This chapter provides guidance on issues and considerations not covered in previous chapters, including a discussion of unique issues relevant to P3 procurements in different industry sectors.
As previously noted, utility and third-party risks present major concerns for concessionaires undertaking the responsibility for developing transportation facilities. It is therefore in the agency's interest to assess the potential risk associated with utility line relocation early in the project planning process and formulate a strategy to mitigate and manage this risk.
Sections 3.4.4 and 3.4.5 discuss issues relating to unknown utilities and steps that an agency may take to minimize the risks associated with them, such as early SUE and title work. The agency will want to provide proposers with baseline information that it assembles as part of the procurement package, identifying known utilities, and where possible, arrangements that have or will be made to address such utilities, and the dates by which such arrangements will be consummated.
In addition, where a project extends through multiple jurisdictions, it will be helpful for the agency to understand the extent to which it may exercise or benefit from the local jurisdiction's prior rights to require a utility owner to relocate or protect-in-place its own facilities.
The risk of costs and delays to the project due to failure of utility owners and other third parties to cooperate with the concessionaire presents different issues from the risk of unidentified facilities. P3 agreements often include provisions obligating the concessionaire to take the lead in seeking approvals required from third parties and working with third parties to ensure that their facilities are relocated in a timely manner, but also recognize that, in some cases, a third party may fail to cooperate with the concessionaire despite its best efforts to address the third party's concerns. Such a situation can quickly create significant additional project costs, and a concessionaire prejudiced by such lack of cooperation may be entitled to compensation from the agency for the delay. The P3 agreement may also require the agency to assist the concessionaire in dealing with the third party if reasonably requested to do so by the concessionaire.
One means of managing the risk of a third party's failure to cooperate is to establish a framework for the relationship between the future concessionaire and third party through a negotiated agreement with that party. In the case of utility owners, these agreements are often called "master agreements." In order to obtain the maximum benefit from these agreements, it is important for the agency to devote resources to ensure that the agreements are concluded prior to contract award. Ideally, such agreements will specify timelines for approvals and other third-party activities and will identify which costs will be borne by the agency or the third party. As these agreements are typically entered into prior to award of the concession agreement, the concessionaire is not normally a party to the agreement, but the agreement should make it clear that the agency plans to assign responsibility for performance of certain aspects of the agreements to the concessionaire.
The terms and conditions of these agreements may require extensive negotiation, as they involve impacts to the third party's operations, the need to devote resources to meet schedule commitments, and costs of performance, as well as potential exposure to liability for the cost of any delay to the concessionaire if the third party fails to perform. Agreements are generally easier to negotiate if the agency will pay the third party's costs, but the agency should not assume it can take on the obligation to pay such costs (or require its concessionaire to pay them), as the question of cost liability for relocations must be determined with reference to applicable State law.
The importance of concluding these agreements prior to award of the P3 agreement cannot be overemphasized. It may be necessary for the agency to hire outside advisors and counsel to assist with these agreements, since agency staff may not have sufficient time available. In some cases, the agency may already have master utility relocation agreements in place providing standard terms for any utility relocations required for its projects, in which case those agreements should be reviewed with reference to the terms of the P3 agreement and revisions negotiated as appropriate.
Even though, in the ideal world, all agreements would be finalized before issuance of the RFP, in practice, agencies that are using a P3 for the first time will likely continue to negotiate during the proposal period and should aim to finalize all agreements before the proposal due date. In some cases, it may not be possible to finalize the agreements by the proposal due date, in which event the contract documents will need to address the risk of post-proposal changes in the agreements.
The P3 agreement should identify all existing third-party rights and agreements affected by the project and any contractual rights or obligations under such agreements that will be assigned to the concessionaire or that the concessionaire will be required to assume. It should also identify requirements that the concessionaire must meet before it has the right to call on the agency for assistance or obtain relief. For example, in the PennDOT Rapid Bridge Replacement Project, which required significant interaction with third parties, provisions in the contract treated excessive delay caused by negligence or deliberate inaction on the part of utilities as compensation events, but only if the concessionaire demonstrated it had done everything in its power to obtain cooperation, including giving PennDOT an opportunity to intervene.
