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Tools & Programs: SEP-15

Trans Texas Corridor 35 (TTC 35)

TTC 35 Early Development Agreement

Early Development Agreement Between the Federal Highway Administration and the Texas Department of Transportation for the Construction of the I-35 High Priority Trans-Texas Corridor

THIS EARLY DEVELOPMENT AGREEMENT (hereinafter "EDA"), made and entered into this 11th day of July 2005, by and between the TEXAS DEPARTMENT OF TRANSPORTATION (hereinafter "TxDOT") and the FEDERAL HIGHWAY ADMINISTRATION, UNITED STATES DEPARTMENT OF TRANSPORTATION (hereinafter "FHWA"):

WITNESSETH:

WHEREAS, TxDOT desires to construct Facilities within the TTC-35 High Priority Trans Texas Corridor, as identified in the June 2002 "Crossroads of the Americas: Trans Texas Corridor PLan" adopted by the Texas Transportation Commission, generally parallel to the I-35 corridors and related facilities, to the extent necessary for the connectivity and financing purposes; the alignment and limits thereof to be determined through the environmental process;

WHEREAS, on December 5, 2003, TxDOT submitted an application to use an innovative procurement approach, which included certain specified modifications or deviations from the current requirements and policies contained in the title 23 of the United States Code and title 23 of the Code of Federal Regulations, for Projects developed within the Corridor under FHWA's Special Experimental Project No. 14 (hereinafter "SEP-14");

WHEREAS, on February 27, 2004, the FHWA approved TxDOT's December 5, 2003 SEP-14 application;

WHEREAS, TxDOT issued a Request for Detailed Proposals ("RFDP") on April 28, 2004, as contemplated by the SEP-14 application, and received three detailed proposals on August 23, 2004, including a proposal from the Cintra Zachry, LP.

WHEREAS, on October 6, 2004, the FHWA announced, in the Federal Register at 69 Fed. Reg. 59983, a new special experimental project to explore alternative and innovative approaches to the overall project development process known as Special Experimental Project No. 15 (hereinafter "SEP-15");

WHEREAS, on February 7, 2005, the FHWA transferred the TTC-35 SEP-14 approval to the SEP-15 program;

WHEREAS, on March 11, 2005, TxDOT entered into a comprehensive development agreement (hereinafter "CDA") with Cintra Zachry, LP;

WHEREAS, SEP-15 is designed to permit tests and experimentation in the entire Federal-aid highway project development process that are specifically aimed at attracting private investment and lead to increased project management, flexibility, more innovation, improved efficiency, timely project implementation, and new revenue streams;

WHEREAS, under SEP-15, in order to facilitate tests and experimentation in the project development process, the FHWA may grant modifications or deviations from the current requirements and policies contained in the title 23 of the United States Code and title 23 of the Code of Federal Regulations; and,

WHEREAS, under SEP-15, an Early Development Agreement between TxDOT and FHWA is required in order to contain the parameters of the modifications or deviations from Federal requirements that are granted for the Corridor development process as well as to identify the reporting requirements that will be used to evaluate the extent to which the modifications or deviations contributed to the success of the process;

NOW THEREFORE, TxDOT and FHWA hereby agree as follows:

SECTION 1. SCOPE OF EARLY DEVELOPMENT AGREEMENT

This Early Development Agreement ("EDA") is intended to identify and establish the parameters of the modifications or deviations from title 23 of the United States Code and title 23, Code of Federal Regulations, for Facilities within the Corridor, which shall be hereinafter referred to as the "experimental features." The experimental features identified in this Agreement will apply to all Facilities for which TxDOT decides to use Federal funds. Nothing in this EDA shall be construed as a relinquishment of any Federal oversight or stewardship responsibility.

SECTION 2. DEFINITIONS

2.1 Comprehensive Development Agreement ("CDA")

Comprehensive Development Agreement" ("CDA") means the agreement executed on March 11, 2005, and any amendments thereto, by and between TxDOT and the Developer, which provides the framework for the Developer to collaborate with TxDOT for the conceptual, preliminary and final planning for TTC-35 undertaking along with some or all of the development, design, construction, financing, operation, and maintenance of one or more Facilities.

