CASE FOR BOTSWANA GOVERNMENT TO ADOPT

UNSOLICITED proposals

An evaluation of the case for Botswana Government to adopt unsolicited proposals

POLICY BRIEF

Table of Contents

1.0 INTRODUCTION........................................................................................................................3

2.0 PURPOSE...................................................................................................................................3

3.0 NATURE OF THE PROBLEM........................................................................................................4

4.0 THE IMPACT OF ADOPTING UNSOLICITED PROPOSALS IN BOTSWANA....................................5

5.0 CURRENT PROCUREMENT ENVIRONMENT...............................................................................5

PUBLIC PROCUREMENT AND ASSET DISPOSAL (PPAD) ACT.............................................5PRIVATISATION POLICY OF 2000 AND THE DIRECTIVE ON THE REVISED PEEPA MANDATE.........................................................................................................................................7PUBLIC PRIVATE PARTNERSHIP (PPP) POLICY AND IMPLEMENTATION FRAMEWORKOF 2009.................................................................................................................................9PUBLIC FINANCE MANAGEMENT ACT.............................................................................11CITIZEN ECONOMIC EMPOWERMENT POLICY OF 2012 (CEE).........................................12ECONOMIC DIVERSIFICATION DRIVE (EDD) MEDIUM TO LONG TERM STRATEGY (2011-2016).............................................................................................................................13BOTSWANA INNOVATION HUB......................................................................14

6.0 OVERVIEW OF INTERNATIONAL BEST PRACTISE....................................................................16

6.1 Philippines ................................................................................................................17

6.2 Republic of Korea.......................................................................................................17

6.3 Chile...........................................................................................................................17

6.4 South Africa................................................................................................................17

6.5 China..........................................................................................................................18

6.6 Steps To Follow Upon Receipt Of An Unsolicited Proposal In South Africa ...............18

7.0 HANDLING UNSOLICITED BIDS PROPOSALS...........................................................................20

8.0 TIME ALLOCATIONS FOR BIDDING AND APPROVAL................................................................21

9.0 SECTORS PRONE TO UNSOLICITED BIDS .................................................................................22

10.0 CONCLUSION ........................................................................................................................22

11.0 RECOMMENDATIONS ...........................................................................................................23

12.0 BIBLIOGRAPHY ......................................................................................................................24

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1.0 INTRODUCTION1.1 Government procurement is normally done publicly for any

interested party to participate. Proponents of Government reform have viewed government activities, including procurement, as rigid, overregulated, and leading to inefficiencies and diseconomies. The reformers advocate eliminating administrative regulations that interfere with productivity, while maintaining those that further essential procurement policies. However, such policies or procedures for Unsolicited Bids/Proposals should not be incompatible with Government fulfillment of its roles, and must be designed to fit within existing structures.

1.2 The National Economic Diversification Council (NEDC) at its 3rd meeting held in September 2012 resolved that a Task Team be formed to explore ways of adopting both solicited and unsolicited bidding process within the Government procurement framework in order to leverage on innovativeness, and also guard what is developed locally without necessarily compromising on the country’s governance and procurement procedures.

1.3 Unsolicited proposals are those proposals that are not requested by a government and usually originate within the private sector. These proposals typically come from companies with ties to a particular industry—such as developers, suppliers, and financiers—that spend their own money to develop project specifications, then directly approach governments to get the required official approvals. Unsolicited bids can offer innovative ideas and offer solutions to infrastructure problems that governments are experiencing. However, unsolicited bids need to be managed properly as they have the potential to compromise transparency, serve special interests, suppresses competition and to deliver poor value for money.

2.0 PURPOSE2.1 This report has been drafted in order to provide the Government of

Botswana with a framework within which unsolicited proposals may be considered. It proposes how unsolicited bids should be dealt with by setting out procedures that must be followed. It also demonstrates unsolicited bids best practices from all over the world. These procedures will eventually create an environment whereby Government will eventually take advantage of private sector’s ability to innovate and their capacity to conceptualize and develop projects and by so doing create employment and economic growth.

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3.0 NATURE OF THE PROBLEM

3.1 Private sector often proposes projects with the objective of avoiding competition and if successful the project champion usually negotiates with government directly behind closed doors. In some cases Government feels compelled not to go out on tender because of the Intellectual Property Rights that if they were to go out to tender would be revealed to the other bidders and therefore violated. Some governments are often easily confused by these arguments of Intellectual Property Rights and the fact that they can save money from negotiating with a single company or entity and reduce the cost that they would incur by tendering. Governments often think that by negotiating with a single company, the project would be developed much faster than negotiating with multiple companies or entities. In some countries, sole negotiation has proven to take longer than anticipated when compared to open bidding processes.

The diagram below shows various unsolicited bids scenarios.

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Solicited proposal awarded through sole-source negotiations

Solicited proposal awarded through open tendering process

Unsolicited proposal awarded through sole-source negotiations

Unsolicited proposal awarded through open tendering process

Increased Transparency

Increased competition

4.0 THE IMPACT OF ADOPTING UNSOLICITED PROPOSALS IN BOTSWANA

4.1 Any reform promoting the use of unsolicited proposals must ensure competitive opportunities for comparable proposals from alternative suppliers. They also promote efficiency because they may allow a consideration of alternative suppliers whose typically small size may allow them to develop and market innovations more quickly than their rivals. The private sector also employs more cost-effective methods than the Government; in this case, the Government can save and divert the resources to other projects that can improve the lives of its citizens. For example, some infrastructure projects are more costly to the Government hence the involvement of the private sector can reduce government spending.

