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The Federal Highway Administration has developed a number of resources for sponsors of public-private partnerships. These include a number of federal initiatives, Special Experimental Project 15 (SEP-15), and the FHWA PPP web page (http://www.fhwa.dot.gov/ppp). These resources are described below.
In addition to the Partnerships in Transportation workshops, FHWA has a number of initiatives at present to promote public-private partnerships, the Intragency PPP Task Force, the PPP Report to Congress, several PPP research projects, and Innovative Finance Quarterly. Each of these initiatives is detailed below.
The FHWA Intragency PPP Task Force was formed in October 2003 to explore how current and future PPPs will be treated under federal laws affecting highway projects. Task force initiatives include the creation of SEP-15 to encourage the use of PPPs on federal-aid highway transportation projects; a webpage for those interested in using PPPs to procure federal-aid construction projects; and a Report to Congress on the challenges to the formation of PPPs (detailed below).
The FHWA Report to Congress on PPPs, issued in December 2004 by U.S. DOT, answers the questions posed by Congress and attempts to provide a resource document for states interested in using public-private partnerships as a method of procurement. The report identifies the impediments to the formation of large, capital-intensive highway and transportation projects involving PPPs. The report is divided into five major sections: history of PPPs in highways and transit, value of PPPs, impediments in current law, regulations and practice that discourage the formation of PPPs, recommendations from states, trade associations, private law firms, consultants, designers, and contractors to remove those impediments, and U.S. DOT legislative proposals to facilitate PPPs. The report also contains case studies on completed and current projects.
The value section is designed to help states considering public-private partnerships better understand the benefits of such an approach and some of the downsides. This report, however, is not designed to be a manual on how to use public-private partnerships as part of a state program. FHWA has not addressed the myriad issues concerning when public-private partnerships should be used and how they should be negotiated. The report focuses on the questions posed by the House Report language and provides the background necessary to provide context for the answers to those questions. The report will be valuable resource for those interested in using PPPs as an alternative method to the traditional procurement process.
The report is on the web at http://www.fhwa.dot.gov/ppp.
FHWA has several PPP research projects related to public-private partnerships underway or planned. In addition to the PPP workshops described above, research is underway to develop detailed case studies of current PPPs in the United States and abroad and to develop model legislation and contract documents that could be used as the basis for establishing partnerships that meet the unique requirements of individual states and individual project. The case study project will:
– Develop a series of detailed case studies of domestic PPPs and project overviews of international PPPs that characterize PPPs according to an accepted typology, describe their institutional challenges and how those challenges were addressed, and identify general strategies to overcome various types of impediments that may confront other PPPs; and
– Synthesize and document the study finding in a guidebook for prospective participants in PPPs.
The model legislation research will:
– Compare and contrast state legislation pertaining to PPPs for highway programs and projects; and
– Compare and contrast partnership agreements and key legal documents to allow potential partners to more readily identify opportunities and options for handling various partnership issues.
Future research will build on results of ongoing research, input from the PPP workshops, and other outreach activities.
Innovative Finance Quarterly, a newsletter published by FHWA, provides information on the latest developments in Federally-sponsored innovative finance programs, such as TIFIA, GARVEE Bonds, and SIB transactions. It also features descriptions of innovative projects and programs of interest launched by state transportation agencies around the country. The newsletter also tracks legislative changes. Copies of all issues of the Quarterly dating back to 1997 are available on the FHWA Innovative Finance website, together with copies of FHWA's earlier Innovative Finance Newsletter.
At the Partnerships in Transportation workshop in Orlando, Florida on October 6, 2004, Federal Highway Administrator Mary Peters introduced Special Experimental Project 15 (SEP-15), a new experimental process for FHWA to identify, for trial evaluation, new public-private partnership approaches to project delivery. FHWA anticipates that these new approaches will allow the efficient delivery of transportation projects without impairing FHWA's ability to carry out its stewardship responsibilities to protect both the environment and American taxpayers.
