How to Submit an Unsolicited Proposal under Puerto Rico’s P3 Regulations: A Step-by-Step Guide
Discover how to submit an unsolicited proposal under Puerto Rico’s P3 regulations. Learn the essential steps for a successful submission, from project assessment to contract negotiation.
Unsolicited proposals (USPs) provide private entities with a unique opportunity to proactively present innovative solutions to address public infrastructure and service needs in Puerto Rico. Under Act 29-2009 and the accompanying Public-Private Partnership (P3) regulations, these proposals offer businesses a structured, transparent pathway to collaborate with the government. Unsolicited proposals must meet strict legal requirements to ensure compliance, safeguarding both public interests and the integrity of the process.
Navigating Puerto Rico's P3 framework requires an in-depth understanding of the legal landscape and regulatory environment. This guide offers private entities a step-by-step approach to submitting a successful unsolicited proposal while ensuring full legal compliance. For further insights into Puerto Rico's P3 landscape, visit our Quick Guide to Public-Private Partnerships in Puerto Rico.
MZLS Recent Experience in Public-Private Partnerships
MZLS LLC has extensive experience in handling various aspects of public-private partnerships in Puerto Rico, including compliance and legal strategies. Our recent work includes managing compliance for projects such as the San Juan Bay Cruise Terminals. Click here to view the report.
Another example of recent experience is MZLS assisted in successfully securing FAA approval for the San Juan Cruise Piers Public-Private Partnership—a pivotal project demonstrating our ability to manage both legal and regulatory complexities in P3 ventures. Explore more about this achievement here.
These examples underscore MZLS's comprehensive approach, from compliance oversight to securing essential regulatory approvals, all while ensuring that each project aligns with public policy and economic goals.
I. Understanding Unsolicited Proposals (USPs) in Puerto Rico’s Public-Private Partnership (P3) Framework
Unsolicited proposals (USPs) offer private entities a valuable opportunity to proactively address Puerto Rico's critical public infrastructure and service needs. Through this process, businesses can present innovative projects directly to the Puerto Rico Public-Private Partnerships Authority (P3A). Unlike traditional solicited proposals, which are initiated through government-issued Requests for Proposals (RFPs), USPs allow private companies to identify infrastructure or service gaps and propose projects that align with Puerto Rico’s strategic development goals.
This proactive approach empowers businesses to utilize their expertise and resources to drive economic growth, enhance public services, and contribute to Puerto Rico’s social progress. USPs are an integral part of Puerto Rico’s Public-Private Partnership (P3) model, enabling private-sector innovation while addressing government priorities.
The legal framework for USPs was first introduced through Act 1-2017, which amended Act 29-2009. This significant update to the P3 model allows private entities to submit proposals without waiting for formal government solicitation. The amendment fosters greater creativity, encourages private-sector investment, and aligns with the public policy objectives of Puerto Rico. Despite the flexibility of this process, USPs remain subject to strict regulations to ensure fairness, transparency, and accountability in their evaluation.
By embracing this updated framework, private businesses have a clear path to contribute to Puerto Rico’s future development while ensuring compliance with the island’s legal and regulatory standards.
Evaluation and Oversight
USPs are subjected to a thorough evaluation by the P3A to ensure compliance with Act 29-2009 and its accompanying 2017 regulations. The evaluation process considers several critical factors, including:
Public Policy Alignment: Ensuring the proposed project supports government priorities and addresses identified public needs.
Economic Priorities: Assessing the project's feasibility and its potential to drive economic growth.
Transparency and Fairness: Maintaining an open and competitive environment, even for unsolicited proposals, to ensure that public resources are managed responsibly.
Opportunities and Safeguards
The inclusion of USPs expands opportunities for the private sector by allowing businesses to present innovative, high-impact solutions. At the same time, the process safeguards public interests through a structured evaluation framework that includes public consultation, feasibility studies, and rigorous oversight.
For businesses looking to participate, understanding the requirements and procedures outlined in the P3 regulations is essential. By adhering to these guidelines, private entities can maximize their chances of approval while contributing to transformative projects that benefit Puerto Rico’s residents and economy.
II. Steps to Submitting an Unsolicited Proposal
Step 1: Conduct an Initial Project Assessment
Before beginning the formal submission process for an unsolicited proposal (USP), it is essential to conduct a thorough assessment to determine whether your project aligns with Puerto Rico’s strategic priorities and the regulatory framework established under Act 29-2009. A successful USP must demonstrate:
Clear Public Benefits: The proposed project should deliver measurable advantages to Puerto Rico’s residents and economy. This may include fostering economic growth, creating employment opportunities, improving access to public services, or addressing pressing infrastructure challenges. Projects that address energy sustainability, transportation efficiency, or critical public services often resonate strongly with government priorities.