4.2 Countries which allow for unsolicited bidding give opportunity for formation of new industries. As companies come up with innovative and creative ideas which are different from the norm, their knowledge and ideas can result in creation of new industries. The development of these industries will lead to creation of new job opportunities.

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4.3 Unsolicited proposals can lead to developments in business activities such as the use of new technology. Furthermore, current technology can also be improved and through the use of unsolicited bidding, these developments of technologies can come from any individual. Allowing innovation and creativity to be part of Government bidding process give way for an expansion of sectors that contribute to economic growth. As compared to depending on the normal sectors of the economy, citizens are given freedom to present ideas that can help government in solving some of the problems which could otherwise have not had a resolved. The introduction of new sectors can also lead to development of new products and services.

Methodology

In considering the adoption of unsolicited proposals, the Task Team looked into several issues;

a) Risks Associated with Adopting Unsolicited Bids

The risks of not getting value for money; to curb this risk, the proposals will be subjected to open bidding process once the proposals have been considered to be of Government/ public interest. They will also be subjected to a feasibility study as well as before an agreement can be made with the proponent.

b) Transparency and Fairness; once the proposal has been submitted and evaluated, they will follow the PPAD Act procedures for tendering.

c) No Competition; unsolicited Bids; once the proposal has been received, and evaluated and deemed to be beneficial to the Government, it will then be subjected to PPAD Act.

d) Intellectual Property Rights Violated; In a situation where the proponent has submitted a proposal to a Government or Public Entity and feels that the information might be licked to a third party, a Confidentiality None Disclosure Agreements indicating that confidential and proprietary data will not be made public must be signed.

e) Reimbursement by the Government (Budget Constrains); The reimbursement to the proponent when they do not win the tender will be absorbed by the contractor who will win the tender.

f) Motivate Corruption; it is possible that unsolicited proposals can fall in the hands of inside traders who are involved in corrupt

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practices. In this case, the Directorate on Corruption and Economic Crime will be engaged.

g) Unsolicited Proposals benefiting only those on Medium and Large Scale; The government should ensure that all policies adopted will cater for such and proposals can also be categorized to allow companies to compete with those in the same capacity level.

5.0 CURRENT PROCUREMENT ENVIRONMENT5.1 The PPAD Act and its Regulations do not provide for unsolicited bids

hence they fall outside the scope of the public procurement and asset disposal legal framework. The Act does not explicitly prohibit the unsolicited bids but from the processes entailed therein, it can be inferred from the reading of the provisions of the Act and the Regulations that the intention of the legislature was to make provision only of the solicited bids.

Below is the current policy and legal environment as it relates to unsolicited bids.

A. PUBLIC PROCUREMENT AND ASSET DISPOSAL (PPAD) ACT

Public procurement and asset disposal in Botswana is regulated by the Public Procurement and Asset Disposal Act [CAP. 42:08] and its implementing Public Procurement and Asset Disposal Regulations.

Under this legal framework, the following methods of procurement are provided for:

I. Open Domestic bidding;

This is a procurement or disposal method which is open to participation by all providers through advertisement of the procurement or disposal opportunity. In terms of the Act, the open domestic bidding is the preferred/ default method of procurement

II. Open International Bidding;

This is a method of procurement which may be used where it is determined that foreign bidders’ participation may enhance competition and also where the procurement requirement’s technical complexity requires participation of non-resident foreign bidders. Whenever this method is used, it must also be reasonably anticipated that foreign bidders would increase value for money. This method therefore specifically seeks to attract foreign bidders.

III. Restricted International Bidding;

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This method is used where items to be procured are available only from a limited number of suppliers and where there is insufficient time for open bidding due to an emergency situation. The departure from the open bidding must be justified. In this method, foreign providers are included in the list of bidders.

IV. Restricted Domestic Bidding;

This method may be used where supplies are available from a limited number of providers and where there is insufficient time for an open bidding procedure due to an emergency situation. It may also be used where exceptional circumstances justify a departure from open bidding.

V. Quotations Proposal Procurement;

This method of procurement is used where there is insufficient time for an open or restricted bidding procedure due to an emergency situation and where the value of the procurement does not exceed the threshold stated in the Guidelines. It may also be used where exceptional circumstances justify a departure from open or restricted bidding. In this method, a written bidding document is addressed to a limited number of potential bidders without publicly advertising the opportunity. At least five bids should be obtained.

VI. Direct Procurement;

Direct procurement method may be used where the selection of a supplier is conducted on a sole supplier basis without competition such as where there is insufficient time for any other procurement method to be used due to an emergency situation or where the supplies are available only from one provider. This method is used where exceptional circumstances prevent the use of competition.

VII. Micro Procurement;

Micro procurement may be used where the estimated value of the procurement does not exceed the threshold stated in the Guidelines. The Board regularly reviews the thresholds and currently the threshold for micro-procurement is P30.000.00.