SEP-15 addresses, but is not limited to, four major components of project delivery:
Elements of the transportation planning process may be also involved. SEP-15 applications may include suggested changes to the FHWA's traditional project approval procedures and may require some modifications in the implementation of FHWA policy. Deviations from current title 23, U.S.C., requirements and generally applicable FHWA regulations also may be involved.
The goal of SEP-15 is to encourage tests and experiments in the entire project development process, specifically aimed at, but not limited to, promoting greater use of public-private partnerships and attracting private investment in transportation improvements. Objectives include:
Identify for trial evaluation and documentation more cost-effective approaches to delivering Federal-aid transportation projects, pertaining to contracting, finance, right-of-way acquisition, environmental clearance, and transportation planning;
Test and evaluate the application of innovative approaches to project development, financing, and delivery that would otherwise be impeded by existing rules and regulations of FHWA under the Federal-Aid Highway Program and existing statutes;
Identify impediments in current laws, regulations, and practices to greater use of public-private partnerships and private investment in transportation improvements;
Determine changes in current laws, regulations, and practices that would remove impediments to more cost-effective approaches to project development, financing, and delivery, while protecting the environment and public;
Establish comprehensive policies and seek future legislation to eliminate those impediments to program delivery innovations that have proved most useful under SEP-15;
Identify changes in current practices that could promote greater and more effective private sector involvement in the delivery of Federal-aid construction projects; and
Enable and encourage state transportation agencies to apply innovative approaches to project development, finance, and delivery that result in more timely and cost-effective projects.
Intended outcomes are greater use of public-private partnerships and private investment in federal-aid transportation improvements through innovations in project planning, development, finance, design, construction, maintenance and operations, as well as increased project management flexibility, improved efficiency, timely project implementation, enhanced quality, and new revenue streams while protecting the environment, taxpayers, and investors.
While SEP-15 will allow greater flexibility in gaining exemption to existing regulations and procedures that restrict the use of more innovative project delivery approaches, it will do so on a selective basis. Projects designated under the SEP-15 program must be approved by FHWA, based upon a formal application processed through the local division office and authorized by FHWA headquarters staff. Upon completion, SEP-15 project milestones, the public-private sponsors will be required to submit an independently-prepared evaluation report on project results, lessons learned, and impacts on the project, and recommended changes in statues or regulations that impede the application of innovations used in the project. In developing and delivering SEP-15 projects, sponsors will be expected to ensure the provision of appropriate engineering standards, environmental protections, effective competition among service providers, and prudent internal controls that protect against waste, fraud, and abuse.
In her remarks in Orlando, Peters said that supporting innovation is central to FHWA's mission, and that the agency wants to partner with and encourage states interested in experimenting with better ways to provide mobility.
"We have evaluated a variety of innovative contracting practices under Special Experimental Project No.14 (SEP-14), several of which have become a regular part of the highway program, including design-build and cost-plus-time bidding," said Peters. "FHWA has also long-encouraged innovations in the area of transportation financing, including TIFIA. It is time, however, for us to take the next step in encouraging innovation and develop a program that provides incentives for innovation in all aspects of project development."
Peters continued, "Announcing this new program at this conference is appropriate because SEP-15 will encourage the formation of PPPs by providing additional flexibility for states interested in experimenting with better ways to develop projects. SEP-15 will lead to increased project management flexibility, more innovation, improved efficiency, timely project implementation, and new revenue streams".
"SEP-15 arose out of some of the questions we received from states interested in pursuing large, corridor projects-in particular I-81 in Virginia and I-35 in Texas," said Peters. "These projects did not fit well under SEP-14. SEP-14 allows for innovations in contracting, but is not designed to provide flexibility in the environmental review process, project finance, or in areas such as right-of-way acquisition. As the projects in Virginia and Texas underscored, we needed a special experimental project that would allow innovative project proponents to ask for flexibility on a project-wide basis."
According to Peters, SEP-15 provides project-wide flexibility, and will improve the agency's climate towards PPPs and other projects advanced through innovative project delivery mechanisms.
The FHWA Public-Private Partnership (PPP) Webpage was developed as part of the project in response to FHWA's growing need to disseminating information on new PPPs to the widest possible audience. The webpage was prepared by PB Consult as a subcontractor to AECOM Consult, and is now available from the FHWA homepage at: http://www.fhwa.dot.gov/ppp.