Alignment with Strategic Goals: Ensure that the project supports Puerto Rico’s long-term infrastructure and development objectives. Focus on areas identified as critical needs, such as renewable energy, water management, transportation modernization, or technological innovation. Projects that align with emerging global trends, like hydrogen energy or green infrastructure, are particularly well-positioned for approval.
Feasibility and Viability:
Technical Feasibility: Demonstrate the project's ability to meet or exceed technical standards and operate effectively.
Financial Feasibility: Provide a sustainable financial model, including funding sources, cost estimates, and projected returns.
Operational Feasibility: Ensure the project’s structure supports efficient implementation and long-term maintenance.
Risk Assessment: Clearly outline potential risks associated with the project and present a robust risk mitigation strategy. This may include financial, environmental, or operational risks, along with contingencies to address unforeseen challenges.
Learn from Successful P3 Projects
Gain insights by studying high-profile P3 projects in Puerto Rico. For example:
Luis Muñoz Marín International Airport Privatization: The first U.S. airport privatized under a P3 framework, this project highlights how private sector innovation can address public infrastructure challenges effectively.
Hydrogen Energy Initiative: This forward-looking energy project demonstrates the potential of leveraging private investment and expertise to align with global sustainability goals.
San Juan Bay Cruise Terminals: A transformative project aimed at modernizing and expanding Puerto Rico’s cruise terminal infrastructure to enhance tourism and economic growth through private sector investment and expertise combined with federal disaster recovery funding.
While not all three examples started with an unsolicited proposal, they illustrate how projects with clear public benefits, strategic alignment, and innovative approaches can achieve success under Puerto Rico’s P3 framework. These cases also emphasize the importance of collaboration between public agencies and private entities.
Resources to Guide Your Proposal
To ensure your project aligns with legal and procedural requirements, consult the 2017 P3 Regulations and review detailed insights in our Quick Guide to Public-Private Partnerships in Puerto Rico.
Step 2: Prepare a Comprehensive Proposal for Public-Private Partnerships (P3) in Puerto Rico
When submitting an unsolicited proposal (USP) under Puerto Rico’s Public-Private Partnership (P3) framework, your submission must meet the specific requirements laid out in Act 29-2009 and the 2017 P3 regulations. Below is a comprehensive overview of the nine requirements your proposal must include to ensure it aligns with the regulatory framework and stands the best chance for approval.
1. Project Summary
Your proposal must begin with a summary of the proposed project, clearly outlining its objectives, scope, and the expected outcomes. This summary should articulate why the project is essential for Puerto Rico, focusing on addressing a critical public need and aligning with the government’s strategic priorities.
2. How the Project Meets Government Needs
You must provide a detailed description of how the proposed project satisfies a government need. This includes identifying the gaps in infrastructure or services that the project is designed to address. Clearly demonstrate how the project aligns with Puerto Rico’s public policy and development goals, ensuring that it meets both immediate and long-term needs.
3. Differentiation from Traditional Approaches
The proposal should outline how the project differs from other traditional or proposed approaches for solving the same problem. This section must demonstrate the innovative nature of your project, explaining how it offers superior solutions or efficiencies compared to existing models.
4. Public Resources Required
Include a breakdown of the amount of public resources needed to complete the project. This should detail both direct costs, such as capital investments, and indirect costs, such as operational expenses or subsidies that may be required. A clear financial structure ensures transparency regarding the resources the government must allocate to the project.
5. Financial Viability
A key component of your proposal is the financial viability assessment, which must demonstrate that the project is financially sustainable. You should explain how the project will be funded, detailing whether the financing will come from private investment, loans, or other financial mechanisms. It is essential to provide revenue projections to show the expected income or returns from the project, highlighting how the project will generate sufficient revenue to support its ongoing operations and deliver financial sustainability over time. Additionally, your proposal must include cost estimates, breaking down both capital costs and operating expenses. This breakdown will help to establish the overall financial feasibility of the project, ensuring that all financial aspects are transparent and realistic.
6. Commercial Aspects of the Project
Provide an overview of the commercial aspects of your proposal. This includes the business model, how the project will generate revenue, and any partnerships or agreements that will be necessary for successful implementation. This section should emphasize how the project is financially sustainable in the long run.
