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Federal Highway Administration - Special Experimental Project 15 Implementation Procedure

1. Introduction

The following sets forth the Federal Highway Administration's (FHWA) procedure for the implementation of the Special Experimental Project Number 15 (SEP-15) program. Questions or clarifications regarding the content of this document should be directed to the Public-Private Partnership Office.

2. References

  1. 23 U.S.C. §502(a).
  2. Federal Register Notice October 6, 2004 (Volume 69, Number 193).
  3. Frederick G. Wright memorandum "SEP-15 Application Process" October 14, 2004.

3. Purpose

  1. Background - The FHWA has long promoted the use of innovative project delivery methodologies and practices through the application of the provisions of Special Experimental Project Number 14 (SEP-14). Since the inception of SEP-14 in 1990, many processes that were once considered experimental including design-build, cost-plus-time bidding, lane rental and the use of warranties have become mainstream practices across the country. These new areas of interest include alternative ways to accomplish NEPA environmental compliance, right of way acquisition, and financing. Many of these areas offer promise for innovations that may be applicable to the broad project delivery process. In order for FHWA to accommodate these new and beneficial activities, it became incumbent upon the FHWA to establish the SEP-15 program. SEP-15 allows for the use of experimental features on Federal-aid projects that will test an innovative project delivery technique that is prohibited by a current provision of title 23 of the United States Code, FHWA regulations or policy.1 SEP-15 does not replace SEP-14, which is still available to evaluate experimental contract administration methods. The creation of SEP-15 provides a process and the tools for the application of these strategies in an environment that encourages innovation while still maintaining the fundamental objectives of title 23 of the United States Code.

    In establishing the SEP-15 program, the FHWA recognizes that its specific procedures should not be so narrowly construed that they prevent or unnecessarily inhibit a possible project or program where opportunities may exist for innovation. SEP-15 should be seen by all as a means to facilitate, not inhibit, innovation.

    The SEP-15 procedure can be utilized both for a specific project as well as a corridor or a program of projects. In each case, the SEP-15 Application and Early Development Agreement (EDA) will be different and will be tailored to suit the unique circumstances of the project. When applied to a project, the requirements will be focused on a more defined set of elements. When SEP-15 is used for a corridor or program composed of multiple projects, the provisions, applications, and approval processes will be more general in nature with specificity added as each project progresses through the development process. Amendments to an EDA may be expected and required under such circumstances.

    The tendency for most programs would be to establish a template or form for each corridor or project considered under the provisions of the SEP-15 program. Because the SEP-15 program is intended to respond to the unique circumstances of individual projects and a project's specific needs, neither FHWA nor the applicants should endeavor to create such a template. Rather, this procedure and the philosophy behind SEP-15 have been developed to maximize flexibilities with title 23 of the United States Code and to encourage the cultivation of innovation. The FHWA does not want the intent of SEP-15 to be stifled due to mandatory formats or procedural requirements. For example, it is likely that project objectives around the same development element (e.g. finance, right of way, etc.) may be different from one SEP-15 project to another. In addition, current and future SEP-15 project approvals should not be constrained by past practices or procedures. Rather, past experience should serve to refine innovations and result in more targeted and effective innovations. It is the philosophy of finding ways to make proposed innovations successful that will bring the most benefits to the transportation industry across the country.

    It should be noted that the role of FHWA will include both its traditional regulatory activities stipulated under title 23 of the United States Code and a responsibility for advancing innovations in the project delivery process. Consequently, much of what will be done by FHWA staff in relation to the SEP-15 program will be consultative in nature. The Division Offices, Resource Centers, and headquarters staff will serve as a resource to the applicants in developing their innovations and experimental efforts.
  2. Objectives - The primary objectives of the SEP-15 program are as follows:
    1. To encourage tests and experimentation in the entire project development process leading to increased project management flexibility, more innovation, improved efficiency, timely project implementation and potentially new revenue streams;
    2. To identify impediments to current laws, regulations, and practices to the greater use of public-private partnerships and private investment in transportation improvements;
    3. To develop procedures and approaches addressing these impediments; and
    4. To evaluate and propose administrative and statutory recommendations to remove these impediments.

4. Authority

SEP-15 was established pursuant to the authority granted the Secretary of Transportation by United States Congress in 23 U.S.C. §502(a).