2.2 Corridor

"Corridor" means the TTC-35 High Priority Trans Texas Corridor, as identified in the June 2002 "Crossroads of the Americas: Trans Texas Corridor Plan" adopted by the Texas Transportation Commission, generally parallel to the I-35 corridor, and including portions of the I-37 and I-69 high priority Trans Texas corridors, to the extent necessary for connectivity and financing purposes; the alignment and limits thereof to be determined through the environmental process. The term "Corridor," as used herein, also includes (a) any facility within the TTC-35 corridor study area that serves a connectivity purpose and has been approved through a separate NEPA process, and (b) any facility within the TTC-35 corridor study area that serves a financing purpose and has been approved through a separate NEPA process, to the extent that such a facility is included in the CDA and/or a Facility Agreement with the Developer.

2.3 Developer

"Developer" means Cintra Zachry, LP. Depending on the context, the term "Developer" shall also mean an affiliate of Cintra Zachry, LP.

2.4 Facility

"Facility" means each separate transportation or utility facility within the Corridor, including all improvements, amenities, and related development, that is a segment of independent utility within the Corridor. The term "Facility", may include a State highway, a turnpike, one or more of a freight or passenger railroad, a public or private utility facility, or any structure that is reasonably necessary for the effective operation of a method of transportation, and may include (a) a segment of independent utility within the Corridor approved after completion of the NEPA process, (b) a facility within the TTC-35 corridor study area that serves a connectivity purpose and has been approved through a separate process, or (c) a facility within the TTC-35 corridor study area that serves a financing purpose and has been approved through a separate NEPA process.

2.5 Facility Agreement

"Facility Agreement" means the agreement or agreements to be entered into by TxDOT with the Developer and/or parties for the acquisition, design, permitting, construction, operations, maintenance, financing and other services and work necessary to deliver and operate an individual Facility.

2.6 Facility Implementation Plan ("FIP")

"Facility Implementation Plan" ("FIP") means a plan for the development of a Facility and prepared by the Developer and approved by TxDOT.

2.7 NEPA

"NEPA" means the National Environmental Policy Act of 1969, as amended, 42 U.S.C. §§ 4321 to 4370f.

2.8 Project

"Project" means an undertaking to construct a particular Facility.

2.9 Project Agreement

"Project Agreement" means the formal instrument to be executed between the FHWA and TxDOT as required by 23 U.S.C. 106.

2.10 Proposer

"Proposer" means each entity or team of entities that submitted a proposal in response to the RFDP.

2.11 Request for Detailed Proposals ("RFDP")

"Request for Detailed Proposals" ("RFDP") means the Request for Detailed Proposals issued by TxDOT on April 29, 2004, as amended. The RFDP shall constitute the request for proposals for purposes of 23 C.F.R. Part 636 with respect to each Facility developed pursuant to a Facility Agreement with the Developer.

2.11 Request for Detailed Proposals ("RFDP")

"Request for Detailed Proposals" ("RFDP") means the Request for Detailed Proposals issued by TxDOT on April 20, 2004, as amended. The RFDP shall constitute the request for proposals for purposes of 23 C.F.R. Part 636 with respect to each Facility developed pursuant to a Facility Agreement with the Developer.

2.12 Self-Performance

"Self-Performance" means any design or construction services to be performed by the Developer pursuant to a Facility Agreement.

2.13 Uniform Act

"Uniform Act" means the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. §§ 4601, et seq.,, and FHWA's implementing regulations found at 49 C.F.R. part 24.

SECTION 3. GENERAL PROVISIONS

3.1 Applicability of Federal Law

  1. All Federal laws, rules and regulations shall be applicable to any Project using federal funds, including, but not limited to, the requirements set forth in titles 23 and 49 of the United States Code, and titles 23 and 49 of the Code of Federal Regulations, the Uniform Act, and NEPA, except as otherwise specified herein. Except as specified in this EDA, Federal requirements applicable to projects as a result of use of Federal funds shall not be applicable to Facilities constructed without federal funds.