Procurement protests serve an important function for agency procurements. The ability to file a protest ensures integrity in the public procurement process and provides transparency, thereby encouraging participation and competition in government procurements. The opportunity to submit bid protests also protects the public interest in procurement integrity, as protestors have an incentive to serve a "watchdog" function.
State laws governing procurement protests vary from jurisdiction to jurisdiction. Some agencies have adopted detailed procedures, while others have less detailed requirements. In many cases, protest requirements adopted by State and local agencies are similar to the rules applicable to bid protests for Federal contracts. Federal rules allow only "interested parties" to file protests. An "interested party" is an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract. Typically, this would include disappointed proposers who were not shortlisted or selected for award, parties who were excluded from bidding, or parties that were disadvantaged during the procurement.
Protests may arise for a variety of reasons at various times during the procurement, including prior to selection, post-selection, or post-award. In the case of a P3 procurement, a protest may arise when a firm is not shortlisted or when a firm is not selected for award. In most jurisdictions, courts will not second guess an agency's administrative determination and will provide the agency with a fair amount of deference regarding shortlisting and selection determinations, only granting a protest on such grounds when the agency's decision is shown to be arbitrary or capricious. One exception to this deference occurs when the agency fails to follow its own procedures and the terms of the solicitation.
P3 procurement documents may require a protest to be filed prior to the proposal due date (or date for receipt of SOQs) if a proposer believes that the terms of the solicitation are not clear, are unlawful, or favor one proposer over another. This ensures that post-selection protests will be limited to the agency's failure to follow its own rules as set forth in the RFQ and RFP documents. Such a provision should include specific deadlines for the protest and provide that the right to make a protest on such grounds will expire if the protest is not timely filed. Such restrictions are essential to preventing a protest based on the language of the procurement from interfering with the award after proposals are submitted.
It is important for the agency to adopt procedures for each type of protest enabling a quick resolution, so as to not delay the project through a protracted or delayed protest. In some cases, the agency's existing procedures are sufficient, but the agency should consider whether inclusion of specific provisions in the RFQ or RFP would be beneficial. Clear protest procedures that allow for the timely and efficient resolution of protests also benefit proposers, who rely upon the orderly progression and integrity of the procurement process. Some agencies require that protests be filed with and determined by the agency as a pre-requisite to seeking relief in court.
Protests may be filed even though the agency has acted in accordance with its procedures. Therefore, the procuring agency is well advised to have a strategy in place to deal with protests before they arise, ensuring that protests will be responded to timely, efficiently and effectively. If a protest is filed, the agency's first line of defense will likely be that it followed appropriate practices, such as those discussed earlier in this Guidebook, like providing each proposer with the same information and not disclosing any proposer's confidential business strategy, and adhering to the terms of the solicitation and evaluation process identified in the procurement documents.
If a protest is filed, or if an unsuccessful proposer indicates it is considering a protest, the agency may want to consider disclosing certain additional information about the evaluation process or conducting a debriefing with the proposer as a way to resolve the proposer's concerns. This strategy has proven helpful for at least one project where the proposer was satisfied by the information provided and decided not to file a formal protest. With no access to relevant information, the proposer may have no choice but to seek the same information through a more protracted formal protest process, which could potentially delay the project. In all cases, the agency's decisions regarding the approach to be taken to address protests and potential protests should be made in consultation with the procurement officer and legal counsel.
Public records laws usually include an exception permitting information to be kept confidential where the public interest in disclosure is outweighed by the public interest in maintaining confidentiality. In most cases, the public interest in confidentiality permits information to be kept confidential during the procurement process, to preserve competitive tension, and to ensure that proposers are willing to engage in open discussions with the agency throughout the process. Individuals involved in discussions with proposers, as well as those participating in proposal evaluation, including outside advisors and observers, are typically required to sign confidentiality and nondisclosure agreements. Once award is made, the balance changes and the public interest in disclosure outweighs the interest in confidentiality, subject to exceptions for proprietary information and other categories of information that the statute exempts from disclosure.
