Bid cost reimbursement for major construction projects

Victoria’s Bid Cost Reimbursement policy sets out the criteria when partial bid cost reimbursement may be considered for on Public Private Partnerships, Alliances and High Value High Risk Projects as identified by Victoria’s High Value High Risk Projects framework.

Victoria’s Bid Cost Reimbursement for Major Construction Projects policy acknowledges industry as a vital partner in infrastructure delivery and reflects Victoria’s continuing commitment to this partnership. It also acknowledges the significant cost to industry of preparing bids for Victorian infrastructure projects.

This policy provides transparency about the requirements and considerations the Victorian Government will follow when deciding if it will contribute to bid costs.

The policy demonstrates Victoria’s commitment to industry to streamline the efficiency of procurement.

Purpose

This policy defines a consistent approach for assessing the need for bid cost reimbursement on major construction projects.

The appropriateness of bid cost reimbursement will be assessed on a case by case basis.

Eligible projects

Partial bid cost reimbursement may be considered for major construction projects that meet the required eligibility criteria.

Major construction projects are defined as:

  • Public Private Partnerships;
  • Alliances; and
  • High Value High Risk projects, as identified by Victoria’s High Value High Risk framework.

Eligibility Criteria

In assessing eligibility for partial bid cost reimbursement, Government will consider:

  • project specific criteria;
  • broader market criteria and conditions; and
  • where applicable, change of tender circumstances.

Project specific criteria

Projects are required to meet all the following criteria:

  • there is a need to further incentivise strong bids and enhance competitive tension for the project based on market sounding and / or Expression of Interest responses;
  • the project is of significant scale and complexity;
  • the project has components that would benefit from the use of intellectual property from other tenders; and
  • there is sufficient budget funding to enable reimbursement of bid costs.

Broader market criteria and conditions

Broader market criteria and conditions include:

  • the need to incentivise bidders to promote the best bid and procurement outcomes;
  • where there is a significant active pipeline of infrastructure projects in delivery within Victoria and/or across Australia;
  • encouraging entry into the market where there is an identifiable gap in expertise, experience, capacity and capability within the Victorian market created by the number and complexity of tenders in the market, their size and the ability of potential bidders to take on project risks;
  • encouraging investment in the market where there is active international interest;
  • a reasonable expectation that the contribution to bid costs is likely to lead to greater competition; and
  • other relevant market factors.

Change of tender circumstances

Partial reimbursement of bid costs may also be considered where:

  • the Government introduces significant additional requirements on the bidders for the project during the tender process;
  • the Government significantly lengthens the tender process; or
  • a tender process is cancelled after bids have been submitted.

This assessment considers the cost impact on the specific procurement, in line with Government’s existing commitment to reduce unnecessary time and cost of tendering.

Approval

If the above factors are satisfied, Government may consider partial bid cost reimbursement, and the reimbursement conditions appropriate for the procurement.

Any bid cost reimbursement will be approved by the portfolio Minister, in consultation with the Treasurer, prior to any commitments to the market.

Communicating bid cost reimbursement

If partial bid cost reimbursement applies to a procurement, the tender documentation will set out bidders’ entitlements, including covered items and any limitations on reimbursement.

Reimbursement will be linked to receiving intellectual property rights from the unsuccessful bidder’s proposal and subject to the bidder submitting a conforming bid.

Additional information

Access Victoria’s Bid Cost Reimbursement Policy as a word document:

Enquiries regarding Victoria’s Bid Cost Reimbursement Policy should be directed to the Construction Policy Team at the Victorian Department of Treasury and Finance:

Email: construction.procurement@dtf.vic.gov.au

Telephone: 03 9651 5300
 

Reviewed 10/07/2019
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