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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
2019-09-11 Daily Xml
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Government Contracts

In reply to the Hon. S.C. MULLIGHAN (Lee) (24 July 2019). (Estimates Committee B)

The Hon. R.I. LUCAS (Treasurer): I have been advised the following:

The unsolicited proposal (UP) Process is governed by the Unsolicited Proposal Framework and Guidelines in place since October 2014. It consists of three steps:

Step 1: Application and investigation step

The initial step allows a proponent to lodge an unsolicited proposal, which enables the committee to form a view as to whether further consideration of the unsolicited proposal is warranted.

Step 2: Exclusive negotiations and business case

This step involves detailed consideration of the feasibility of the proposal.

Step 3: Contract negotiation

The contract negotiation step allows the government and the proponent to negotiate final legal and commercial terms then prepare and execute formal project documentation.

On 31 January 2018, the Department of Treasury and Finance (DTF) received the Berkshire Hathaway (BH) unsolicited proposal (Proposal). From this date, DTF undertook due diligence activities with the findings provided to the Unsolicited Proposals Committee (UPC). The UPC determined that all five criteria had been met and made a recommendation to Cabinet that the Proposal proceed to step 2. Cabinet approved the progression of the Proposal from step 1 to step 2 on 25 June 2018 with BH notified of approval to Step 2 on 27 June 2018.

During step 2 of the UP Process, I met with executives from National Indemnity Company (Berkshire Hathaway's reinsurance arm) at Old Parliament House on 31 July 2018. The meeting included DTF Executive staff (Chief Executive, Executive Director Commercial and Economics Branch (CEB), and Project Director CEB), as well as members of my Ministerial Staff.

This session signalled the government's commitment to undertake detailed due diligence of a potential transaction proceeding. Consistent with the unsolicited proposal guidelines, no negotiations occurred. Negotiations occurred separately between DTF and BH during step 3 of the unsolicited proposal process.

Cabinet approved the BH unsolicited proposal on 26 November 2018 with the state and BH executing the contractual documents (completion of step 3) on 7 December 2018.

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