Subject: Action: Procurement
Approach for the I-35 Corridor
Approval under Special Experimental Project No. 14
Innovative Contracting Practices (SEP-14)
Date: February 27, 2004
From: Dwight A. Home
Director, Office of Program Administration
Reply to Attn. of: HIPA-30
To: Mr. C.D. Reagan
This is in response to your December 19, 2003, memo and the Texas Department of Transportation's (TXDOT) December 5, 2003, letter that submitted an SEP-14 work plan for the procurement of the High Priority Trans-Texas Corridor through a public private partnership. We appreciate the opportunity to review and provide comments at an early point in the project development process. Thank you for incorporating the suggestions, comments and clarifications requested by Gerald Yakowenko of my staff in a November 21, 2003, telephone conference.
Regarding TXDOT's specific request to proceed with certain features of the contracting process under SEP-14, we concur with the use of all the proposed concepts for evaluation under SEP-14:
In addition, we agree that it is acceptable to proceed with the proposed procurement process under SEP-14. While we are concerned with the concept of using an "open book review" process or an independent engineer's estimate to verify price reasonableness, we agree that such a process should provide some assurance of reasonable prices, if properly implemented.
As a condition of this SEP-14 approval, we request that your office and TXDOT develop a formal procedure (prior to the execution of the development agreement) for verifying price reasonableness and developing an independent estimate. This procedure should describe the criteria and considerations that will be used in developing independent cost estimates and the criteria that will be used in determining whether the developer's prices are reasonable.
We congratulate TXDOT for attempting such an ambitious project and look forward to TXDOT's evaluation of the innovative features of this project. Should you have any questions, please contact Gerald Yakowenko at (202) 366-1562.