7. Public Benefits
Your proposal must provide a comprehensive explanation of the public benefits the project will deliver. Begin by describing how the project will improve public services for Puerto Rican residents, specifically addressing the ways it will enhance access to or the quality of essential services. Next, outline how the project will drive economic growth, highlighting expected outcomes such as job creation, increased investments, and regional development. Finally, demonstrate how the project will enhance the quality of life for the broader Puerto Rican population, detailing the social and economic impacts that will positively affect communities across the island.
8. Method of Execution
A well-defined method of execution is essential for the success of the project. In this section, outline the steps and processes that will be followed to complete the project, ensuring clarity on how the initiative will progress from inception to completion. Start by defining the project timeline, including key milestones and completion dates, as well as any phased approaches that may be necessary for the successful implementation of the project. Additionally, provide a detailed execution plan, explaining how the project will be carried out. This should include the specific roles and responsibilities of all parties involved, from the public and private partners to any subcontractors or third-party collaborators, ensuring that all participants understand their obligations and contributions to the project’s success.
9. Intellectual Property (If Applicable)
If your proposal involves unique intellectual property, such as patents, proprietary technologies, or innovative methodologies, it is essential to include a detailed description of the intellectual property associated with the project. In this section, you should clearly indicate the ownership of the intellectual property, specifying who holds the rights to it and clarifying any related ownership details. Furthermore, explain the commercial viability of the intellectual property and how it will contribute to the overall success of the project. This includes outlining its role in the project’s execution, revenue generation, and long-term sustainability. Additionally, if applicable, describe any intellectual property licensing or usage rights that will be part of the partnership, and how these rights will be utilized to enhance the project's success and profitability.
Step 3: Submit Your Proposal for Public-Private Partnerships (P3) in Puerto Rico
Submitting your unsolicited proposal (USP) is a pivotal step in advancing your project within Puerto Rico’s Public-Private Partnership (P3) framework. By adhering to the guidelines set forth in Act 29-2009 and the 2017 P3 regulations, you ensure your proposal undergoes a comprehensive review by the Puerto Rico Public-Private Partnerships Authority (P3A).
Review Your Proposal prior to Submission
Before submission, ensure your proposal package is comprehensive. This includes a detailed description of the technical aspects, financial plans, and compliance documentation related to your project. You should demonstrate how your proposal aligns with public priorities and addresses critical infrastructure or service needs. Supporting documents such as feasibility studies, risk assessments, and necessary certifications should also be included.
It’s important to follow all guidelines in Act 29-2009 to avoid delays and ensure the proposal’s eligibility for review.
Payment Requirement
As part of the submission process, a $5,000 fee must be paid to the P3A. This fee is required to cover the review and evaluation costs associated with your proposal. Keep in mind that this fee is non-refundable and non-negotiable. Submitting your proposal without the payment will result in the suspension of the review process. Always check the P3A’s guidelines for current payment instructions and deadlines.
Initial Review by the P3A
After submission, the P3A will review your proposal to assess whether it meets the public policy and government priorities. The evaluation will focus on the project’s feasibility—both technically and financially—and its ability to generate public benefit. During this stage, the P3A may ask for additional information or clarification. Timely responses are crucial for keeping the process moving forward.
Possible Outcomes of the Review
Once the P3A completes its review, the proposal may be directed toward two possible outcomes:
If the proposal meets all criteria, the P3A may initiate a competitive bidding process by issuing a Request for Qualifications (RFQ) and Request for Proposals (RFP). This allows other qualified entities to submit their own proposals, ensuring fairness and transparency.
Alternatively, if your proposal is the only one or considered superior, the P3A may proceed with direct negotiations with your team. This method allows for a more expedited path to contract finalization and project implementation.
Important Considerations for a Successful Submission
Ensuring a successful submission requires careful attention to several factors. First, adhere to all deadlines and submission guidelines. Delays in submitting or responding to requests for additional information could hinder your proposal’s review. Ensure full compliance with Act 29-2009 and related regulations to avoid complications during the review. Even if you’re the only proposer, be prepared for the possibility of competition and focus on clearly demonstrating the value and feasibility of your project.
Step 4: Engage in the Desirability and Convenience Study
Once an unsolicited proposal (USP) is approved for further consideration, it must undergo a Desirability and Convenience Study (D&C Study) as required by Act 29-2009. This crucial phase evaluates whether the proposed project aligns with Puerto Rico's public policy goals and delivers meaningful socio-economic benefits. The D&C Study is essential to ensure that the project meets public needs while fostering transparency and accountability in the evaluation process.