5. Definitions

  1. Applicant - An applicant will be a State Department of Transportation (DOT). In some cases a project may be initiated by a third party including another governmental entity, a private entity or some kind of public-private organization, but in all cases the application shall flow through the respective State DOT to FHWA as described in this procedure.
  2. Corridor - A corridor may be comprised of multiple projects which may or may not have unique characteristics and that may be developed in different ways under the procedures of the SEP-15 program. Similar to a program of projects, there may be reasons to have an initial SEP-15 Application processed and an EDA established for the corridor itself followed by amendments to EDA based on specific project needs within the corridor.
  3. Early Development Agreement (EDA) - An EDA is a document that is developed jointly between the State DOT and FHWA and describes the parameters for the implementation of experimental features of the SEP-15 project, such as project planning and design, environmental review, right of way acquisition, procurement method, regulatory compliance, timelines, financing, construction and operation. For each experimental feature identified in the EDA there will be specific roles identified for all parties, procedures defined, timeframes established and other attributes described that will set forth the manner in which the project will be administered under SEP-15.
  4. Experimental Feature - An experimental feature is a law, regulation, or FHWA policy or practice from which a State seeks a waiver under SEP-15. Areas in which a State may choose to pursue an experimental feature include, but are not limited to:
    1. Requests for Proposals.
    2. Unsolicited Proposals.
    3. Project elements.
    4. Proposal evaluation processes and procedures.
    5. Communications.
    6. Finance plans.
    7. Short listing processes and procedures.
  5. Program - Under some circumstances an applicant may desire to apply the SEP-15 process to a program of projects. In this instance, the process must be modified to ensure that the individual experimental features are properly applied on individual projects and that specific differences from one project to another are documented in the EDA. A program of projects may differ from a corridor in that its composite projects may not be physically adjacent to one another.
  6. Project - A single project with defined limits and elements, a program of projects, or a corridor.
  7. SEP-15 Application - The SEP-15 Application is the formal documentation of an applicant's request for the use of an experimental feature in the project development process. It shall be prepared by the applicant.
  8. SEP-15 Concept Paper - The SEP-15 Concept Paper is a short narrative which articulates the basic elements of the applicant's proposed use of SEP-15 and provides the basis for FHWA to offer the applicant a preliminary assessment of the viability of potential experimental features. An applicant may bypass the Concept Paper component of the SEP-15 process without penalty and prepare an Application.

6. Organizational Structure

  1. General - Specific roles for individuals within FHWA will be key to achieving the broadest application of the SEP-15 program and advance innovations in project delivery methods. The roles of the FHWA are described as follows:
  2. Co-facilitators - The co-facilitators shall be appointed by the Deputy Administrator with one being the Division Administrator from the applicant State and the other being a member of the SEP-15 Steering Committee or an individual holding a senior leadership position within FHWA. They shall have responsibility for overseeing the development and execution of the EDA and will provide guidance, consultation, and assistance with the administration of a SEP-15 project. They shall report to the Deputy Administrator. The term of service shall extend until the submission of the final report on the SEP-15 project.
  3. Deputy Administrator - The Deputy Administrator has overall responsibility for the SEP-15 program. The Deputy Administrator shall:
    1. Chair the SEP-15 Steering Committee.
    2. Shall make the final decision on all SEP-15 Applications and approve all EDAs.
    3. Shall appoint the co-facilitators and approve membership on the SEP-15 Steering Committee.
  4. D. SEP-15 Steering Committee - The SEP-15 Steering Committee shall be established by the Deputy Administrator and shall have broad responsibility for the implementation of the SEP-15 program.
    1. Core members of the SEP-15 Steering Committee are as follows:

      1. Associate Administrator for Planning, Environment and Realty;
      2. Associate Administrator for Infrastructure;
      3. Chief Counsel;
      4. Associate Administrator for Policy;
      5. A representative of FHWA's Division Offices;
      6. The Public-Private Partnerships ( P3) Program Manager; and
      7. Other members as determined appropriate by the Deputy Administrator.
    2. Duties of the SEP-15 Steering Committee shall include:

      1. Rotating responsibility for review of SEP-15 Concept Papers and Applications;
      2. Proposing SEP-15 project co-facilitators;
      3. Providing recommendations regarding SEP-15 Applications to the Deputy Administrator;
      4. Managing the development of documents, promotional materials and other informational items relevant to the SEP-15 process; and
      5. Developing training courses relevant to the administration of SEP-15 projects.

