Additional project Case Studies can be found on the Build America Bureau Website
Additional Projects used to Illustrate Procurement Concepts
Agency
Project
Description
Arizona Department of Transportation
South Mountain Freeway
Highway DBM project
California Department of Transportation City of Los Angeles (Los Angeles World Airports)
Presidio Parkway
Availability payment roadway
SR-91
Express lanes toll concession
Automated People Mover and Consolidated Rental Car Facility
Availability payment
Florida Department of Transportation
Port of Miami Tunnel
Availability payment tunnel
1-595
Availability payment express lanes
1- 4 Ultimate
Availability payment express lanes
Indiana Finance Authority
East End Crossing
Availability payment toll bridge
Arizona Department of Transportation
South Mountain Freeway
Highway DBM project
New Jersey Transit Corporation
Hudson-Bergen light rail transit system
DBOM transit system (finance component was removed by change order)
Ohio Department of Transportation
Portsmouth Bypass
Availability payment roadway
PennsylvaniaDepartment of Transportation
Rapid Bridge Replacement
Multiple bridge replacements with availability payments
RegionalTransportation District (Denver)
Eagle
Commuter rail availability payment P3
Texas Department ofTransportation
1-635 (LBJ TEXpress Lanes)
Express lanes toll concession
SH 288
Express lanes toll concession
Grand Parkway
Toll road DB project
Virginia Department of Transportation
Transform 66 Outside the Beltway
Express lanes toll concession
Elizabeth River Tunnels
Connector toll concession
Guide is Structured by Procurement Phase
Sequentially with procurement progress:
Chapter 3: Pre-procurement Period
Chapter 4: Start of Procurement through RFQ Issuance
Chapter 5: Development and Issuance of RFP
Chapter 6: Issuance of Solicitation Package through Selection
Chapter 7: Commercial and Financial Close
Also includes:
Chapter 2: Overview of Procurement Process
Chapter 8: Additional Considerations
Part 2: Differences between P3 and Other Delivery Methods an Laws Affecting P3 Procurements
What would be good to know before considering procuring a project as a P3?
Why P3?
"A P3 procurement is defined as Procurement of a contract for development, operation and/or maintenance of a facility that involves a component of private financing." DBF, DBFM, DBFOM
Use private capital to close funding gap
Allocate risk to entity best able to manage/ mitigate
Atypical, complex projects that can benefit from expertise of specialized firms
Key Aspects of P3 project Delivery
Determining Statement of Work
Risk assessment, mitigation & allocation
Performance specifications
Developing terms and conditions
Selection criteria determination
Selection and negotiation
US Common Practice: best value selection process; post- selection negotiation due to project complexity.
Financing considerations
Contract administration
Topics for Legal Consideration
Procurement
Debt limitations
ROW Acquisition
Dispute resolution procedures
Other considerations
Laws Affecting P3 Procurement
Do existing laws:
Allow practices such as
a two-step best value procurement
payment of stipends
discussions and requests for revised proposals
pre-award negotiations?
Impose restrictions affecting the agency's preferred approach to risk allocation?
Impose constraints on the structure of the concession that may affect project feasibility?
Legislative Analysis (continued)
Debt limitations
Do constitutional debt limitations apply to the transaction?
ROW Acquisition
Uniform Act
Timelines for property acquisition, "quick take" authority; ability to pay for utility relocations
Dispute resolution procedures
Are there restrictions affecting the agency's ability to use alternative dispute resolution procedures?
How might the project be affected by:
Statutes of limitations (requiring an action to be brought within a specified time after the cause of action arises).
Statutes of repose (requiring an action to be brought within a specified time after completion of the project).
Does State law include other requirements affecting project feasibility; for example, the possibility that a long- term concession might be considered a "possessory interest" subject to an ad valorem tax?
Additional Resources for Legislative Analysis
NCHRP Report 561: Best-Value Procurement Methods for Highway Construction projects
Transit Cooperative Research Program ,(TCRP) Legal Research Digest 40: Issues Involving Surety for Public Transportation projects
NCHRP Synthesis 481: Current Practices to Set and Monitor DBE Goals on Design-Build projects and Other Alternative project Delivery Methods
NCHRP Legal Research Digest 68: Liability of Design- Builders for Design, Construction, and Acquisition Claims
Test Your Knowledge
Which items below are important to analyze before initiating a P3 procurement:
☐ Laws affecting P3 procurements, particularly those affecting the structure of the concession and thus impacting project feasibility
☐ Detailed risk profile of P3 compared to traditional delivery methods
Test Your Knowledge (Answers)
Which items below are important to analyze before initiating a P3 procurement:
☑ Laws affecting P3 procurements, particularly those affecting the structure of the concession and thus impacting project feasibility
☑ Detailed risk profile of P3 compared to traditional delivery methods
Part 3: Goals, Activities and Successful Practices
P3 Procurement Phases
Pre-Procurement
Start of Procurement to RFQ Issuance
RFP Development and Issuance
Selection
Commercial and Financial Close
Pre-Procurement Goals and Activities
Goal: Structure a procurement team to provide overall project management
Engage technical, legal and financial consultants
Establish a communications strategy.