In some cases, agencies may allow the concessionaire to take the position that aspects of its financial proposal constitute proprietary information that is exempt from public disclosure. For example, the proposers' financial models are sometimes delivered into an escrow, enabling the concessionaire to argue that its model is not a matter of public record. It is not clear, however, whether such an arrangement in fact avoids application of the public records laws.
Some agencies, including the Maryland Transit Administration, routinely require cost and pricing data to be provided for their contracts, which may result in such information becoming a matter of public record. For the Purple Line project, the P3 agreement includes provisions recognizing that the cost and pricing data and the financial model are the concessionaire's property and permitting the concessionaire to take the position that the data and model constitute proprietary information that is exempt from disclosure under the Maryland Public Information Act.
Some agencies have adopted policies (or are subject to statutory requirements) mandating a greater degree of public disclosure than others. Recent TxDOT procurements require proposers to provide executive summaries suitable for immediate disclosure. Following TxDOT's selection of a proposer for negotiations (called "conditional award"), its financial summary form and any information contained therein is subject to disclosure. After final award, all portions of the proposals (including those of the unsuccessful proposers), except certain non-public financial statements, are also subject to disclosure.
Under Florida's Public Records Laws, sealed bids, proposals or replies received by an agency pursuant to a competitive solicitation are exempt from disclosure until such time as the agency provides notice of an intended decision or until 30 days after opening the bids, proposals, or replies, whichever is earlier. As a result, FDOT RFPs strive to include specific safeguards to ensure that price proposals remain confidential until the statutory time period has run for affected parties to file a notice of intent to file bid protest, following the notice of posting of the award. For FDOT's Port of Miami Tunnel (POMT) project, a Sunshine Law request was made shortly after proposals were received, resulting in the public disclosure of technical proposals early in the evaluation process. This requirement makes requests for revised proposals problematic, as each proposer could obtain copies of the competing proposals, and FDOT's procurement documents do not contemplate such requests.
The Build America Bureau is subject to a legislative mandate to ensure the transparency of P3 projects receiving credit assistance through its program. 49 U.S.C. § 116(e)(3)(A) provides as follows:
"(3) Transparency.-The Bureau shall-
(A) ensure the transparency of a project receiving credit assistance under a program referred to in subsection (d)(1) and procured as a public-private partnership by-
(i) requiring the sponsor of the project to undergo a value for money analysis or a comparable analysis prior to deciding to advance the project as a public-private partnership;
(ii) requiring the analysis required under subparagraph (A), and other key terms of the relevant public-private partnership agreement, to be made publicly available by the project sponsor at an appropriate time;
(iii) not later than 3 years after the date of completion of the project, requiring the sponsor of the project to conduct a review regarding whether the private partner is meeting the terms of the relevant public-private partnership agreement; and
(iv) providing a publicly available summary of the total level of Federal assistance in such project."
(iv) providing a publicly available summary of the total level of Federal assistance in such project."
Accordingly, agencies using TIFIA, RRIF, INFRA, or PABs for P3s must adopt appropriate measures to ensure that the public interest is served by use of a P3 delivery method and enable the public to learn about the details of P3 procurements and projects-including conducting a VfM (or comparable) analysis, publicly disclosing the terms of the P3 agreement and amount of Federal participation and conducting a performance review. As discussed in section 3.1.5, in some cases State law or policy may require an even greater degree of public disclosure.
Due to the complexities involved in a P3 solicitation, the number of different players involved in document development, and the importance of maintaining confidentiality with respect to certain types of communications, proper methods of document control are of critical importance for P3s.