  2. With respect to the title of 23 of the United States Code and title 23 of the Code of Federal Regulations, TxDOT may use the SEP-15 experimental features described in Section 4. TxDOT's use of such experimental features shall be deemed to be in full compliance with Federal law, rules, and regulations.

3.2 Withdrawal of Approval for Experimental Features

The FHWA's approval of any or all of the SEP-15 experimental features identified in Section 4 may be withdrawn at any time by the FHWA if the FHWA determines that the experimental features are not in the public interest. Prior to any such withdrawal, the FHWA will issue a written notice to TxDOT describing the FHWA's concerns and give TxDOT a reasonable period of time address the FHWA's concerns. However, during such period of time, except as specified below, no further work shall be conducted based on the approval at issue until such time as the FHWA determines that TxDOT has fully addressed the FHWA's concerns. Upon withdrawal of approval of an experimental feature, the applicable requirements of title 23 of the United States Code and title 23 of the Code of Federal Regulations shall immediately apply. Notwithstanding the foregoing, any withdrawal of an approval under this paragraph only affects Federal funding eligibility for projects, or elements thereof, not subject to a Project Agreement and shall not (a) invalidate or require modification of any previously executed contracts (including the CDA and any Facility Agreement) entered into in reliance upon such approval, (b) affect the obligations of the parties under a previously executed contract, and (c) otherwise apply retroactively to any completed elements or activities.

3.3 Access to Documents

As provided in 23 C.F.R. 1.5, TxDOT shall furnish, or make available, to the FHWA such information as the FHWA deems desirable in order to administer Federal funds within the Corridor and ensure compliance with any applicable Federal requirements. Any records that a private party does not want to be made publicly available shall be reviewed by the FHWA in accordance with the procedures outlines in the FHWA's January 26, 2005 memorandum concerning "pre-submission evaluation of information under the Freedom of Information Act." The confidentiality of any records obtained by the FHWA shall be determined in accordance with 49 C.F.R. Part 7.

3.4 Oversight Agreement

FHWA project oversight for design and construction shall be determined by a separate formal oversight agreement between the FHWA and TxDOT

3.5 Order of Precedence

Except as otherwise specified herein, this EDA supercedes the December 5, 2003 SEP-14 work plan, the FHWA's February 27, 2004 SEP-14 approval, and the FHWA's February 7, 2005 letter converting the SEP-14 approval into a SEP-15 approval. The December 5, 2003 SEP-14 work plan, the February 27, 2004 SEP-14 approval, and February 7 SEP-15 conversion letter are attached to the EDA and may be used for historical and interpretive purposes, provided that this EDA shall be given effect to the extent there is any conflict. Any modifications to this EDA shall supercede any conflicting provisions of the December 5, 2003 SEP-14 work plan, the FHWA's February 27, 2004 SEP-14 approval, the February 7, 2005 SEP-15 conversion letter, this EDA, and any prior modifications to the EDA.

SECTION 4. EXPERIMENTAL FEATURES

I. EXECUTION OF THE CDA

4.1 Deviations from 23 C.F.R. 636.109 - Executing a CDA prior to completion of NEPA.

  1. FHWA acknowledges and agrees to TxDOT's deviation from 23 C.F.R. 636.109, as provided in the FHWA's February 27, 2004 SEP-14 approval, by issuance of the RFDP and execution and delivery of the CDA, prior to the conclusion of the NEPA process. In addition, TxDOT may permit the Developer to provide NEPA support services, including preliminary engineering, tests, studies, data, analyses and reports, and may permit the Developer to perform limited non-construction work under the CDA prior to the conclusion of the NEPA review process.

  2. The purpose of 23 C.F.R. 636.109 is to ensure that there is an unbiased NEPA decision making process, that public officials and citizens have the necessary environmental impact information for federally funded actions before actions are taken, and that design-build proposers do not assume an unnecessary amount of risk in the even of NEPA process results in a significant change in the proposal.

  3. In order to ensure that the purposes of 23 C.F.R. 636.109, as listed in 4.1.B, are protected, the following conditions must be met:

    (i) FHWA, with TxDOT's participation, will, at all times, direct and control the NEPA process.

    (ii) FHWA and TxDOT will participate in all phases of the NEPA review process. FHWA is solely responsible for the Project approval process under NEPA.