7. Implementation Procedure

  1. Overview - The SEP-15 process will be unique for every project and is a reflection of the variable nature of experimental features that may be proposed by the States. Thus, the SEP-15 process has been specifically designed to provide maximum flexibility on the part of FHWA and the State DOT's to achieve the objectives of the SEP-15 program. The following sets forth the SEP-15 process, including submission of Concept Papers and Applications, development of an EDA, project oversight, and project performance evaluations.
  2. Process - The following describes the various steps in pursuing a project under the SEP-15 program (All references to a project may be also applied to a program of projects or a corridor unless otherwise noted):
    Concept Paper
    1. Once an applicant has selected a project and the project development elements that require approval through the SEP-15 program, the applicant may consult with the local FHWA Division Administrator and the SEP-15 Steering Committee on the specific actions being proposed and how best to frame them for presentation and approval.
    2. The applicant may prepare a SEP-15 Concept Paper if there are uncertainties about whether potential experimental features are appropriate for the SEP-15 program.
    3. If the applicant chooses to prepare a SEP-15 Concept Paper it shall be submitted to the Division Administrator who will forward it to the P3 Program Manager. If necessary, the P3 Manager may coordinate review of the concept paper with the SEP-15 Steering Committee and Division Administrator. The Division Office should forward the application immediately upon receipt to the P3 Program Manager. The Division Office will be asked to forward comments when requested by the P3 Program Manager.
    4. The SEP-15 Concept Paper can be an important step in the process of advancing a SEP-15 Application. It allows the applicant to articulate the basic element of their proposal while offering the FHWA an opportunity to critique, offer guidance, and provide other information that may be helpful to the applicant's decision to submit a project for consideration for administration under SEP-15. The SEP-15 Concept Paper should not be seen as a final product but rather as an overview of the experimental feature(s) the State DOT would like to evaluate and the types of project(s) on which these feature(s) would be tested.
    5. The SEP-15 Steering Committee, in coordination with the appropriate Division Administrator, will review the Concept Paper and determine if the proposed approach is appropriate for the SEP-15 program. After review and consideration, the Division Administrator, with the concurrence of the SEP-15 Steering Committee, will respond to the applicant. In this response to the applicant, the Division Administrator will make a statement regarding the applicability of the proposed elements contained in the SEP-15 Concept Paper to the SEP-15 program. Additional comments may include recommendations and information based on lessons learned from other SEP-15 projects. The purpose for FHWA's consideration of the SEP-15 Concept Paper is to expedite the review of a SEP-15 Application, offer guidance/consultation to enhance opportunities for innovation and the ultimate success of the project. The response shall not be construed as an endorsement or commitment from FHWA concerning the ultimate approval of proposed experimental features. The timeframe for the SEP-15 Steering Committee and Division Administrator to provide their comments to the applicant's SEP-15 Concept Paper is 60-days after receipt of the Concept Paper by the Steering Committee. This response is strictly informational in nature and the applicant is under no obligation to incorporate the guidance or recommendations into their final application.
    6. The applicant shall submit a SEP-15 Application that shall provide the following:

      1. Brief project description;
      2. A concise description of each experimental feature;
      3. An explanation of why the State is seeking to undertake the experimental feature, including a description of why the experimental features are beneficial to the development of the project and the expected value to be achieved from the experimental feature; and
      4. An explanation of how the areas of experimentation vary from requirements found in title 23 U.S.C., FHWA regulations, or FHWA policy and practices.

    SEP-15 Application

    1. The SEP-15 Application shall be submitted to the Division Administrator. Immediately upon receipt, the Division Administrator will forward the application to the P3 Program Manager.
    2. The P3 Program Manager will coordinate the review of the application with the SEP-15 Steering Committee and the Division Office. The review will be focused on assessing whether the proposed experimental features are appropriate for administration under the SEP-15 program or whether they are precluded from further consideration due to legal or policy constraints.
    3. Either the applicant or FHWA may request a formal presentation if there are significant questions that could affect the overall viability of a project under SEP-15. If additional information or clarification is needed then this will be requested from the applicant. Once all information is gathered, the SEP-15 Steering Committee and the Division Administrator will prepare a recommendation for the Deputy Administrator within 60-days of receipt in Headquarters of the SEP-15 Application by the Steering Committee.
    4. The SEP-15 Steering Committee will make a recommendation on the merits of a SEP-15 Application to the FHWA Deputy Administrator. If the Deputy Administrator accepts a project for administration under the SEP-15 program, he will inform the head of the State DOT of his decision in writing. At this point, acceptance of a project is only a commitment not to declare the project ineligible for Federal-aid funding. Until there is formal FHWA project approval and the execution of an EDA, the FHWA retains the right to declare the project ineligible for Federal-aid funds at anytime.
    5. If the SEP-15 Steering Committee does not recommend acceptance of the application, they shall brief the Deputy Administrator. If the Deputy Administrator concurs with the recommendation not to accept a SEP-15 application, the Deputy Administrator shall notify the State DOT.
    6. Nothing in this procedure shall inhibit the free and open communication between FHWA and the applicant. The primary purpose of the review process is to strengthen the applications and improve the opportunities for successful application of innovations.
    7. If an application is accepted for administration under the SEP-15 program, the Deputy Administrator will officially appoint co-facilitators for the project. The co-facilitators will establish an FHWA interdisciplinary team to assist with the development of the provisions of the EDA.