Colorado's P3 Management Manual assigns the responsibility to identify document control systems and records management for the proposed P3 project to the P3 Project Manager. The Manual allows for the use of Colorado DOT's Electronic Document Management System (EDMS) (ProjectWise) or HPTE's (Aconex). 142 The system is required to: a) store and share large documents among authorized users; b) provide search and retrieve capabilities across documents; c) have a document control manager assigned for each P3 project; and d) track contract performance.
For the private sector, Colorado's P3 Management Manual assigns the following responsibilities: a) the use of data systems, standards, and procedures compatible with those employed by HPTE/CDOT, and the adoption of new processes in response to changes introduced by HPTE/CDOT; b) providing a secure location to use the EDMS; c) training their personnel to use the EDMS; d) having a mechanism to upload data into the EDMS; e) backing up all project-related documents on a nightly basis and storing all project-related documents in a secure off-site area on a weekly basis. HPTE/CDOT will assess how file storage and organization is conducted and the protocols involved with project information.
Virginia's 2017 PPTA Implementation Manual and Guidelines assigns to the VDOT P3 Office/VDOT District the responsibility to implement the document control database, to take place from project procurement to project completion.
Some States do not discuss document control responsibilities in their P3 guidelines, and instead address document control based on their standard policies or on a project-specific basis. For example, Indiana (which uses Oracle Fusion Middleware as its EDMS) does not discuss document control in its 2013 Public-Private Partnership Program Implementation Guidelines. As another example, Arizona's 2011 ADOT P3 Program Guidelines contemplates that document control requirements will be specified in the P3 comprehensive agreements. For the South Mountain Freeway DBM project, the P3 agreement requires the developer to establish and maintain an EDMS for the project and to allow ADOT access to the data. The responsibilities required by the ADOT contract are more specific than those described by CDOT, e.g., prepare a plan describing the methodologies used to log, track, retrieve, and approve documents.
A number of public sector entities accept unsolicited P3 proposals, and several have adopted guidelines for such submittals. An unsolicited proposal has been defined as "a written proposal for a new or innovative idea that is submitted to an agency on the initiative of the offering company for the purpose of obtaining a contract with the government, and that is not in response to an RFP, broad agency announcement, or any other government-initiated solicitation or program." 143
The unsolicited proposal process can, potentially, support private sector innovation and efficiencies in project delivery to a greater extent than a traditional solicited procurement. Enabling legislation in a given State may or may not explicitly address the authority of public sector entities to receive and act upon unsolicited proposals. In some States, enabling legislation may prohibit the acceptance of unsolicited proposals, prohibit the solicitation of proposals not tied to any specific project or projects or impose a fee to accompany such proposals.
In States where enabling legislation includes a process for unsolicited proposals, once a proposal is received, the agency is typically required to evaluate such proposals in accordance with statutory requirements or implementing guidelines. The legislation or guidelines may also provide the criteria for evaluating such proposals (such as public or agency benefit) and/or stipulate requirements for soliciting competing offers.
The unsolicited proposal process can include a mechanism serving to maximize the benefits of private sector innovation and efficiencies in project delivery. A proposal request originating within an agency typically includes a defined scope and engineering standards. An unsolicited proposal process gives the proposers wide latitude to innovate and express the benefits of their proposed innovations. Furthermore, unlike in a competitive bidding process, where the private proposers are restricted from seeking public support for their proposal, a firm submitting an unsolicited proposal can reach out to stakeholders to build a coalition in favor of its (proposed) solution.
The unsolicited proposal for the Virginia I-495 HOT lanes provides an example of the opportunity for innovation that can occur when the private sector has the ability to submit a proposal on projects that it chooses, instead of being limited to projects identified by the public sector. At the time the Virginia DOT received the proposal in 2002, it was not considering priced managed lanes on the right-of-way, and HOT lane implementation in the United States was still in its nascent stage. The innovative proposal provided a solution to the congestion problem as well as a mechanism to finance the roadway expansion while minimizing externalities such as land acquisition. The private entity that submitted the proposal (Fluor) succeeded in gaining public support for the proposed solution through its outreach efforts.