In line with Section 26 of the PPAD Act, procurement must be based on the following principles:

Open economy

Transparency and accountability

Integrity and public confidence in the procurement and disposal process

Fair and equitable treatment of contractors

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Competition among contractors

Standardization of procurement items.

5.2 In terms of the PPADB legal framework, open domestic bidding method is the default method of procurement hence the use of any other method that is not consistent with the above-mentioned principles must first be approved by the Board upon the necessary justification being provided. Regulation 55 provides that a procuring or disposing entity may request the Board for permission to use a procurement procedure other than the open domestic bidding method where the circumstances for the bid are not provided for under the provisions of these Regulations.

5.3 Procurement process means the successive stages in the procurement cycle including planning, choice of procedure, measures to solicit offers from bidders, examination and evaluation of such offers, award of contract and contract management. This clearly requires that all procurement processes should have been planned by the Procuring Entity.

B. PRIVATISATION POLICY OF 2000 AND THE DIRECTIVE ON THE REVISED PEEPA MANDATE

I. Privatisation in Botswana is defined broadly to encompass all the measures and policies aimed at strengthening the role of the private sector in the economy. The privatisation policy has a number of objectives outlined as follows:

Promotion of competition, improvement of efficiency and enhancement of productivity of enterprises

Increasing direct citizen participation in ownership of national assets

Accelerating rate of economic growth by stimulating entrepreneurship and investment,

Withdrawing from commercial activities which no longer need to be undertaken by the public sector.

Reducing size of public sector; Relieving the financial and administrative burden of

Government in undertaking and maintaining a constantly expanding network of services and investments in infrastructure.

Broadening and deepening capital market.

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II. The Policy is flexible on the choice of privatisation modalities. The choice depends on several factors including the objectives of the government; financial conditions and performance record of the entity and the ability to mobilise private sector resources, particularly through the domestic capital market. It also recognises alternative forms or methods of privatisation such as commercialisation, corporatisation, management contracts, franchises, leases, concessions and stock market floatation

III. To achieve the objectives of the Privatisation Policy, there is need for flexibility, standard procedures, processes and sound legal framework to safeguard the principles of privatisation. The principles of privatisation amongst others are that;

it should be done to benefit all, make utilities and industries efficient and competitive, be transparent, stimulate the growth of financial and capital markets, consider different and appropriate modalities of privatisation for

improving the efficiency of different enterprises or units.

IV. Unsolicited proposals can be used as a means to achieve the objectives of privatisation. They can also initiate other privatisation modalities mentioned above through private sector ingenuity and reduce the burden of implementing agencies to prepare projects for bidding. The method can also benefit government to;

access exclusive rights, either worldwide or regional. access design, methodology or engineering concept for which the

proponent or association possesses intellectual property rights improve cost efficiency and speedy project development

V. In summary, the privatisation Policy acknowledges that the role of Government in providing marketable goods will diminish and will rather seek to facilitate and where necessary regulate the operation of the business by the private sector. It further states that the drive will not be easy and needs commitment from the private sector and public sector. In addition, the drive towards the diversified economy should be led by the private sector, which is expected to display qualities of good corporate citizenship. Thus, unsolicited proposals will be testament to the determination of Government towards transforming the interaction of the Government sector into a “smart partnership” of cooperation and a win–win situation for both parties.

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C. PUBLIC PRIVATE PARTNERSHIP (PPP) POLICY AND IMPLEMENTATION FRAMEWORK OF 2009

I. The Government of Botswana formulated the PPP policy in order to use PPP as a form of procuring and of financing infrastructure projects in the public sector to ensure sustainable investment in infrastructure as well as to restore soundness in public finances and bring down the budget deficit to a manageable level. The policy provides a platform to promote the efficient allocation and use of economic resources of Government and the private sector.

II. In developing the policy, an assessment was undertaken in order to establish whether the policies, laws and suitable sponsoring institutions existed to facilitate PPP projects as well as to determine additional measures that may be required to create a necessary conducive environment. The review revealed amongst others, key findings to be;

that the general policy and legal framework in Botswana was considered to be less enabling to deal efficiently with PPPs.

That there are no standardised approaches and process guidelines to deal with the structure of PPP projects and no uniform framework to guide the treatment of tendered and unsolicited proposals.

III. The Policy followed the recommendations of the foresaid assessment of creating a stable policy framework and development of detailed PPP procedures and guidelines for project conception, preparation, procurement and management.

IV. In dealing with unsolicited bids, the policy does not exclude the method but rather requires that the fundamentals of a competitive transparent procurement process be preserved. It embraces that such an approach might demonstrate substantial technical or financial innovation; or meet an unidentified need. However, the processes and procedures outlined in the Policy do not envisage unsolicited proposals though the PPP procurement.

V. Furthermore, the PPP guidelines appended as Annexure 3, are; to provide a best practice guide for PPP practitioners in both

the public and private sectors;

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structured sequentially, from project inception and registration to contract management and the implementation at the expiry of a PPP contract; and

to be used by all public entities of the Government of Botswana when assessing the procurement alternatives for any infrastructure project, whether listed in the NDP or not.

VI. The guidelines therefore do not allow unsolicited proposals, subject to the policy. The unsolicited proposals are envisioned to present a risk of entering into obligations that do not demonstrate affordability, transfer of significant risk to the private sector and value for money and may violate the principles of transparency, fairness and competition.