The site was launched in January 2005, shortly before the Transportation Research Board Annual Meeting in Washington, D.C.
The site has a number of purposes:
To provide information of all types on PPPs;
To provide a convenient architecture that allows users to navigate to information of all types germane to PPP
To allow FHWA to readily post additional resources to the site as they become available; and
To provide concise definitions and an overall framework for understanding the range of PPP applications.
While the webpage makes a broad range of pre-existing information available to users through links and by posting files directly, the text content of the site itself is all new and is the result of considerable research conducted by PB Consult, with input from the National Council for Public-Private Partnerships (NCPPP), and careful review by FHWA staff. This research broadens and enhances the body of literature that FHWA has compiled on PPPs in the past, including the recent FHWA PPP Report To Congress.
The FHWA PPP webpage includes a number of sections, listed below and shown in the site map for the webpage in Figure 3 on the next page.
A question-and-answer section that defines PPPs, key benefits, risks, and other aspects of PPPs;
An overview of the various PPP options, including
A state-by-state list of PPP enabling legislation, including links to actual statutes;
A summary of the SEP-15 program;
Over 20 domestic and international case studies;
Links to other PPP-related webpages;
An extensive list and description of various PPP-related resources;
A PPP events calendar; and
A glossary of PPP terms and definitions.
Each of these sections is described more fully below.
The PPP webpage includes a comprehensive set of frequently asked questions (FAQs) that provides in depth responses to a number of questions on PPPs. These range from definitions to discussions of the benefits and risks and rewards commonly associated with PPPs. The FAQs also explore financing, procurement and regulatory issues, among others. Together the FAQs are intended to provide transportation professions with an understanding of the issues involved with PPPs and the various steps involved with implementing a successful PPP project.
The PPP Options section identifies and defines the common PPP structures and shows the ways in which private sector responsibilities can be expanded through the use of partnerships. This section of the site depicts the different PPP options expanding across a spectrum of increased private responsibilities. These options range from transferring tasks normally done in house to the private sector, to combining typically separate services into a single procurement or having private sector partners assume owner-like roles. The specific PPP Options defined include the following:
Design-Bid-Build
Private Contract Fee Services
Design-Build
Build-Operate-Transfer(BOT)
Design-Build Finance Operate (DBFO)
Build-Own-Operate (BOO)
Among the site's most important features are profiles of recent projects that have benefited from one or more types of PPPs. The profiles are organized by the PPP options listed above. In cases where projects have been procured using a combination of approaches, such as design-build and design-bid-build, they are listed under both categories. The profiles have been reviewed by their sponsoring agencies and are presented in a tabular format to facilitate comparisons. Photographs of each of the projects are included in a rotating photo gallery in the center of the home page, together with brief summaries and onward links to the full profile description. The featured image changes each time the home page is refreshed.
The PPP webpage also provides brief summaries and onward links to the PPP legislation enacted in 23 U.S. states to enable the use of PPPs in the development of transportation infrastructure. This information is presented in an easy to use tabular form. The site also includes information and onward links on the SEP-15 Program. This is FHWA's new experimental process to identify, for trial evaluation, new public-private partnership approaches to project delivery. Additional materials on the SEP-15 will be made available from this section of the webpage as the program matures.
In addition to these features, the site also includes annotated links to other websites that address issues related to PPPs. The "Resources" section provides summaries of and onward links to other resource documents on PPPs. An Events Calendar provides overviews of upcoming conferences, seminars and professional meetings that treat PPPs both in the United States and abroad. The site also includes a glossary providing definitions of over 153 technical terms which are germane to PPPs.
The PPP webpage also highlights a number of important resources with short cut links available from the homepage. Shortcut links are provided for the FHWA PPP Report to Congress, as well as recent remarks made on the use of PPPs by FHWA Administrator Mary Peters. Other links are provided to the FHWA Design-Build and Asset Management websites, together with an onward link to the InnovativeFinance.org website, which is maintained by the American Association of State Highway and Transportation Officials (AASHTO), together with support from FHWA.