Unsolicited proposals also involve some negative aspects. They create a burden on the agency if it is subject to mandatory requirements to review and evaluate proposals upon receipt without the ability to schedule and appropriately manage the review process. Significant staff and/or specialized consultant resources, such as financial advisors, may need to be dedicated to reviewing and processing unsolicited proposals, leaving staff spread thin on regular tasks. To overcome this, agencies may specify a pre-set time period for delivery of unsolicited proposals.
Another aspect of unsolicited proposals is the possibility and/or the perception that the proposed project might displace or defer projects that the agency would otherwise undertake or significantly impact the priority order of projects within the agency. Requests to accelerate projects may be viewed as an attempt to bypass standard environmental review, permitting, stakeholder involvement, and public outreach processes. Procedures for unsolicited proposals typically require appropriate levels of community and stakeholder coordination to avoid these concerns.
Another issue raised by the use of unsolicited proposals relates to intellectual property concerns associated with innovative solutions proposed by the private sector. To encourage competition and to ensure transparency in the procurement process, most States require public agencies to give public notice of an unsolicited proposal and to solicit competing offers. Federal and State law may dictate the latitude that individual State or local governments have in developing guidelines for protecting proposers' intellectual property rights while ensuring a transparent procurement process. For example, the FAR requirements applicable to unsolicited proposals submitted to Federal agencies expressly state that: "Government personnel shall not disclose restrictively marked information included in an unsolicited proposal." 144 State and local agencies typically place the burden on the proposing entity to identify information that it believes is exempt from disclosure under the State's open records laws, but reserve the right to determine that the information is subject to disclosure under applicable law. Some States also require proposers to provide a substantial fee along with their unsolicited proposal. The cost of producing an unsolicited proposal, the requirement to pay a fee, and concerns regarding confidentiality can act as deterrents to active and effective private sector participation in the unsolicited proposal process.
Some considerations for setting up an unsolicited proposal program include:
Some successful practices that agencies wishing to seek unsolicited proposals may consider include:
Certain issues relevant to P3s are specific to the type of project and industry sector. The following discussion concerns issues specific to highway, transit, port, and airport projects.
Toll Setting
The viability and success of a revenue-based toll project is highly dependent on how the toll rates are set over the term of the concession. If the agency has the right to set rates, it means that the concessionaire's revenue is subject to the political considerations of the agency without regard to the actual costs and profitability of the facility- which may be an unacceptable outcome for potential concessionaires. On the other hand, allowing the concessionaire unfettered discretion to adjust toll rates invites a potential backlash from the public. Accordingly, the P3 agreement should include provisions that set clear parameters as to what toll rates may be charged and under what conditions. By providing bands in which the toll rates may be set, the agency provides the concessionaire with clear limits but the flexibility to adjust toll rates as the concessionaire sees fit. Matters that can be considered include inflation, traffic levels, types of users, exemptions for HOV users, the duration of the term, competing facilities, average traffic speed, and time and season of the year, among other things. And with the advent of dynamic pricing, the agency may provide for these factors to be considered on a minute to minute basis.
Business Rules
The agency needs to set out the "business rules" for any tolled facility. These business rules are the framework for the concessionaire to develop its tolling system. Through the business rules the agency can direct the concessionaire as to the practical, logical, and political factors to be taken into account, while at the same time allowing the concessionaire flexibility to develop its own solutions. Business rules may include matters such as requirements for recordkeeping, vehicle classifications, defining exempt transactions, identifying discounts, communications with customers, website services, and transactions involving customers of other toll operators, handling violations and complaints, video tolling, and handling fees.
Competing Facilities
Concessionaires must take a long-term view of any project they are considering, as key to the success of the project for them is long-term profitability. Thus, a 35- to 50-year term must take into account a number of potential variables during that time frame that could affect the traffic and revenue for the project. One significant factor to consider is that future development of other facilities (e.g., "competing facilities") in proximity to the project may reduce toll traffic due to the availability of a "free" alternative.