    Early Development Agreement (EDA)

    1. The EDA will contain parameters to guide such key elements as project planning, design, environmental review, right-of-way acquisition, method of procurement regulatory compliance, timelines, financing, construction, and operation. During this phase of the SEP-15 process, FHWA will also address concerns regarding program or operation aspects of the project. The EDA will also identify the performance measures that will be used to evaluate the success of the project. The parties will work to execute the EDA within 60 days of the approval of the SEP-15 Application. The time for approving EDAs may be shorter or longer depending on the complexity of the experimental features. Development of the EDA may involve one or more meetings between members of the co-facilitators and FHWA interdisciplinary team. The Deputy Administrator and the chief executive of the State DOT shall sign and execute the EDA.
    2. Throughout the life of the project approved under SEP-15, the co-facilitators shall be responsible for ensuring that the project is coordinated within the Department of Transportation and other stakeholders in Federal government. If the project is one that is also being considered by the President's Environmental Streamlining Task Force created under Executive Order 13274, the co-facilitators will work with members of the Task Force to help identify any concerns other Federal agencies may have with the project. They will assist the project applicant in addressing those concerns.
    3. The Division Administrator will be primarily responsible for monitoring the status of the project through the life of the project and will ensure the FHWA actions, approvals and other activities are provided in a timely manner as outlined in the SEP-15 Application, and the EDA.
    4. Project documentation shall be completed in accordance with the provisions of Section 9, Documentation.

8. Project elements, milestones, and products

  1. Overview - The EDA shall list all SEP-15 project elements, including the experimental features, the terms and conditions of the experimental features, evaluation criteria, and reporting requirements. The contents of the EDA will vary from project to project and the co-facilitators shall work with the applicant to develop a list that is appropriate for experimental features of each SEP-15 project. In addition to specifying the elements, milestones, and products, the EDA shall include roles, timeframes and commitments for the applicant, FHWA, and third parties as appropriate. In addition, the EDA shall identify specific performance measures that will be used to evaluate the success of the SEP-15 process and the experimental features of the project. The co-facilitators shall approve or deny any changes to the EDA that are requested by the State. The EDA will address the potential consequences to a SEP-15 project should there be a significant change in circumstances that results in a violation of the terms of the EDA, title 23 of the United States Code, or FHWA policy.
  2. Negotiation - The EDA will be negotiated by the co-facilitators and the State DOT.
  3. Amendments - The EDA should be seen as a valuable tool for optimizing the success of the SEP-15 approach and may be modified and amended after execution with the approval of the co-facilitators to achieve this objective.

9. Documentation

  1. Purpose - Documentation shall be tailored to meet the specific elements of projects being developed or constructed under the provisions of the SEP-15 program. This flexibility will allow the applicant and FHWA to provide feedback and insights to assist other entities in their efforts to bring innovation to their projects. The purpose of the documentation element of this procedure is to provide the following:
    1. Compliance with the approved features of the SEP-15 application;
    2. Benefits of the applied SEP-15 process;
    3. Lessons learned for future SEP-15 experimental features; and
    4. Recommendations for changes in FHWA practice, regulations, or title 23.
  2. Documentation Requirements - The EDA shall define the documentation requirements that specifically apply to the SEP-15 project. At a minimum, the EDA shall require documentation in the following areas:
    1. A matrix of project elements that were modified and approved through the SEP-15 process;
    2. A specific means for measuring the benefits and impacts that each of these elements had on the overall project;
    3. A means for determining accountability on the part of the applicant for meeting requirements of the approved EDA; and
    4. Lessons learned.
  3. Reporting - States are required to submit at least one report on each approved experimental feature. An independent third party must prepare any required report. The EDA will include details about the number of required reports, the contents of the report(s), and the frequency by which the States must submit the report(s). The Division Office shall determine a format to be used for any SEP-15 project report. The format should not only consider the uniqueness of each project, but also facilitates FHWA's ability to compile and use the information to benefit all applicants under the SEP-15 program. The State will submit all reports to the Division Administrator. The Division Administrator will forward all reports to the SEP-15 Steering Committee for review.
  4. Actions - Upon review of the individual SEP-15 reports, the SEP-15 Steering Committee may offer recommendations for modifying this procedure, changing the organizational elements of FHWA and other components of the SEP-15 program to further enhance innovation on transportation projects, and identify training needs and opportunities related to the development and administration of SEP-15 projects.

1 SEP-15 projects cannot be used to modify environmental and other requirements external to title 23 of the United States Code.

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