    (iii) TxDOT has included appropriate provisions in the CDA to ensure that no commitment to any alternative that could be evaluated during the NEPA review process is made prior to the completion of the NEPA review process, and allowing all alternatives presented in the NEPA document, including the no-build alternative, to be equally evaluated.

    (iv) TxDOT must ensure that no decision regarding a preferred alternative will be made before all necessary environmental impact information is available for review and comment by both the decision makers and the general public.

    (v) TxDOT must ensure that any FIP will address how environmental commitments and mitigation measures identified during the NEPA process will be implemented.

    (vi) Sections 4.4 and 19 of the CDA provide for the compensation payable to the Developer for work products that may be produced by the Developer in the event that a no-build alternative, or if some other alternative that is not consistent, with the Developer's planned approach, is selected.

    (vii) Should TxDOT engage an independent NEPA consultant, or other consultant, to provide services for the Corridor, TxDOT shall ensure that the organizational conflict of interest requirements of 23 C.F.R. 636.116 are met with respect to such consultant's participation in the Developer's activities. Moreover, any such consultant for NEPA services must be independent from the Developer.

    (viii) Regardless of Developer risk or Federal-aid funding in a given FIP, TxDOT must ensure that final design and construction of the Facility covered by the FIP does not commence before the conclusion of the NEPA process for that Facility.

4.2 Deviations from 23 C.F.R. 636.057 and 636.513 - Communicating with proposer and negotiations prior to award.

  1. FHWA acknowledges and agrees to the deviation from 23 C.F.R. 636.507 and 636.513, as provided in FHWA's February 27, 2004 SEP-14 approval, associated with the one-on-one negotiations conducted by TxDOT with the selected Proposer prior to award of the CDA.

  2. The purpose for the general prohibition on the activities described in 4.2.A under 23. C.F.R. 535.507 & 636.513 is to enhance competition and ensure that the procurement process is fair and transparent to all proposers.

  3. FHWA acknowledges and agrees that TxDOT complied with the SEP-14 requirements associated with the deviation from 23 C.F.R. 636.507 and 636.513, for the purpose of protecting the purposes of said requirement, as listed in 4.2.B, including:

    (i) TxDOT provided the FHWA with the opportunity to observe and participate in the evaluation, selection and negotiation process between TxDOT and the short-listed Proposers.

    (ii) TxDOT submitted major amendments to the RFDP, as well as the executed CDA, to FHWA for concurrence.

    (iii) Prior to award of the CDA, TxDOT provided the FHWA with a summary regarding the process followed, the rationale for the selection, the substantive changes made to the CDA during the negotiations, and requested the FHWA's concurrence in the award.

    (iv) TxDOT had the ability to terminate negotiations with the selected Proposers if the negotiations were not successful and proceed to the Proposer determined to provide the next best value.

    (v) TxDOT obtained the consent of the unsuccessful Proposers to use the work product; required the Proposer to transfer and assign all rights to the work product to TxDOT; and provided for a stipulated amount to be paid to each unsuccessful proposer in accordance with applicable law.

II. PROJECT AUTHORIZATION

4.3 Deviations from 23 C.F.R. 635.112(i)(1) & 635.114(k) - Project authorization.

  1. TxDOT may deviate from 23 C.F.R. 635.112(i)(1) and 635.114(k) to permit project authorization for a Project to occur on a Facility-by-Facility basis after a final environmental approval by FHWA has been issued, in compliance with NEPA, for a Facility.

  2. The purpose of the project authorization requirements in 23 C.F.R. 635.112(i)(1) and 635.114(k) is to ensure that the FHWA is involved in the project development process at a time that is sufficient to permit the FHWA to adequately review and oversee compliance with all appropriate Federal requirements and that costs are not incurred prior to authorization. Moreover, the project authorization requirements of 23 C.F.R. 635.112(i)(1) and 635.114(k) are consistent with 23 C.F.R. 636.109, which does not permit a State issue a request for proposals until the NEPA process is complete. Here, however, as explained in section 4.1, TxDOT was permitted to issue the RFDP and execute the CDA prior to the completion of the NEPA process. The FHWA and TxDOT do not believe issuance of the RFDP or execution of the CDA was the appropriate point at which to authorize Federal funding for the entire Corridor since the NEPA process has not yet been completed and financing decisions for each Facility will not be made by TxDOT until the NEPA process has been completed for that Facility.