While this issue could be addressed by a covenant on the part of the agency not to develop competing facilities, FHWA does not consider this approach a good practice. 145 Instead, most toll concessions include provisions that treat development of a competing facility as a "relief event," and include a formula to determine the impacts of the new facility on the concession, accounting for factors such as then current toll rates, traffic changes, remainder of time in the term, and proximity of the new facility, among other things.
These competing facility provisions are likely to be carefully scrutinized by sources both inside and outside of the agency. While such a provision may give a concessionaire a sufficient level of comfort to pursue the project, agencies must consider the political implications of an agreement with a private concessionaire that may affect the agency's ability to provide for effective and efficient transportation to meet the needs of the traveling public.
It is common for a P3 agreement to exclude from the definition of a "competing facility" any transportation projects in then-current long-range plans of the agency, such as a State DOT's STIP or LRTP. Another means of limiting the impact is to clearly delineate what types of facilities would be "competing facilities" (e.g. highways or frontage roads but not local access or transit). And any such provision should include geographical limitations (within a certain number of miles or a predetermined zone) to ensure the concessionaire does not receive a windfall due to a distant facility.
It should be noted that not all competing facility clauses are explicitly for the benefit of the concessionaire. Outside groups opposed to growth or the expansion of roadways in an area may pressure the agency for a competing facilities clause to limit future development and traffic. In such a case, the agency may want to take steps through public relations to publicize this point whenever the issue is raised during development. This may counteract opposition to the project if the public understands this is the result of third party input, and not a "giveaway" to concessionaires.
Snow and Ice Removal
One of the most basic and outwardly simple operations of a highway is snow and ice removal during winter months. But with a P3, this can raise some unique issues with risk allocation. Questions to be asked include:
These issues present significant concerns for P3s because the capital investment associated with snow and ice removal equipment can be very large, particularly in comparison to the amount of use the equipment will get each season. For this reason, the P3 agreement may allow for the concessionaire to lease equipment and storage facilities from the agency and to purchase supplies, such as rock salt, from the agency. This arrangement can be limited, though, depending on how much equipment and supplies the agency needs at a given time to perform its own work on the remainder of the system.
In cases where the agency retains the responsibility for snow and ice removal, or requires the concessionaire to retain the agency to do the work, the P3 agreement should address responsibility for damage and additional wear and tear to the facility resulting from the agency's work. The concessionaire may be concerned that the techniques and skills used to perform snow and ice removal may prematurely shorten the life of the structure or increase short term maintenance costs. This can be addressed, in part, by using specific standards for the work to be undertaken by the agency and by performing routine inspections before, during, and after the season.
Although transit P3s are less common in the United States than highway P3s, a number of different agencies have used P3s for transit projects. One of the first such projects was the New Jersey Transit Corporation's turnkey contract for the Hudson-Bergen light rail line in the mid-1990s. Given recent transit P3 examples, such as the Eagle project in Denver, the Purple Line in Maryland, and the LAX automated people mover in Los Angeles, and the fact that several transit properties have announced an interest in using P3s, it seems likely that P3s will continue to be used as a tool for delivering transit projects in the future.
Vehicle Supply
Questions to be addressed in the context of a transit P3 include whether the transit vehicles will be provided by the concessionaire or the agency, as well as performance requirements for the vehicles. A requirement for the concessionaire to use vehicles supplied by the agency will engender discussions regarding delivery schedule, compliance with performance requirements, and integration with the concessionaire's other work.
