19.3.2  Private party's proposal

(a)  Within a defined period after government's request, the private party must advise government, by way of a quote, of the cost of preparation of a proposal for carrying out the requested Modifications. Government will either accept or reject this quote.  If government rejects the quote, it may:

(i)  require the private party to submit a further price;

(ii)  refer the issue to an independent expert for dispute resolution; or

(iii)  advise the private party that it will not proceed with the Modification.

(b)  If government accepts the quote for the proposal, then within a specified period after government's request, the private party must give government its proposal for carrying out the requested Modification, including (without limitation) details of any effect on the facility and delivery of the Contracted Services, necessary capital expenditure, any impact on recurrent costs (on a fully transparent basis) and, where necessary, how the private party will fund the costs.  

(c)  Government may, at its discretion, accept (with or without conditions) or reject the private party's proposal, or withdraw its Modification request.

(d)  Where the parties fail to agree upon the cost of the Modification works and government still wishes to proceed with the Modification, the cost will be determined either by:

(i)  the independent expert during the construction phase,69 or

(ii)  competitive tender70 during the operating phase.

(e)  Where the cost is to be determined by competitive tender, the private party must appoint the tenderer whom the parties agree (or an independent expert determines) offers best value for money.71  In the event that government agrees to proceed, it will compensate the private party for the cost in accordance with the tender which it is agreed or determined offers best value for money.

(f)  Where government does not proceed with a government-initiated Modification, it will pay a percentage of the reasonable, fully audited third party costs incurred by the private party in preparing its proposal, with some jurisdictions paying up to the total amount of the quote given by the private party under this section 19.3.2.

(g)  Where a proposal for carrying out the Modification is agreed by the parties or government wishes to proceed with a Modification in accordance with the independent expert determination or tender proposal, the private party must implement the Modification.

(h)  Where the expert determination or tender cost is not to government's satisfaction, government may elect not to proceed with the Modification works or to carry out the Modification itself.72

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69  See section 31 (Dispute resolution).

70  The private party will call for tenders (for a fixed price for carrying out the works) from a list of three contractors agreed with government or determined by an independent expert.

71  The value for money assessment will have regard to, amongst other things, the experience, skills, reputation and financial capacity of each tenderer.

72  Where government carries out or appoints a third party to undertake the Modification works, it will compensate the private party for costs directly incurred by the private party as a result of such works.