  3. In order to ensure that the purposes described in 4.3.B are satisfied, the following stipulations shall apply:

    (i) TxDOT and the FHWA will develop a formal oversight agreement for the Corridor that will enable the FHWA to be appropriately involved in the development process for the Federally funded facilities and to monitor the overall effectiveness of the self-performance process. The FHWA's involvement in any design and construction of any Federally funded Facility is determined by this EDA, as well as a separate oversight and stewardship agreement between TxDOT and the FHWA.

    (ii) TxDOT shall request FHWA's concurrence in any FIP that contemplates the use of Federal funds. With the requesting for concurrence in a FIP, TxDOT shall transmit to FHWA all relevant and necessary documents, including the FIP and a summary of the process followed in the developing the FIP. TxDOT shall also request FHWA concurrence in any major changes that will be made to an approved FIP. FHWA concurrence in the FIP shall be subject to the completion of the NEPA review process for the Facility underlying the FIP and all applicable conditions listed in 23 C.F.R. being satisfied for such Facility.

    (iii) If the FIP provides for Federal funding of a Facility, TxDOT shall request FHWA concurrence in the Facility Agreement with the Developer prior to execution. FHWA concurrence in the Facility Agreement will be conditioned upon the FHWA's review of price reasonableness as well as a determination that all applicable Federal requirements have been, and will be, complied with and that the Facility Agreement includes all relevant Federal provisions. The CDA includes provisions requiring, as a prerequisite to TxDOT's entering into a federally funded Facility Agreement with the Developer involving construction work self-performed by the Developer, that the contract price of the Facility Agreement is reasonable. The CDA includes a process for determining price and verifying price reasonableness with respect to such Facility Agreements. Upon concurrence in a Facility Agreement, TxDOT and the Developer may proceed to execute the Facility Agreement. Once the Facility Agreement has been executed, and the FHWA determines that all applicable conditions have been satisfied, Federal-aid procedures governing the obligations of funds shall apply.

    (iv) TxDOT may proceed with a competitive procurement process for design and/or construction of a Facility should TxDOT choose not to enter into a Facility Agreement with the Developer. In such case, should TxDOT choose to use Federal funds, TxDOT shall follow the Federal-aid procurement requirements in 23 C.F.R. Parts 635 and 636. Should TxDOT choose to deviate from any of the requirements in 23 C.F.R. Parts 635 or 636, TxDOT shall request FHWA's approval of any such deviation at least 30 days prior to the scheduled date for advertisement (for procurement subject to Part 635) and for issuance of the request for proposals (for procurement subject to Part 636). FHWA will respond to such request within 30 days and, upon FHWA's approval, an appropriate modification shall be made to this EDA to provide for the approved deviation. As permitted by the CDA, TxDOT shall disqualify the Developer from participation in any competitive procurement process for a Facility Agreement should TxDOT determine that the Developer's participation in such process would give the Developer an unfair competitive advantage or would otherwise constitute an impermissible conflict of interest as provide in 23 C.F.R. 1.33. TxDOT's determination with respect to the Developer's participation shall be subject to FHWA concurrence.

  4. The FHWA and TxDOT shall preview the price reasonableness process described above in 4.3C(iii), and evaluate whether the process is cost effective and in the public interest. This evaluation shall take place 5 years after the date of award of the first Facility Agreement involving self-performance, or after 3 completed self-performed Facilities, whichever occurs first, and, thereafter, following the completion of every 3 self-performed Facilities until the Corridor is completed. The evaluation shall look at whether the FHWA and TxDOT are, in fact, getting the best value in terms of cost, quality, and timeliness of the work as well as the continued operations and maintenance of the Facilities. The process used for the Federally funded and the process used for the non-Federally funded projects shall both be evaluated. The evaluation shall also review the impact on the competitive environment in Texas. The evaluation shall also review the impact on the competitive environment in Texas. The evaluation may make recommendations for improving the price reasonableness determination process, which shall be incorporated into the CDA through an appropriate modification. If, as a result of this evaluation, the FHWA determines that the Developer's self performance of the Facilities is not providing the best value or unduly impacts the competitive environment, FHWA may require a competitive procurement process to be followed in selecting contractors to perform construction work for future Facility Agreements, as a condition to use of federal funds for such work.