VII. In summary, the Policy; appreciates the possibility of unsolicited bids and their

associated benefits. does not outline the processes and procedures for the form of

procurement. provides guidelines for implementing PPP which do not allow

for unsolicited proposals

VIII. The policy therefore does not provide standardised approaches and process guidelines to cater for unsolicited bids as initially determined by the assessment that gave way for the PPP Policy. The risks envisaged for allowing unsolicited bids can be dealt with in several ways which will be discussed later in the paper. It is also important to be mindful that unsolicited bids can be used for non PPP ventures.

D. PUBLIC FINANCE MANAGEMENT ACT I. The Public Finance Management Act (PFMA) was established to

regulate financial management in the Central Government and local authorities to;

ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively;

provide for the responsibilities of persons entrusted with financial management in those governments; and

provide for matters connected therewith.

II. Under the Act, the Minister of Ministry of Finance Development Planning (MFDP) is responsible for the supervision of finances of Botswana, control and management of the Consolidated Fund, the Development Fund and all other public funds, and the overall control and direction of all matters relating to the financial affairs of

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Botswana. Therefore, the Minister is charged with the cause of establishment of systems throughout Government for planning, monitoring, allocating and budgeting for the use of public moneys and supplies in order to attain efficiency and effectiveness of the economy.

III. The Minister is also mandated to instigate the review of all requests for the issue of moneys from the Consolidated Fund and, where the Minister considers it appropriate approve their inclusion in the estimates of the expenditure submission to the National Assembly. Furthermore, the Minister shall provide a framework for the scrutiny and control over the utilisation of public supplies and moneys by maintaining clear reporting methods and systems which amongst others;

comprehensively set out the applicable hierarchy and procedure for accountability

ensure the exercise of regularity and propriety in the handling and expenditure of public money and, in particular demonstrate that goods or services are procured in a fair, equitable, competitive and cost effective manner in accordance with the law providing for public procurement.

IV. In addition, the Minister has to safeguard public assets by acting under and complying with statutory authority and control when conducting the following financial transactions on behalf of the Government;

borrowing of money issuing securities investing public moneys giving guarantees and indemnities, and operating bank accounts

V. In light of the foregoing, the Minister of MFDP is responsible for causal of the promulgation of policies, laws, frameworks and systems for adopting Unsolicited Proposals. Unsolicited proposal are a form of public procurement and can have varying implications on public moneys, government budgeting, fairness, equity, cost effectiveness, competitiveness and delivery of public services only to name a few. It is therefore prudent to put in place adequate systems that will ensure accountability, regularity and promote transparency and competitiveness.

VI. Unsolicited bids are unique in nature and are bound to differ in how the Private Sector wants to deal with the Government or the general public. Therefore, variations of the proposals for partnership with Government might include requests for the government to borrow money, issue securities, invest public money, give guarantees or

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indemnities or operate bank account. Consequently, the government has to clearly state its position on which modalities will be accepted. For example, the Philippines Government does not allow direct sovereign guarantees, equity, or subsidies. It does not include market risks or revenue streams.

VII. The Government has adopted a comprehensive Public Financial Management Reforms Programme (PFMRP) in July 2010. The programme addresses issues of budget credibility, comprehensiveness and transparency; policy based budgeting, predictability and control in budget execution, accountability and reporting as well as external scrutiny and auditing. As such, the programme can also assist in assimilating the new dispensation of accepting unsolicited proposals into the current government procurement systems.

VIII. In summary, the Minister of Finance and Development Planning has to champion and own the consideration of allowing unsolicited bids. Furthermore, ensure adequacy of frameworks and systems that deal with allowing unsolicited bids. It is also important to amend the PFMA where necessary to safeguard public finances and the general public.

E. OTHER POLICIES AND STRUTEGIES

1) CITIZEN ECONOMIC EMPOWERMENT POLICY OF 2012 (CEE)

a. The main objective of the Citizen Economic Empowerment (CEE) Policy is to develop skills and knowledge of Botswana Citizens to enable them realize their full potential, build capacity for the private sector to grow through technical and managerial skills and to infuse entrepreneurial culture in order to build a foundation for global competitiveness. The adoption of unsolicited bids will in this case promote entrepreneurial culture as well as promote citizen participation at all levels of the economic.

b. According to the CEE Policy, it is also the role of the Government to inculcate entrepreneurship culture amongst citizens and encourage business to business support within the private sector. Citizens and the private sector can benefit from the adoption of unsolicited bidding under the CEE pillars “enhancing global competitiveness through empowerment and partnership, encouraging Non-state Actors to play a role in the delivery of public sector programmes, procurement and licensing to promote empowerment.”

Section 34 of CEE Policy states; “Mechanisms will be developed for accreditation of companies wishing to do

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business with the State or Organs of the state. The Policy will encourage suppliers of items such as medical equipment, education products etc, to work in partnership with local businesses to impart skills, most particularly, to assist citizens to achieve quality standards.”