Establish procedures ensuring confidentiality
Goal: Establish a project delivery strategy
Aim to maximize flexibility to encourage innovation
Define project goals, scope and term of concession
Conduct initial risk assessment and allocation
Perform agency due diligence (technical and financial)
Develop a business case/conduct a Value for Money (VfM) analysis Consider early contractor outreach and involvement
Goal: Set the stage for stakeholder engagement and required approvals
Advertise a Request for Information (RFI) soliciting market input and hold market sounding meeting with interested firms
Organize Industry forum /workshop
Identify applicable laws, procedures and requirement
Develop strategies for environmental and regulatory approvals
Consider Federal financing assistance (TIFIA and PABs)
Begin to engage Federal Government State &Local Entities
Conduct public & stakeholder engagement
Goals and Activities for Starting the Procurement
Goal: Structure the procurement process
Conduct Procurement Strategy Workshop
Develop evaluation structure and procedures
Develop procedures to ensure full, fair and open procurement
Develop Organizational Conflict of Interest policies
Goals and Activities for RFQ Development
Goal: Determine Request for Qualifications Terms and Basis for Shortlisting
Determine RFQ terms and basis for shortlisting
Develop and Issue RFQ
Evaluate and shortlist bidders based on SQQ submitted
Goals and Activities for RFP Development
Goal: Develop Request for Proposals (RFP)
Develop Draft RFP Procurement Terms
Develop Draft RFP Contract Terms
Goal: Develop Final RFP
Industry Review Process
Develop Final RFP Procurement Terms
Develop Final RFP Contract Terms
Continued project Due Diligence
Goals and Activities for the Selection Process
Goal: Revise RFP as Needed
Conduct meetings with proposers
Reconsider prior decisions as appropriate
Issue addenda
Goal: Evaluate Alternative Technical Concepts (ATC) and Alternative Financial Concepts (AFC)
Assess ATCs and AFCs
Consider impact of proposed ATCs on the NEPA process
Goal: Evaluate Proposals
Evaluate proposals based on pre-determined evaluation process and guidelines
Select preferred proposal
Award (with or without negotiations)
Goal: Proposal Revisions (if applicable)
Conduct competitive negotiations
Revised proposal (also called BAFO)
Goals and Activities for Commercial and Financial Close
Goal: Commercial and Financial Close
Negotiate changes to the P3 agreement (if any)
Fulfill requirements of award and contract execution
Commercial close
Financial close
Successful Pre-Procurement Practices
Selection of Advisors: Engage technical, legal, and financial advisors with US P3 project experience early
Request for Information: Request written responses; conduct informal market sounding or meetings) to obtain additional information.
Industry Forum/ One-on-one meeting: Input from private sector on proposed! procurement process
Federal Support: Engage Federal government early especially for projects requesting TIFIA/PAB assistance
Successful Practices for Procurement Initiation
Establish procedures ensuring confidentiality of documents and information
Two-step, selection process: RFQ followed by an RFP issued to the shortlisted proposers.
Industry Review process: Prior to issuing the final RFP:
Obtain input and comments from the shortlisted proposers
Involves one-on-one meetings with proposers
Important for first projects and projects that include elements differing significantly from earlier projects.
Successful Practices for Pre-Selection/ Selection/Negotiation
Provide opportunity to proposers to submit Alternative Technical Concepts (ATCs) during pre-selection
Best value selection process to select preferred proposer
Reserve right to engage in discussions with proposers in competitive range to request proposal revisions
Reserve right to hold negotiations with the selected proposer prior to final award
Payment of stipend to unsuccessful proposers
Other Successful Procurement Practices
Maintain leadership continuity
Develop a transition plan from procurement to contract management.
Monitoring
Develop protocols and assign responsibility for project oversight
Monitor contract requirements during design, construction and throughout operations
Test Your Knowledge
Which of the following activities should the agency aim to complete prior to starting the RFP development process?
☐ Develop evaluation structure and procedures
☐ Develop procedures to ensure full, fair and open procurement
☐ Develop Organizational Conflict of Interest policies
☐ Develop Request for Qualifications and basis for shortlisting
Test Your Knowledge (Answers)
Which of the following activities should the agency aim to complete prior to starting the RFP development process?
☑ Develop evaluation structure and procedures
☑ Develop procedures to ensure full, fair and open procurement
☑ Develop Organizational Conflict of Interest policies
☑ Develop Request for Qualifications and basis for shortlisting
Part 4: Federal Funding and Financing
Topics
Federal-aid Funding
Federal Transit Administration Funding
Transportation Infrastructure Finance and Innovating Act (TIFIA) Financing
Private Activity Bonds
Federal Funding and Financing
Process varies dramatically depending on the source of funds.