Key Evaluation Criteria
The D&C Study focuses on three core evaluation criteria:
Alignment with Government Policies and Priorities The project must support Puerto Rico’s strategic goals, such as infrastructure modernization, energy resilience, and technological innovation. The study assesses how the proposal fits within broader governmental and sectoral plans to ensure it addresses critical public needs.
Socio-Economic Benefits and Public Impact The study evaluates the tangible and intangible benefits the project brings to the community. This includes job creation, economic growth, and enhanced public services. It also measures the potential impact on the quality of life for Puerto Rican residents, ensuring the project promotes equitable access and social inclusion.
Long-Term Sustainability and Feasibility A vital aspect of the D&C Study is determining whether the project is viable in the long run. The study examines the technical, financial, and operational aspects of the proposal, assessing the risk-sharing mechanisms and ensuring the project is structured to endure any unforeseen challenges over its lifecycle.
A Collaborative Process
The D&C Study is a collaborative phase, not merely a review. During this process:
Feedback from Government Agencies: Private entities will receive feedback from relevant public agencies. This feedback helps to align the project with the public sector’s objectives and priorities, ensuring the proposal benefits the public.
Opportunities for Refinement: Based on the feedback, proposers have the opportunity to adjust their proposals. This may include refining technical designs, financial models, or risk management strategies to meet the recommendations outlined in the study.
Public Accountability: The study’s findings will be made available to the public, which ensures transparency. This public access to the study’s results enhances trust in the evaluation process and allows for broader community engagement.
Why the D&C Study Matters
The Desirability and Convenience Study is a critical step in the Public-Private Partnership (P3) process, ensuring that each project delivers measurable benefits to Puerto Rico’s residents and economy while adhering to public policy priorities. For private entities, the D&C Study offers a valuable opportunity to refine proposals based on government feedback, demonstrate the project's value, and align their efforts with Puerto Rico’s vision for sustainable development.
By engaging in this process, private sector entities can strengthen their project proposals and foster trust with public sector counterparts, ensuring that their projects contribute positively to the island's long-term growth.
For more details on the Desirability and Convenience Study and its legal foundation, consult the official text of Act 29-2009. If you are preparing for the D&C Study, MZLS LLC's experienced professionals can guide you through the process, helping you refine your proposal and maximize its chances of success.
Here are some examples of D&C studies to familiarize with them: San Juan Cruise Terminals,
Step 5: Evaluation and Approval
After the Desirability and Convenience Study is completed, your unsolicited proposal (USP) will undergo an Evaluation and Approval process by the Public-Private Partnerships Authority (P3A). During this phase, the P3A assesses whether the proposal aligns with Puerto Rico’s public policy and economic priorities. The proposal’s technical, financial, and operational feasibility is also scrutinized to ensure it can be executed effectively within the outlined budget and timeline. Additionally, the P3A evaluates how risks are allocated between the public and private entities, ensuring a balanced distribution of responsibilities.
If the proposal meets the necessary criteria, it may either advance to a competitive bidding process, where other entities can submit competing proposals, or the P3A may proceed with direct negotiations with the proposer if no competing submissions are received. Once the evaluation is completed, the next steps will involve negotiating the final terms of the partnership agreement, followed by the implementation phase, which will be overseen by the P3A to ensure adherence to the contract.
Step 6: Request for Qualifications, Market Sounding, and Competitive Process
Once the unsolicited proposal (USP) has been evaluated and approved by the Public-Private Partnerships Authority (P3A), the next step is either to advance the project to a competitive process or to enter into direct negotiations with the original proposer, depending on the outcome of the evaluation.
Step 6: Request for Qualifications, Market Sounding, and Competitive Process
Once an unsolicited proposal (USP) has been approved, the next steps involve evaluating the project through either a competitive process or direct negotiation, depending on the specific circumstances. If the P3A determines to open for competition these are likely the most important steps that will be followed:
Request for Qualifications (RFQ): The process typically begins with a Request for Qualifications (RFQ). This step is used to assess the capabilities of private entities that wish to participate in the project. The RFQ ensures that only those with the technical capacity, financial stability, and experience required to execute the project move forward to the next stage.
Market Sounding: In some cases, prior to issuing the RFQ, the Public-Private Partnerships Authority (P3A) may conduct a market sounding. This informal phase helps the P3A assess market interest and readiness for the project. It allows potential private sector partners to gain insight into the project and provide feedback, which helps refine the scope and structure of the project.