2) ECONOMIC DIVERSIFICATION DRIVE (EDD) MEDIUM TO LONG TERM STRATEGY (2011-2016)

a. The Economic Diversification Drive (EDD) is a national strategy aimed at accelerating diversification of the economy. The major aim of the initiative is to diversify the economy into sectors that will continue to grow long after the minerals have run out. The EDD Strategy also aims to facilitate production of goods and services that comply with domestic and international standards; development of a diversified vibrant technologically driven knowledge economy that creates sustainable employment; as well as development of entrepreneurial culture for business growth by enhancing citizen participation.

b. The Botswana Government is continuously advocating for procurement of locally produced goods and services hence the use of unsolicited bidding will create opportunities for small and medium companies to present their innovation for Government consideration. Through this, Government resources are shared by all players in the economy. Equity may also be improved by opening the Government’s contracting process to firms that are not as large or well-established as traditional competitors.

c. Technological development, adaptation and innovation are core elements for competitiveness under the current globalised economic environment. The Global Competitiveness Report categorizes countries according to their level of development and competitiveness. Countries at the lower level of global competitiveness (the factor driven stage) compete on the basis of abundant factors of production such as labour and land; those at the medium or middle level of competitiveness (the efficiency driven stage) compete on the basis of efficiency of their labour markets, goods markets and financial markets sophistication; while those at the leading edge of global competitiveness (the innovation driven stage) compete on the basis of cutting edge technological development and innovation, creation of new products and cost reduction through efficient modes of production and upward movement in the technology and product ladder.

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d. In the medium to long term, the Botswana Government aims to develop sustainable enterprises that will compete in the domestic and international markets. Its specific objectives are to develop globally competitive sectors; diversify exports and export markets through a vibrant and globally competitive private sector; develop goods and services that comply with local and international standards; and develop an entrepreneurship culture for business growth and enhanced citizen participation in the economy. As such, the Technology Development, Innovation and Transfer thematic group facilitates the development of Botswana to become a vibrant technology driven economy through the involvement of the private sector development.

3) BOTSWANA INNOVATION HUB

a. The Botswana Innovation Hub (BIH) is a product of the Botswana Excellence Strategy of 2008 which proposed a three-pronged national strategic goal; being economic diversification, job creation, and moving the country towards a knowledge-based economy. BIH, which is also aligned to the National Vision 2016’s pillar of achieving a prosperous, productive and innovative nation was incorporated as a company to develop and operate Botswana’s first Science and Technology Park. The company is mandated to support new ventures and existing companies as well as attract companies, universities, research and advanced training institutes to establish in the Science and Technology Park. This is intended to help transform Botswana into a technology-driven and knowledge-based economy, by promoting a culture of innovation and competitiveness among its associated companies and knowledge-based institutions

A. CleanTech Center

The Botswana Innovation Hub (BIH) has partnered with Lund University and Krinova Science Park in Sweden to establish a CleanTech Centre of Expertise programme within the Botswana Innovation Hub, with support from the Swedish government through the Swedish International Development Agency (SIDA). The programme is meant to establish a hub for research and business development on Clean Technologies with relevance to Botswana, Swedish partners, and their stakeholders.

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CleanTech business cuts across the four focus areas of BIH as it entails coming up with innovations and technologies for a greener, cleaner, low-carbon, resource efficient and socially-inclusive development path. The programme promotes innovation that answers environmental concerns to global challenges such as water and air pollution, biomass and water depletion, and climate change.

B. The Southern Africa Innovation Support (SAIS) Programme

Through the BIH, the Southern Africa Innovation Support (SAIS) Programme promotes collaboration within the innovation systems of African countries in order to provide greater impact on economic and social development. The programme, which aims to address challenges found within the innovation systems of each country by enhancing their innovation capacity, both individually and collectively is currently being piloted in four countries: Botswana, Mozambique, Namibia and Zambia from 2011 – 2015.

Through SAIS guidance and facilitation, it is envisaged that by 2015 there will be the beginning of a robust, well-functioning and illuminative innovation ecosystem across the four participating countries. This ecosystem will stimulate the operational elements of innovation to contribute to economic growth and poverty reduction, within a sustainable regional innovation development framework.

To unlock innovative potential, it is important to establish and sustain a holistic and interconnected environment, which has a foundation built on both knowledge and practice. SAIS contributes to developing this environment by bringing together the elements of the systems of innovation in each country, and strengthening the capacity of platforms that enable product, service and social innovations. Additionally, SAIS provides a strategic approach to raising funds for innovative projects by using a combination of both local and international sources.

4. ISSUES OF INTELLECTUAL PROPERTY

Intellectual Property refers to the creations of the mind or a body of law whereby the government awards exclusive economic rights to artists and inventors in their creations, in order to stimulate

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technically and socially valuable and innovative contributions to society. It includes such things as inventions, literary and artistic works, symbols, images, names, and designs. IP creations can be sold, bought, hired or rented like all other mainstream property.Intellectual Property is divided into two categories: Industrial Property - relates to Trademarks, Patents and industrial

designs

Copyright

Industrial Property

Trademark: A Trade/Service mark is a word, symbol, logo or combination of both, which distinguishes goods/services of one party from those of the other. A trademark’s main use is to be an identifier of source Patent: is an exclusive right granted by the State for the protection for an invention for a limited period of time. (In Botswana protection is 20 years from the date of filing of the application) It gives its owner the exclusive right to prevent or stop others from making, using, offering for sale, selling or importing a product or a process, based on the patented invention, without the owner’s prior permission.