In some cases, the project requirements for transit vehicles may affect the number of proposers able to meet RFQ or RFP requirements. For instance, if only four different vehicle suppliers are capable of providing vehicles meeting the project criteria, a decision to include vehicles in the scope of the P3 procurement could potentially limit the field of respondents to the same number. This is because of a general preference for exclusive arrangements in teaming. If a proposer is unable to secure a commitment from one of the four qualified suppliers because they are already committed to another team, that proposer will be unable to satisfy the minimum project qualifications requirements. In some cases, agencies have included language preventing vehicle technology providers from being exclusive to one team. While this approach might appear sufficient to address the problem, it is not clear whether it is effective, and it is very difficult for the agency to police the nature of any commitments, formal or informal, that might be made between private firms. Another alternative is to run separate qualifications processes for the vehicles and the proposer teams, requiring each short-listed proposer to identify its vehicle supplier by a stated deadline.
Fare Collection and Farebox Risk
Allocation of risks and responsibilities for transit projects are intertwined with the undeniable fact that, for such projects, farebox revenue likely will not be sufficient to cover costs of performing necessary work during the operations and maintenance phase. As a result, transit projects are more likely to rely on an availability payment approach. While farebox risk can be transferred to the private sector even in an availability payment arrangement, the advantages associated with transfer of that risk are not readily apparent. Both the Denver Eagle and Maryland Purple Line compensated the private sector partner through annual service payments, retaining responsibility for farebox risk. In addition, the P3 agreements for both projects make it clear that fare policy and structure will be determined by the public entity. This model serves to minimize the revenue risk of the private entity (as the agency assumes that risk) while ensuring that fares and other matters of significant interest to the public will remain within public control.
Even though the agency retains farebox risk, it may require the concessionaire to maintain and manage fare collection equipment and to undertake other functions relating to fare collection. For the Purple Line project, the concessionaire is responsible for supplying and installing the fare collection equipment, as well as collecting cash, stocking ticket vending machines with paper ticket and receipt media, counting and accounting for cash fare transactions, making deposits with designated financial institutions, and providing certified statements of revenue collected.
Power Supply
Various issues relating to power supply will need to be considered in drafting the P3 agreement for a transit project, including which entity will contract with the utility company, how to address the risk of increases in rates, and how to deal with differences between planned and actual usage of power. If fuel-powered vehicles are used, the focus changes to cost of fuel and efficiencies in usage. For the Purple Line project, the agency is responsible for directly paying for electrical power required for system operations, and for working with the electric power provider to establish electrical power rates and fees prior to the start of trial running. The payment mechanism includes "painshare/gainshare" provisions to provide incentives to the concessionaire to develop a system that operates efficiently.
Coordination with Railroad Operators
A major consideration for the Denver Eagle project was the potential effects of railroad requirements on work rules for Project personnel as well as the need to coordinate operations with other railroads, due to interfaces between the Eagle project and operations by the National Railroad Passenger Corporation (Amtrak), Burlington Northern Santa Fe Corporation (and its Affiliates) and Union Pacific Corporation.
Labor Issues
Labor issues are a significant consideration for all P3s, as discussed in the FHWA's P3 Toolkit. 146 The toolkit identifies issues relating to prevailing wages, employee benefits, worker displacement, workforce development, apprenticeship, workplace health and safety, equal employment opportunity, and project labor agreements, among others.
For transit projects, the agency will need to determine whether "Section 13(c)" statutory labor protection requirements apply and, if so, determine how to address them. 147 Agencies are highly concerned about labor harmony during operations, to avoid stoppage of service if labor disputes arise. Issues differ significantly for different agencies and also depend on the nature of the project. For example, the Regional Transportation District in Denver has a long history of contracting out operations, and was able to rely on that history in developing labor-related requirements for the Eagle P3.
In addition to standard State and Federal requirements relating to labor issues, the P3 agreement for the Purple Line included provisions addressing Section 13(c) issues and obligating the concessionaire and its contractors to enter into a labor peace agreement under 29 U.S.C. § 158.
