In November 2018, the National Procurement Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah or “LKPP“) amended the regulation governing the procedure on public-private partnership (“PPP“). The previous procedure for procurement of Implementing Business Entity in solicited PPP under Head of LKPP Regulation No. 19 of 2015 on Procedure for Procurement of Implementing Business Entity in PPP for Provision of Infrastructure (“LKPP Regulation 19/2015“) was considered to be incomplete by many PPP participants. Therefore, the new procedure under LKPP Regulation No. 29 of 2018 on Procedure for Procurement of Implementing Business Entity in Solicited PPP for Infrastructure Provision (“LKPP Regulation 29/2018“) is aimed to provide more clarity for PPP participants. That being said, procedures for: (i) procurement of Implementing Business Entity in unsolicited PPP; and (ii) procurement of Preparation Agency are still subject to LKPP Regulation 19/2015.
The table below provides a comparison of the key changes to the procurement procedure in solicited PPP.
|LKPP Regulation 19/2015||LKPP Regulation 29/2018|
|1||Qualification requirements||Tender participants must have experience and capability in implementing and financing PPP projects.||Tender participants must have experience and capability in:
||In practice, prospective business entities found it difficult to meet the requirements set in LKPP Regulation 19/2015, as the number of implemented PPP projects in Indonesia is still quite low.
The new requirement will provide bigger opportunity for any interested business entities to participate in PPP projects.
|2||Amendments to Request for Proposal (“RfP“)||Changes/additions/reductions to the evaluation criteria and procedure set in the RfP are prohibited after the deadline for proposal submission.||Changes/additions/reductions to the evaluation criteria and procedure or any other substantial matters set in the RfP are prohibited after the first determination of the RfP||Although LKPP Regulation 19/2015 prohibited amendments to RfP after proposal submission, the actual practice under such regulation has raised several antitrust/competition law issues.
It is common for the procurement committee (“Procurement Committee“) to deliver pre-bid briefing through one-on-one meeting with certain participant. Under LKPP Regulation 19/2015, the Procurement Committee can amend the RfP based on the input they received in such meeting, provided that the amendment is made prior to the deadline for proposal submission.
This practice opens the possibility for the evaluation criteria and/or procedure to be tailored in the interest of a certain participant, which may be deemed as an indication of bid rigging from the perspective of antitrust/competition law.
||LKPP Regulation 29/2018 makes it possible for the Contracting Entity to request submission of a Performance Bond that is less than 1% of the proposal value or the estimated value of the PPP project. Such change is crucial considering that PPP projects tend to have high monetary value and allowing Performance Bond that is less than 1% of the proposal value or the estimated value of the PPP project will make this requirement less burdensome for the Implementing Business Entity.|
Besides the above, LKPP Regulation 29/2018 also introduced several provisions on matters that were not previously regulated under LKPP Regulation 19/2015, such as:
In conclusion, the new regulation will provide bigger opportunity for any interested business entities to participate in solicited PPP projects, as well as clarity to the procurement procedure.
AHP Client Alert is a publication of Assegaf Hamzah & Partners. It brings an overview of selected Indonesian laws and regulations to the attention of clients but is not intended to be viewed or relied upon as legal advice. Clients should seek advice of qualified Indonesian legal practitioners with respect to the precise effect of the laws and regulations referred to in AHP Client Alert. Whilst care has been taken in the preparation of AHP Client Alert, no warranty is given as to the accuracy of the information it contains and no liability is accepted for any statement, opinion, error or omission.