III. PROCUREMENT REQUIREMENTS FOR DEVELOPER

4.4 Deviation from 23 C.F.R. 636.119(b) - Determining price and assumption of risk between TxDOT and the Developer.

  1. TxDOT may deviate from 23 C.F.R. 636.119(b) to determine price and assignment of risk on a Facility-by-Facility basis, rather than in the CDA for purposes of determining whether the contracts to be awarded by the Developer are subcontracts or prime contracts.

  2. The purpose of 23 C.F.R. 636.119(b) is to ensure that Federal competition requirements are followed in the procurement of services under certain public-private agreements depending upon whether such agreement establishes price and an assignment of risk. If the agreement does not establish price and an assignment of risk, then the Developer must follow the appropriate FHWA procurement requirements in procuring services under the agreement and all subsequent contracts executed by the Developer are considered to be prime contracts. However, if the agreement does establish price and an assignment of risk, then the Developer is not bound by the FHWA procurement requirements and all subsequent contracts executed by the Developer are considered subcontracts. The CDA does not itself establish a price or assignment of risk, and instead establishes a framework for establishing price and an assignment of risk with the Developer at a future date on a Facility-by-Facility basis whenever a Facility is ready for final design and construction. Thus, under the process contemplated by TxDOT, it will not be appropriate to look at the CDA to determine whether price and risk have been assigned for purposes of 23 C.F.R. 636.119(b).

  3. In order to ensure that the purpose of 23 C.F.R. 636.119(b) is met, each Facility Agreement between TxDOT and the Developer must clearly establish price and assignment of risk. The Facility Agreement may establish the price through a requirement that the subcontracts for construction of the Facility be competitively procured using a procurement process approved by TxDOT. Should any Facility Agreement not establish the price and assignment of risk, then the Developer must follow the applicable FHWA procurement requirements in procuring services under the Facility Agreement.

IV. MODIFICATION OF FORM FHWA 1273

4.5 Deviation from standard Form FHWA 1273 - Technical adjustment to update Form FHWA 1273 for conformity with current law.

  1. TxDOT may modify Form FHWA 1273 to provide that contractor self-performance requirements do not apply as provided in 23 CFR 635.116(d).

  2. The purpose of Form FHWA 1273 is to ensure that all contractors to a Federal-aid project comply with Federal requirements. One of the provisions in Form FHWA 1273 requires prime contractors to perform at least 30 percent of the work of a contract with its own forces. However, the design-build rule modified this requirement making it not applicable to design build contracts. Form FHWA 1273 has not been modified to provide for this change.

  3. The FHWA will allow TxDOT to use a modified From FHWA 1273, as described in 4.5.A, for any Facility Agreement performed by the design-build method. This deviation is a technical change that is designed to bring Form FHWA 1273 into conformity with current Federal requirements. Thus, the purpose of Form FHWA 1273 will continue to be met with this change.

V. LONG-TERM WARRANTY AND ROUTINE MAINTENANCE

4.6 Deviation from 23 C.F.R. 635.413(e) - Inclusion of a long-term warranty with some routine maintenance in Facility Agreement.

  1. TxDOT may deviate from 23 C.F.R. 635.413(e) to allow a long-term warranty and to permit the Developer to undertake responsibility for both preventative and some routine maintenance services in any Facility Agreement with the Developer.

  2. The purpose for the restriction on long-term warranties and the inclusion of routine maintenance services in design-build contracts in 23 C.F.R. 635.413(e) is because a short term, 2 year warranty has been determined to be sufficient for the State to uncover most defects and to ensure that Federal funds do not participate in routine maintenance activities, which are Federal-aid eligible.

