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What now, losing original proponent?

What now, losing original proponent?

While recent history has shown that none of the original proponents (OPs) failed in their attempt to secure the public-private partnership (PPP) award, private sector proponents (PSPs) who intend to submit unsolicited proposals to government implementing agencies (IAs) must know the reasons for and effects of losing. By the way, records will also disclose that almost all UPs had no challengers.

A PSP becomes an OP, according it certain rights, after its UP has been accepted by the IA under the BOT law or PPP template ordinance for local governments; or after successful negotiations under the 2013 Joint Venture Guidelines issued
by the National Economic and Development Authority (Neda JV Guidelines).

Failure, i.e., not getting the PPP contract, happens when the OP, depending on the governing rule, is not able to match, exceed, tie or outbid a superior offer from a challenger-PSP.

After losing, the PSP must reflect on the reason(s). Underestimating the competition and overestimating one are related reasons. Offering the maximum at the beginning is another. Failure could also be attributed to ignorance of the process or not doing an exhaustive due diligence.  Also, noninclusion of a technological advantage or proprietary right could be another ground.

In terms of rights, the losing OP has limited entitlements.

  • Right to be reimbursed. Under the Neda JV Guidelines, the winning challenger may reimburse the losing OP. The OP loses when its first or second financial offer is lower than the offers of challengers-PSPs. In other countries, reimbursement may be made by the IA. The BOT law and its implementing rules have no such similar provision but an IA can stipulate one in the terms of reference.

The Neda JV Guidelines, however, does not provide for the mechanics. It is suggested that the OP be required by the IA to declare and substantiate its expenditures prior to the commencement of the challenge process. It is also proposed that the verified amount be stated in the terms of reference of the challenge to apprise the would-be challengers of the amount it will reimburse in the event it gets the project. This ensures accountability, fairness and transparency.

  • Right to recover proposal security. If the OP secures its proposal by paying cash or issuing a cashier’s or manager’s check, it can demand its return after the challenge event. At this point, there is no other incident or commitment that needs to be secured. However, it will have no such right if it paid premium for a surety bond.

There is one right that ripens prior to the outcome of the challenge or before the determination of the successful PSP.

  • Right to continue through Stage 3. Before it exercises its rights as OP in Stage 3, it has the right to demand the completion of the three-stage process. It acquires this right if Stage 2 is completed upon the issuance of the certificate of successful negotiations. The OP, at this point, is protected from any adverse shift in policy of the IA regardless of change in administration.

So, know your rights, please.

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