To be patentable an invention should be new, involve an inventive step and be industrially applicable.

Industrial Designs: refers to the ornamental/ aesthetic appearance of an article or a product. To be registered, the design must not be similar to the existing designs (must be new and original) Must have an individual character which distinguishes it from prior designs.

**New legal provisions have been introduced with regard to geographical indications, unfair competition, traditional knowledge and handicrafts.

CopyrightThe Copyright and Neighbouring Rights Act CAP 68:02, defines copyright in relation to work as an exclusive right, by virtue and subject to the provisions of the Act, to do, and authorize other persons to do, certain Acts in relation to that work in Botswana and

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in any other country to which the relevant provisions of the Act extends.

Neighbouring Rights (Section 23) are the rights of those who assist right holders to communicate their works to the public. Such rights include the rights of performers in their performances, the rights of producers of sound recordings in their sound recordings and the rights of broadcasting organizations in their radio and television programs.

The Copyright and Neighbouring Rights Act and its amendments recognize protected works as literary or artistic works which are original intellectual creations:

Literary and artistic works include the following- books, pamphlets, articles, computer programmes and other writings.

Speeches, lecturers, addresses, sermons and other oral works. Dramatic, dramatic musical works, pantomimes, choreographic

works and other works created for stage productions Stage productions, musical works audiovisual works, works of visual

art’ photography and others. Derivative works such as translations, adaptations, arrangements

and other transformations or modifications of works Collection of works, collection of mere data (databases) whether in

machine readable or other form and collections of expression of folklore.Intellectual property consists of items that one has created, are unique and provide economic benefit. Intellectual property includes inventions, designs, original works of authorship and trade secrets. Protection of intellectual property depends on their types and have to be registered for one to claim ownership.

Intellectual Property (IP) encourages innovation and rewards entrepreneurs, drives economic growth and competitiveness, creates and supports competitive jobs, protects consumers and families, and helps generate breakthrough solutions to global challenges.

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6.0 OVERVIEW OF INTERNATIONAL BEST PRACTISEThe table below shows a list of different countries and how they approach unsolicited bids. The table shows the legal framework used type of system and reimburse of project development costs and intellectual property bidding process.

Country or State

Legal Framework Type of system

Reimbursement of development costs?

Intellectual property rights

Andhra Pradesh (India)

AP Infrastructure Development Enabling Act No. 36, 2001

Swisschallenge

Yes, bygovernment

After reimbursement proposal becomes property of government

Argentina Presidential Decree966, 2005

Bonus and best and final offer

Yes, by the winning bidder, 1% of estimated project cost

After 2 years proposal becomes property of government

Chile Supreme Decree956, 1999

Bonus Yes, by winning bidder Reimbursement costs approved at the initial stage

*

Costa Rica Decree 31836, July 2004

None Yes, by winning bidder Reimbursement costs approved at the initial stage

After reimbursement proposal becomesproperty of government\

Guam(U.S. territory)

Public Law 24-2941998

Swisschallenge

No *

Gujarat(India)

Gujarat InfrastructureDevelopment Act No. 11, 1999

Swisschallenge

Yes, bygovernment

After reimbursement proposal becomesproperty of government

Indonesia Presidential Regulation No. 67,2005

Bonus or purchase of proposal

Yes, when bonus is not granted. Costs paid by government or by winning bidder.

*

Korea, Rep Act on private participation ininfrastructure

Bonus No *

The Philippines

BOT law Swiss challenge

No *

South Africa

PFMA & MFMA None Yes, by winning bidder Cost to be audited by an independent finance expert

Institution takes appropriate action to protect confidential and intellectual property rights

South Africa

Policy of SANRAL in respect of unsolicited proposals

Best and finaloffers

Yes, by winning bidder reimbursement costs approved at the initial stage

*

Sri Lanka Guidelines on private sectorinfrastructure

Same as solicitedprojects

No No

Taiwan (China)

Guidelines for Evaluation ofUnsolicited Proposals, 2002

Combined bonus and Swiss challenge

No *

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Virginia(United States)

Public-Private Transportation Act of 1995. Va. Code Ann. §§56-560

Same as solicitedprojects

No Public entity shall take appropriate action to protect confidential and proprietary information

6.1 * Philippines The Philippines allows third parties to make better offers for a project during a designated period. The original proponent then has the right to counter match any superior offers.

6.2 * Republic of Korea The governments of Chile and Korea support unsolicited proposals by awarding a bonus in a formal bidding procedure to the original proponent. The original proponent’s offer is then selected as long as it falls within a stipulated percentage of the best offer. In Korea the maximum value of a bonus is 10 percent, with the exact value determined by other characteristics of the tender process. Projects are usually awarded on the basis of a complete evaluation covering the financial plan, construction plan, operation plan, and social contribution. Of the two projects in which a counterproposal was successful, only in one did the bonus make a difference in the outcome.

6.3 * Chile The governments of Chile and Korea support unsolicited proposals by awarding a bonus in a formal bidding procedure to the original proponent. The original proponent’s offer is then selected as long as it falls within a stipulated percentage of the best offer. In Chile most unsolicited projects involving a bonus for the original proponent have been airport concessions. Surprisingly, receiving a bonus in the airport privatizations provided little advantage to the original project proponent in the bidding. The bonus may have scared away other potential bidders, but in no case did it determine the award of the project: in the absence of the bonus, the same bidder would have won. Chile reimburses the original project champion its development costs in a case where they loose the final bid.