Direct Negotiation or Competitive Process: Under Act 29-2009, direct negotiations can take place before the RFQ, especially when intellectual property or unique project characteristics are involved. If the project presents distinctive elements that make it challenging for multiple entities to compete, the P3A may decide to enter into direct negotiations with the original proposer. This can streamline the process and ensure that the project moves forward efficiently.
If the project does not involve unique elements that would warrant direct negotiation, the P3A will issue an RFP following the RFQ process, inviting competing proposals. The competitive process ensures fairness and transparency, with multiple parties submitting detailed plans that will be evaluated on factors such as cost, innovation, and alignment with public goals.
Step 7: Contract Negotiation
Once your unsolicited proposal (USP) has successfully passed through the competitive process or direct negotiation phase, the next critical step is contract negotiation. This stage is crucial in ensuring that both the public and private entities are aligned on the terms of the Public-Private Partnership (P3) agreement, and it sets the foundation for the successful execution of the project.
Defining Roles and Responsibilities: The contract will clearly outline the roles and responsibilities of both the private and public entities involved. This includes specifying the private partner's obligations related to project financing, construction, operation, and maintenance, as well as the public sector’s role in overseeing the project’s compliance with public interests.
Financial Arrangements: The financial aspects of the agreement are critical to ensure the long-term viability of the project. During negotiations, both parties will establish cost-sharing mechanisms, revenue models, and payment structures. The private entity typically assumes the upfront investment, while the public sector may provide support through subsidies or incentives, depending on the project’s scope and public benefit.
Performance Metrics and Compliance: Another vital element of the contract is defining performance metrics. These metrics set clear benchmarks for project execution, including timelines for construction, quality standards, and operational performance after the project is completed. Both parties will agree on regular performance reviews and compliance checks to ensure the project remains on track and meets established goals.
Risk Allocation: A successful P3 agreement must balance the risks between the public and private sectors. The contract will specify which risks are borne by the private entity, such as construction delays or cost overruns, and which are retained by the public sector, such as regulatory changes or political risks. Risk mitigation strategies and contingencies for unexpected challenges will also be included to ensure the project’s long-term stability.
Dispute Resolution: It’s essential to include mechanisms for resolving potential disputes that may arise during the partnership. These may include alternative dispute resolution processes, such as arbitration or mediation, as well as the steps to be taken in case of a breach of contract. The goal is to ensure that any disagreements can be addressed efficiently without disrupting the project’s progress.
Finalizing the Agreement: After negotiating the terms, both parties will review and finalize the contract, ensuring all aspects are aligned with their interests and regulatory requirements. The final agreement will then be signed, making it legally binding and moving the project into the implementation phase.
Step 8: Financial and Commercial Closing
After the contract negotiation is finalized, the next stage involves financial and commercial closing, followed by the actual implementation of the project and its ongoing oversight.
Financial and Commercial Closing
Before the private entity begins executing the project, the financial and commercial closing processes must be completed. This stage is crucial for ensuring that the necessary financing is in place and that both parties are legally committed to the project.
Commercial closing occurs when all the commercial terms of the agreement are finalized, confirming the financial arrangements and ensuring that both the private and public parties are bound by the contractual obligations.
At financial closing, the project’s financing arrangements are finalized. This can involve securing loans, private investments, or other financial resources needed to fund the project. Additionally, in certain projects where payments are due to the government participating entity, this step will include the transfer of agreed-upon payments. These payments may be in the form of upfront capital or structured payments based on project milestones or revenue generation. This ensures the necessary funds are available for project implementation and guarantees that the public sector partner receives its share as stipulated in the contract.
Once both financial and commercial closing are concluded, the Public-Private Partnership Agreement is in place, and the project is set to move forward into the implementation phase.
III. Engaging Experienced Legal Counsel for P3 Projects
Successfully navigating the complexities of public-private partnerships requires expert legal counsel. Whether you are a private entity looking to enter a partnership or a public agency seeking to collaborate with the private sector, understanding the intricacies of P3 contracts, compliance, and ongoing oversight is paramount. At MZLS, we specialize in providing comprehensive legal support for businesses involved in public-private partnerships in Puerto Rico. Our team has years of experience working with government entities and private companies, ensuring that all aspects of your P3 project are handled with the utmost professionalism and attention to detail.
If you're considering participating in a public-private partnership or need expert guidance on ensuring compliance and successful project execution, MZLS is the best law firm to assist you with this. Our team is well-versed in Puerto Rico’s P3 legal framework and can help you navigate the process from proposal submission to ongoing project oversight.
Looking to partner with the government on innovative infrastructure solutions? Let MZLS guide you through every step of your Public-Private Partnership proposal. Contact us today to get started on your project.