Engages FHWA, FTA, FRA, and the Build America Bureau differently.
Build America Bureau is a one-stop shop for loan and credit enhancement programs administered by the USDOT
Federal Financing: TIFIA
FAST Act provided nearly $1.5 billion in TIFIA subsidy authorization for FFY 2016-201
Three types of loans: direct loans, loan guarantees, and standby letters of credit.
For TIFIA assistance, the applicant must be able to:
Demonstrate the creditworthiness of the project
Identify the sources of funding to make any repayments of a TIFIA loan
Demonstrate extent to which project generates economic benefits, leverages private capital, and promotes innovative technologies.
Notable TIFIA projects
TxDOT North Tarrant Express: $531 million loan
VDOT Transform 66: $1,299 million loan
Florida DOT (FOOT) 1-4 Ultimate : $950 million loan
Port Authority of New York and New Jersey Goethals Bridge Replacement: $474 million loan
Capital Beltway: $588.9 million loan
Maryland Purple Line: $874.6 million loan
Federal Financing: Private Activity Bonds (PABs)
PABs were first authorized in 2005 in SAFETEA-LU
To qualify for a PAB allocation, the activity must
include a project receiving Federal assistance under Title 23,. U.S. Code or
be a freight transfer facility receiving funding under Title 23 or 49, U.S. Code
NEPA decision must be obtained prior to PAB allocation
U.S. DOT allocates authority to issue bonds; it otherwise has no role in the issuance of PABs
Part 5: Strategies for Environmental and Regulatory Approval
Strategies for Environmental and Regulatory Approval
Source: SHRP 2 entitled "Effect of Public- Private Partnerships and Nontraditional Procurement Processes on Highway Planning, Environmental Review and Collaborative Decision Making."
Source : Parsons Brinckerhoff
Potential Role of Private Partner in the NEPA process
Public sponsor may ask the private concessionaire to provide studies that will inform the NEPA process.
Concessionaire's innovative ideas can be incorporated into the project
FHWA's Design-Build Rule permits award of P3 agreements prior to completion of the NEPA process, but requires deferral of final design and most other project activities until after completion of the NEPA process
Concessionaires prefer completion of the NEPA process prior to contract award
NEPA Discussion of Funding/ Financing and Tolls
NEPA document is not a funding document.
Tolling/P3 discussion in the EIS:
Tolling changes the operational characteristics of highway
Discussion can help address potential sources of public opposition , avoiding controversies later
Failure to discuss tolling can lead a court to find an EIS legally flawed
Only tolled alternatives may be discussed in the EIS
Tolls/fares may be higher as a result of private financing
NEPA and P3: Other Considerations
Flexibility: Proposers retain some flexibility since project is usually defined in broad terms
Mitigation: Extensive mitigation requirements may make project less attractive to proposers
Public agency: ability to participate in mitigation measures governed by law: unrelated betterments not approvable without additional legal authority
Private sector: concerned with cost, schedule and revenue impact of required mitigation measures.
Permits: Concessionaire may obtain permits requiring design detail, e.g
Section 401 (discharge of pollutants , usually during construction) and 404 (dredge and fill) of the Clean Water Act, Section 10 of the Endangered Species Act (incidental takes of endangered species)
Test Your Knowledge
For TIFIA assistance, the applicant must be able to demonstrate which of the following
☐ Demonstrate the creditworthiness of the project
☐ Identify the sources of funding to make any repayments of a TIFIA loan
☐ Demonstrate extent to which project generates economic benefits, leverages private capital, and promotes innovative technologies
Test Your Knowledge (Answers)
For TIFIA assistance, the applicant must be able to demonstrate which of the following:
☑ Demonstrate the creditworthiness of the project
☑ Identify the sources of funding to make any repayments of a TIFIA loan
☑ Demonstrate extent to which project generates economic benefits, leverages private capital, and promotes innovative technologies
Questions?
FHWA P3 Toolkit
Fact Sheets
Primers
Guidebooks
Analytical Tools
FHWA P3 Toolkit
Risk Valuation & Allocation
Value for Money Analysis
Financial Structuring
Analytical Studies
Conducting Procurements
Monitoring &Oversight
Establishing a P3 Program
Risk Assessment
Value for Money Assessment
Financial Structuring & Assessment
Risk Assessment
Value for Money Assessment
Benefit-Cost Analysis for P3 Delivery
P3 project Financing
Model Contracts
Successful P3 Practices
P3 Procurement
P3-SCREEN
P3 viability evaluation prior to project development
Patrick Decorla-Souza P3 Program Manager
USDOT Build America Bureau & FHWA Center for Innovative Finance Support
(202) 366-4076 Patrick.DeCorla-Souza@dot.gov