6.4 * South Africa The regulation initially made no provision for unsolicited bids, and National Treasury was not in favour of them. The government has seince developed an unsolicited bid framework (2009). National Treasury encourages institutions to listen to innovative ideas from the private sector but, in so doing, not to acquire associated intellectual property rights, and issued as National Treasury PPP Practice Note Number 02 of 2004 11 not to make any commitments that will undermine competitive procurement. If the 9ideas seem

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promising, institutions should register the project with the relevant treasury in terms of Treasury Regulation 16 and follow the project cycle as regulated. South Africa modeled its regulations on the Philippine system. But it recently adjusted them to increase the possibility of a successful challenge1. SA reimburses the original project champion its development costs in a case where they loose the final bid or states in the bidding document the cost of reimbursement by the winning bidder.

6.5 * China Another major issue is the increasing numbers of unsolicited proposals presented to governments in both developing and developed countries. While in many cases the origin of a project is not clear, the percentage of overall PPI projects that originate as unsolicited proposals is also estimated to be significant in some countries (for example, approximately 43 percent in Taiwan [China]). Because unsolicited proposals are beginning to represent a significant share of overall projects in many countries and these proposals can create negative public perceptions, many policy makers have begun to realize the need to directly address them in PPI legislation.

6.6 STEPS TO FOLLOW UPON RECEIPT OF AN UNSOLICITED PROPOSAL IN SOUTH AFRICA

6.6.1 The unsolicited bid framework in South Africa gives a lot of power to the accounting officer. If the accounting authority decides not to consider the unsolicited bid, the process ends. If the accounting officer decides to reject the unsolicited proposal, he or she must follow the following process;

I. notify the authorized representative of the proponent by registered post, that the institution has rejected the unsolicited proposal;

II. ensure that the institution does not make use of any of the intellectual property or proprietary data in the unsolicited proposal; and

III. return to the proponent by registered mail, all documents received in the unsolicited proposal.

6.6.2 If the accounting officer decides to consider the unsolicited proposal, he or she must send a registered letter to the project proponent confirming the decision to consider the unsolicited proposal. The accounting officer will then have to send a letter to the National Treasury to register the project as a PPP. The

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diagram below shows steps to follow upon receipt of an unsolicited proposal in South Africa.

6.6.3 Depending on whether the project is a municipal or a provincial/national PPP, it would have to follow the PFMA and MFMA legislations. All PPPs have to comply with Treasury Regulation 16. The National Treasury then takes the lead and invites parties to the inception meeting. In South Africa, unsolicited bids are evaluated in such a manner as any bids submitted in response to a tender. Such bids will be subjected to a feasibility study and Treasury Approvals/Treasury View and Recommendations to test for affordability, value for money and risk transfer to the party best able to handle it. The bid will have to comply with PPP procurement policy until the successful bidder is appointed.

6.6.4 With regards to Intellectual Property Rights, it is important to note that institutions take appropriate action to protect confidential and Intellect6ual Property Rights. If the unsolicited bid is rejected, the accounting officer has to ensure that the institution does not make use of any of the intellectual property or proprietary data in the unsolicited proposal. If the unsolicited bid is accepted, the accounting officer has to ensure that the institution does not use any data, concept, idea, for a solicitation or in negotiation with any other firm. Institution

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requirements to use intellectual property during and after the termination of the PPP agreement and after the expiry of the PPP agreement should also be specified in the RFP where appropriate.

7.0 HANDLING UNSOLICITED BIDS PROPOSALS

7.1 Governments could use several approaches to handle unsolicited proposals.

7.2 Option one:

- prohibiting unsolicited projects

Some governments disallow unsolicited bids because they have the potential to compromise transparency, serve special interests, suppresses competition and to deliver poor value for money.

7.3 Option two:

- purchase the project concept and then award the project through a competitive bidding process

The advantage of this option is that there is no bidder with a pre-defined advantage.

7.4 Option three:

Offer the original project champion a predefined advantage in a competitive bidding process

a. Bonus system

This process involves a competitive tender where the original project champion is given additional value to the bid. 5

b. II. Swiss challenge system

The original proponent has the right to counter-match any superior offers. By contrast, a challenger may have as little as 60 days in some countries (such as the Philippines) to prepare a counterproposal. Many potential challengers may be unwilling to compete without sufficient time to prepare.

c. Best and Final Offer System

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Recently, variations of the bonus and Swiss challenge systems have been developed in several countries. The key element of many of these is multiple rounds of tendering, in which the original proponent is given the advantage of automatically participating in the final round. Bids are received, evaluated, and ranked. In South Africa, the two most advantageous bids are selected in the first round, from which a final round of bidding will take place. If the original proponent is not one of these two selected, it will then automatically be allowed to compete in the final round as well. In South Africa, the winning bidder is also required to compensate the proponent for project development costs, which are stipulated in the public bid documents.