  3. Here, TxDOT anticipates that a long-term general warranty will be a critical part of any Facility Agreement in order to ensure quality in design and construction of the Facility. Due to the unique nature of TxDOT's proposed approach to development of Facilities, the FHWA agrees that TxDOT may use long-term warranties in Facility Agreements. FHWA further acknowledges that such warranties could be a significant factor in determining whether TxDOT is getting the best value for the Facility and that, under certain circumstances, it may not be practicable to separate the costs of routine maintenance associated with a warranty from preventive maintenance. FHWA will participate in the costs of such a warranty, including the associated maintenance costs that cannot be segregated from the underlying warranty costs, provided that FHWA concurs that such warranty is primarily focused on non-routine maintenance activities of the highway and is a factor in providing the best value to TxDOT for the Facility.

  4. The foregoing shall not preclude TxDOT from entering into any agreement involving performance of routine maintenance services that will not be Federally funded.

VII. VALUE ENGINEERING

4.7 Deviation from 23 C.F.R. 627.1, 627.3, & 627.5 - Value engineering for the Corridor.

  1. TxDOT may deviate from the FHWA's value engineering requirement under 23 C.F.R. 627.1, 627.3 & 627.5 by undertaking value engineering only for Facilities constructed with Federal funds where the total Facility Agreement price is expected to exceed $25 million and Federal funds are expected to exceed 30 percent of the Facility Agreement price.

  2. The purpose of this provision is to help eliminate unnecessary and costly elements of a project and, when a project is constructed in a series of segments, to ensure that features of other segments are looked at for potential costs savings in other affected segments.

  3. Due to the extent of private funds that are expected to be invested in the Corridor, it is expected that the Developer will have an incentive to value engineer, or perform other cost savings analyses on any Facility that it self-performs. Thus, the purpose described in the 4.7.B will be satisfied by only requiring Federal value engineering to apply where the total Facility Agreement price is expected to exceed $25 million and Federal funds are expected to exceed 30 percent of Facility Agreement price.

SECTION 5. EVALUATION CRITERIA

5.1 General

The purpose of this section is to describe the evaluation criteria that TxDOT shall use in evaluating the CDA procurement and development process.

5.2 Time Savings

TxDOT shall:

  1. compare the actual schedule for delivery of Facilities with the estimated schedule based on a traditional procurement process;

  2. evaluate the effect of the CDA process on delivery of the Facilities; and

  3. attempt to quantify the value of early completion.

5.3 Innovation in Facility Development

TxDOT shall analyze the type and nature of facilities developed through CDA and the procurement approaches described in the Section 4 of this EDA and compare those facilities with TxDOT's other projects. TxDOT shall also analyze the benefits of issuing an RFDP prior to the completion of the NEPA process and allowing project development work to proceed while the environmental process is still being carried out.

5.4 Innovation in Public-Private Partnership Selection

TxDOT shall analyze the process used to select the Developer and report on how well that process facilitated competition in the selection of development proposals, how well that process produced a sufficient pool of qualified competitors, how well that process enabled TxDOT to select a developer offering the best value, how well that process enabled TxDOT to achieve the best value, how the process was perceived in the industry, and how the process was perceived by the unsuccessful competitors.

5.5 Innovation in Design and Construction

TxDOT shall analyze innovative design and construction ideas and concepts used by the Developer team, which evolve as a byproduct of the CDA process.

5.6 Connectivity Improvement

TxDOT shall analyze the extent to which the Facilities enhance and improve connectivity throughout the State of Texas.

5.7 Quality and Warranty

TxDOT shall analyze the ultimate quality of work and the strength of any warranties provided for delivered Facilities.

5.8 Responsiveness to Local Concerns

Because of the multimodal nature of the Corridor is unprecedented, TxDOT shall require the Developer to work closely with the communities through which such Facilities pass. TxDOT shall evaluate the success of the process used in responding to local concerns as well as coordinating with, and responding to concerns of, MPOs.

SECTION 6. REPORTING REQUIREMENTS

6.1 Establishment of Milestones

TxDOT will establish major milestones for the development of the Corridor as well as performance measures that will be used in evaluating the success of the Corridor and the extent to which the SEP-15 experimental features identified in paragraph 2 contributed to that success. The milestones, which shall include the execution of the CDA, and performance measures will be established by a separate agreement between TxDOT and the FHWA.

