The COVID-19 pandemic is far more than just an epochal public health crisis. The economic devastation it is causing has the potential to hobble global prosperity for generations to come. Governments need to act fast to ensure their economies can weather the storm – and many are doing so, by crafting stimulus measures with infrastructure development prominently centred. Increasingly, however, policymakers are thinking beyond how we can rebuild the old world to how we can create a better new one.
By thinking about this moment as an opportunity for a Great Reset, infrastructure policymakers can implement long-awaited systemic changes in areas like inclusion, sustainability and innovation. However, the question always comes down to: How? The Global Future Council on Infrastructure is calling on policymakers to increase the use of one strategy in particular: unsolicited proposals.
Why unsolicited proposals?
Unsolicited proposals (UPs) are a type of procurement process where a party (generally in the private sector) takes the initiative to prepare a project proposal for the government instead of submitting to an existing competitive bidding process. Essentially, it means bringing an idea to a government without being asked – though UPs can also be part of a broader government programme in which policymakers express the areas or sectors in which they are open to entertaining proposals.
When done properly, and alongside other procurement tools and strategies, UPs can infuse a variety of benefits into a national, regional or local infrastructure programme. UPs’ ability to rapidly mobilize investment, build stronger project pipelines and improve efficiency is well-known and a major reason why they’ve been considered in the past.
Now, it is those factors, plus their potential as a vehicle for innovative and sustainable solutions to sectoral and societal challenges, that have renewed interest in UPs. In its recent publication A Call for Infrastructure Development through Unsolicited Proposals: Tapping into Private-Sector Innovation to Improve Infrastructure Delivery, the Global Future Council on Infrastructure presents a detailed understanding of what UPs can help accomplish, and multi-faceted guidelines to help policymakers pick and choose the right strategy for their governments.
Ensuring adequate government capacity
Having adequate funding and well-trained staff is an essential requirement for governments who want to pursue projects sourced from UPs. One way to help approach this is to centralize this capacity in one government agency with experience with public-private partnerships (PPPs). Still, there are other avenues to seek support from the outside. Project preparation facilities at international organizations, peer-to-peer exchanges with other national PPP units and professional service firms can all help bolster government capacity. In countries with very low capacity, there are still options available, such as utilizing a revolving project development facility.
Transparency for trust
Incentivizing private-sector participation in infrastructure development is always a tightrope act for governments who want to serve their communities and maintain public trust. Having the most transparent process possible, with clear frameworks and guidance, is essential. This is also an important aspect for private sector developers. Project preparation costs can run into the tens of millions. Without a clear voice of support and a detailed framework, few will bother to bid speculatively. Any UP framework a government would create would need to make clear important considerations such as the type of projects that will be considered, the process for considering and awarding contracts, project management and the mechanism of transparency, as well as a very clearly stated government commitment to the programme.
Enabling better builds
UPs are not just about the quantity of new infrastructure built, but the quality as well. UP programmes can take several routes to ensure they are getting the best possible projects. Among them are including a very high bar for qualification to submit projects, inclusive of proof of reputability. Insisting on detailed project proposal requirements also weeds out lower-quality bids. Additionally, given the new global focus on “building back better” from COVID-19, government should use the opportunity to ensure that projects meet sustainability goals. This could include requirements to obtain independent sustainability assessments in line with globally recognized methodologies. Governments should also take this chance to bring their infrastructure systems into a Fourth Industrial Revolution world and encourage proposals that embrace emerging technologies. This, as well as increasing the focus on building inclusive infrastructure, can be done partially by focusing on outcomes and performance requirements, rather than prescriptive requirements. Governments should also ensure the process is consultative, and bring affected communities into decision-making.
Paying market prices
Just because these projects didn’t come through a traditional competitive bidding process, doesn’t mean they shouldn’t be structured competitively. In large countries and well-developed sub-national entities, this could take the form of some type of bidding process at the end of the UP. However, for smaller or less-developed jurisdictions, this could end up being too much of a burden. In these cases, the GFC recommends a variety of mitigants, including a public consultation period, independent assessment by a multilateral development bank, disclosure of key terms (especially those that have a regulatory, tax or subsidy dimension) and introducing competition at subsequent levels of the projects (such as during equipment procurement).
A tool in the toolbox
While the GFC advocates for the use of unsolicited bids, it is well aware that competitive bidding processes will remain the norm in most jurisdictions. UPs, however, can and should play a role in infrastructure development schemes. If we are to reset to a better world than we had before, we need to be open to bolder ideas. We also need to be prepared for them to come when we least expect them.