delivery, along with NSW Treasury.
• Sub-committee of Cabinet (Expenditure Review Committee) generally approves most
procurement milestones, including business case, EOI and negotiation parameters.
• Treasurer's approval required under the PAFA Act to enter into a Joint Financing
Arrangement.
• Project management/governance structures established at agency / whole of
government level.
• In addition to the Expenditure Review Committee, disclosure under Government
Information (Public Access) Act 2009, Contract Summary to the Auditor General.
10
The Project Deed
Key issues
• Absence of PPP law gives greater flexibility both in terms of:
Form of documents; and
Process to be followed.
• However, there are many similarities in major PPPs and market precedents
are very important.
• The market has called for uniform documentation and the government is now
responding.
11
• Neither federal nor state law mandates any particular form of Project Deed, although:
NSW is developing its own standard form; and
the National PPP Guidelines set out preferred terms and some procuring governments and agencies have their own standard forms.
• Common law contracting (Australian general contract law rules apply)
• Specific clauses to address and allocate market risks
Time
Cost
Quality
The Project Deed
Key issues
12
• Public Authorities (Financial Arrangements) Act 1987 (NSW) (PAFA)
Key legislation for PPP arrangements.
Allows an authority to enter into a joint financing arrangement.
Reduces the complexity of contracting with government by helping parties identify the legislative authority for entering into long-term contractual arrangements.
Crown may be called upon to provide a guarantee of the contracting agency’s performance
• Common Law rules in relation to power of State to contract and who can sign.
• Internal government rules, policies provide central agency control over expenditure/contracts.
The Project Deed
Other laws
13
• Australian governments have used private sector contractors to
provide a wide range of public services for many years.
• Key issues:
PPP pipeline – including, when should the PPP model be used?
Average procurement time
Bid costs
• Australian PPP success stories:
Social infrastructure – hospitals, schools
Economic infrastructure – convention centres, toll roads
International best practice
14
Q&A
16 Allens is an independent partnership operating in alliance with Linklaters LLP.