The table below shows the advantages and disadvantages of offering reimbursements for development costs

Advantages Disadvantages

Legal respect for Intellectual Property Rights are essential to private sector development

Reimbursement maintains private sector interest in the project development phase

Project ideas will not be limited only to large companies or developers who have deep pockets

The amount of financial compensation for project development costs can be determined through the estimated market value for the project proposal or an independent audit

Developers will allocate the necessary resources to make sure that the project is developed professionally

Reimbursement encourages innovation

The number of meaningless projects may increase because developers might not intend to bid in the tender process, but only to profit from a project concept

Original project proponents may exaggerate project development costs to discourage challengers once a project is given formal approval

Challengers are at a financial disadvantage because reimbursement adds extra project finance expenses into calculation of tariff

Government will have to allocate additional resources to determine if requested reimbursement is accurate

8.0 TIME ALLOCATIONS FOR BIDDING AND APPROVAL

8.1 In some countries challengers of bids have as little as 60 days to challenge or prepare for counter proposal and may be unwilling to compete without sufficient time to prepare. The table below shows a group of sampled countries’ time allocation for bidding and approval.

Preliminaryapproval

Final approval

Call for open

Challenge or

Additional

Total time

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tenders counter time

Argentina

90 days 60 days Undetermined

n.a n.a.

Chile 45 days 12 months 12 months Approximately2–4 months

n.a. 33–35 months

Costa Rica

45 days 4 months 12 months Notapplicable

n.a. 17+ months

Guam (U.S.territory)

Undetermined

Undetermined

Undetermined

60 days n.a n.a.

Italy 4 months 2 months 3 months n.a n.a n.a.Korea, Rep

15 days 4 months Undetermined

Approximately 2–4 months

n.a. 6.5–8.5+months

Philippines

2 months 3 months Undetermined

2 months 1 month tocounter match

8+ months

South Africa

1 month 9 months 3 months 2 months 2 months toevaluate

17 months

9.0 SECTORS PRONE TO UNSOLICITED BIDS

9.1 Allowing the private sector to present proposals in sectors that are part of Government strategic objectives or priorities could be cause for concern. In theory, the private sector’s only concern is making a return on its investment without consideration for the general welfare or overall economic benefit of the country. In order to address such concerns, some countries such as Chile and Costa Rica only allow unsolicited proposals for projects that are part of its strategic plans. The Botswana Government can consider the following sectors as priority for consideration of unsolicited bids but other developers of proposals not in the identified industries which may be beneficial to the Government will also be considered.

a) Collection, purification and distribution of waterb) Construction of Infrastructure Projects such as roads, dams,

Social and welfare facilitiesc) Transportation facilitiesd) Information and Communications Technology and ICT enabled

servicese) Biotechnology and Applied Sciences.f) Energy and Environment (Clean Technology)g) Mining Technologies and Beneficiation

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h) Agro-processing (dairy, horticulture, meat, etc.)i) Recreational, cultural and sporting activitiesj) Renewable Energyk) Power generation facilitiesl) Construction/Building Materialsm)Major facilities for tour sitesn) Major commercial facilities

10. CONCLUSION

10.1 Unsolicited bids can give rise to new approaches to infrastructure delivery problems that the government may be facing. The project champions usually develop the project idea with their own funds however; they usually expect this cost to be reimbursed if the project is awarded to someone else or another party. Calculation of development costs usually requires an independent audit firm to verify and government usually has to allocate additional resources to determine if requested reimbursement is accurate. The biggest challenge is to assess and control this cost and ensure that silly projects which require government capacity to manage are discouraged. In some cases where government reimburse for development cost, the number of meaningless projects increase because developers might not intend to bid in the tender process, but only to profit from a project concept. Overall the biggest challenge of unsolicited bids is to ensure that there is a genuinely effective competitive process and that alternative bidders are given enough time to prepare competitive bids.

11. RECOMMENDATIONS

i. The best approach of managing unsolicited bids is for Government of Botswana to allow them with a clear framework and procedures to follow on where to submit proposals, information required, steps to follow and time frames for decision making process.

ii. In the short term, it would be ideal to adopt an unsolicited bid framework that favours local entrepreneurs in terms of the CEE Policy. It may be ideal for the Government to target only sectors that are part of Government strategic objectives as listed below and amend the Public Procurement and Asset Disposal Act (PPAD Act) to incorporate the unsolicited bid framework.

iii. In the medium to long term the Government could look into amending the Public Finance Management Act (PFMA) to accommodate unsolicited bids.

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12.0 BIBLIOGRAPHY

1. Privatisation Policy for Botswana, Government Paper No. 1, Ministry of Finance and Development Planning, 2000.

2. Public Private Partnership Policy and Implementation Framework, Ministry of Finance and Development Planning, June 2009.

3. Public Finance Management Act, 2011.4. Economic Diversification Drive Medium to Long Term Strategy

(2011-2016)5. Citizen Economic Empowerment Policy of 20126. Directive on Revised Roles and Responsibilities (PEEPA extended

mandate).7. Hodges, John. March 2003. “Unsolicited Proposals: Public Policy for

the Private Sector” Viewpoint 258. World Bank,Private Sector and Infrastructure Network, Washington, D.C.

8. World Bank PPIAF (Public Private Infrastructure Advisory Facility) 9. UNCITRAL (United Nations Commission on International Trade Law),

2001, New York 10. National Treasury, PPP Guidelines, Module 5 PPP Procurement

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