Performance Requirements
Performance requirements for transit projects involve significantly different considerations than is the case for other projects. For example, they may encompass areas such as:
Issues relating to graffiti removal and other types of vandalism responsibility may result in lengthy discussions during the industry review process. For the Purple Line project, the P3 agreement included a "band" approach to risk sharing for vandalism risk. 148
Requirements to meet performance standards relating to electromagnetic interference (EMI) and vibration impacts may also present concerns in the context of a P3-particularly if the transit line is adjacent to facilities where research is conducted that may be affected by EMI and vibration.
Capital Renewal
The concession period for a transit project can be longer than the expected life of many components, and obligations to replace such components should be addressed in the P3 agreement. This is a particular concern for large P3s involving rail systems with significant capital renewal costs programmed during the concession period.
For further information on small-and medium-sized transit P3 projects, refer to Transit Cooperative Research Program (TCRP), Public Transportation Guidebook for Small- and Medium-Sized Public-Private Partnerships (P3s), 2017.
142 Different EDMSs are used by transportation state agencies as described here: Caltrans, Division of Research, Innovation and System Information, "Project Delivery Document Management Systems," (Sacramento, CA: October 20, 2016). Available at: https://dot.ca.gov/newtech/researchreports/preliminary_investigations/docs/project_delivery_document_management_systems_preliminary_investigation.pdf. [ Return to note 142. ]
143 48 CFR § 2.101. Although this definition is found in the Federal Acquisition Rule (FAR), which does not apply to procurements by State and local agencies, the FAR is generally recognized as establishing sound procurement practices and is therefore cited in this Guidebook. [ Return to note 143. ]
144 48 CFR § 15.608. [ Return to note 144. ]
145 A non-compete covenant included in the franchise agreement for the SR-91 project in California proved to be highly controversial when the State DOT determined that certain improvements prohibited by the franchise agreement were needed for safety purposes. Subsequent laws adopted in California permitting use of P3s for highway projects have specifically prohibited such covenants, while permitting agreements to allow the concessionaire to be compensated for impacts to its operations. See Assem. Bill 1467, 2006-2007, ch. 32, 2006 Cal. Stat. Available at: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=200520060AB1467. The relevant provision reads as follows:
(3) No agreement entered into pursuant to this section shall infringe on the authority of the department or a regional transportation agency to develop, maintain, repair, rehabilitate, operate, or lease any transportation project. Lease agreements may provide for reasonable compensation to the leaseholder for the adverse effects on toll revenue or user fee revenue due to the development, operation, or lease of supplemental transportation projects with the exception of any of the following:
(A) Projects identified in regional transportation plans prepared pursuant to Section 65080 of the Government Code and submitted to the commission as of the date the commission selected the project to be developed through a lease agreement, as provided in this section, unless provided by the lease agreement approved by the department or regional transportation agency and the commission.
(B) Safety projects.
(C) Improvement projects that will result in incidental capacity increases.
(D) Additional high-occupancy vehicle lanes or the conversion of existing lanes to high-occupancy vehicle lanes.
(E) Projects located outside the boundaries of a public-private partnership project, to be defined by the lease agreement.
However, compensation to a leaseholder shall only be made after a demonstrable reduction in use of the facility resulting in reduced toll or user fee revenues, and may not exceed the reduction in those revenues. [ Return to note 145. ]
146 Federal Highway Administration, "Public-Private Partnerships: Labor Best Practices - Draft," (Washington, DC: September 2015). Available at: https://www.fhwa.dot.gov/ipd/p3/toolkit/publications/model_contract_guides/labor_best_practices/. [ Return to note 146. ]
147 Requirements of Section 13(c) of the Urban Mass Transportation Act of 1964, since recodified as Section 5333(b) of the Federal Transit Act, but nevertheless still referred to as "Section 13(c)" by practitioners, are discussed in detail in Transit Cooperative Research Program (TCRP), Selected Studies in Transportation Law, vol. 5, § 9D. (Washington, DC: Transportation Research Board of the National Academies, 2014 Supp.). [ Return to note 147. ]
148 See Section 5.2.2 for a description of this approach. [ Return to note 148. ]