6.2 Written Reports

Upon completion of each milestone, TxDOT will submit a written report to the FHWA that summarizes: the activities undertaken to reach each milestone; the SEP-15 experimental features utilized in achieving each milestone; and the extent to which the SEP-15 experimental features contributed to the success of reaching each milestone. At the conclusion of the Corridor undertaking, TxDOT will submit a final report as described in 6.3.

6.3 Initial Report

TxDOT shall submit and initial report within the later of 120 days after the execution of the CDA or sixty days after the execution of this agreement, and will include a preliminary analysis of the CDA procurement. This report shall:

  1. describe the process used to select the Developer team;

  2. identify any reaction by the industry to use of the CDA concept;

  3. document major innovations contained in the proposals received; and

  4. discuss any major problems or issues that have occurred and how they were resolved.

6.4 Interim Reports

  1. During the period following submittal of the initial report and prior to submittal of the final report, TxDOT will submit interim reports in accordance with paragraph B of this subsection.

  2. TxDOT will prepare an interim report after the occurrence of a significant development. A significant development includes:

    (i) issuance of the final Tier 1 NEPA approval;

    (ii) issuance of the final Tier II NEPA approval for any Facility;

    (iii) execution of a Facility Agreement; and

    (iv) completion of each Facility

  3. Each interim report shall describe:

    i. the progress of the development of the Corridor Program as of the date of the interim report;

    ii. any problems encountered and how TxDOT has addressed each of the problems;

    iii. how any changes in the Facility resulting from the NEPA analysis and other permitting processes have been addressed in the CDA;

    iv. for any Facility that is self-performed by the Developer, whether there have been any problems determining price reasonableness and how those problems have been addressed; and

    v. how the time and cost needed to complete the initial development as of the date of the interim report compares to past experience under design-bid-build procurement procedures.

6.5 Final Report

  1. TxDOT shall contract with a third party to assess and draft a final written report on each experimental feature described in this agreement. TxDOT will submit the final written report to FHWA within 180 days following TxDOT's determination that development work under the CDA is complete.
  2. The final report shall include:

    i. an overall evaluation of the CDA procurement and process for the development of the Facilities;

    ii. an overall evaluation of the NEPA and right-of-way acquisition process for the Corridor and individual Facilities;

    iii. an overall evaluation of the price reasonableness process and how that process contributed obtaining the best value in terms of cost, quality, and timeliness;

    iv. an analysis of the evaluation criteria described in Section 5 of this EDA;

    v. a description of lessons learned, including problems to avoid and suggestions for improvements on future innovative procurements and approaches to NEAP reviews;

    vi. an explanation of contract complications encountered and claims made during construction of any particular Facility;

    vii. an identification and evaluation of innovations in design or construction.

    viii. an evaluation of TxDOT's MPO coordination process;

    ix. the extent to which the SEP-15 program contributed to the success of the Corridor;

    x. an evaluation of the SEP-15 experimental features used and the extent to which those features contributed to the project's success;

    xi. an identification of any lessons learned; and

    xii. a recommendation of any statutory or regulatory change.

SECTION 7. MISCELLANEOUS PROVISIONS

7.1 Amendments

This EDA may be amended at any time by written agreement of the parties. Amendments to this EDA may include, but are not limited to, the addition or deletion of SEP-15 experimental features, modification of performance measures, and modification of reporting requirements. The FHWA Texas Division Administrator shall have the authority to amend this EDA for the FHWA, subject to the concurrence of the Corridor co-facilitator.

7.2 Original Copies

This EDA shall be prepared in duplicate original copies so that each signatory has an original copy.

IN WITNESS THEREOF, the parties hereto have caused this EDA to be duly executed in duplicate as of the day and year first written above.

J. Richard Capka
Deputy Administrator
Federal Highway Administration

Michael W. Behrens
Executive Director
Texas Department of Transportation

Federal Highway Administration | 1200 New Jersey Avenue, SE | Washington, DC 20590 | 202-366-4000
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