NEGOTIATIONS AND PARTNER SELECTION

1. UNITED NATIONS SU/SSC TRAINING COURSE Arlington, VA September 19, 2006 NEGOTIATIONS AND PARTNER SELECTION Karen J. Hedlund Partner

2. Partner Selection Challenges • Attracting teams that are financially and technically strong • Attracting well-developed proposals meeting agency policies and objectives • Developing appropriate criteria • Maintaining a competitive process • Achieving transparency • Allocating risks to each party appropriately • Getting buy-in from funding partners • Meeting regulatory challenges

3. Proposal Solicitation –First Steps • International Advertising • “Road Shows” • TxDOT European Tour • Website • Request “Letters of Interest” • Industry Information Meetings • Circulate Draft Documents

4. Requests for Qualifications –Key Criteria • Experience with Similar Projects • Comparable type, size, contract methodology • Completed on time? • Completed within original budget? • References – Call them!

5. Requests for Qualifications –Key Criteria • Ability to Perform the Work • Does the team possess the necessary financial, staffing, equipment, and technical resources to successfully complete the project? • Do the team and/or member firms have competing financial or workforce commitments that may inhibit successful follow-through? • What are plans for obtaining sufficient staff and labor supply? • Training programs?

6. Requests for Qualifications –Key Criteria • Leadership Structure • Is one firm designated as lead on the project? • Does the organization of the team indicate a well thought out approach to managing the project? Is there a written agreement in place between members? • Does the Project Manager have experience leading this type and magnitude of project? • Have the primary functions and responsibilities of the management team been identified?

7. Requests for Qualifications –Key Criteria • Liability • Is the liability structure among the team members clearly specified? • Is there a written commitment to joint and several liability? • Are there adequate parent company guarantees? • Are there limits or caps on the proposer’s liability and indemnification of the Department?

8. Requests for Qualifications –Key Criteria • Financial Strength • Supply financial information regarding the private entity or Team and each Major Partner that includes, if available, the most recent independently audited financial statements which demonstrates their ability to perform the work. • Non-public firms request confidentiality.

9. Requests for Qualifications –Key Criteria • Past Performance • bankruptcy filings • fines, assessments or penalties • judgments or awards in contract disputes • contract defaults, contract terminations • license revocations, suspensions, disciplinary actions • prior debarments or suspensions • denials of prequalification, findings of non-responsibility • safety performance data • violations of criminal or civil law • criminal indictments or investigations • legal claims filed by or against the firm

10. Request for Tender – Contract Components • Performance-based specifications • allows flexibility in design • promotes innovation • promotes cost-saving techniques • reduces opportunities for change orders based on design errors • Value engineering • incentivize by sharing cost savings

11. Contract Component: Risk Allocation • Design • Inflation, Currency Risk • changes in key materials prices • Geotechnical – differing site conditions • hazmat, archeo-paleo • Utility relocations / unknown utilities • actions by utility owners • Permits and governmental approvals • Change in law • Force Majeure

12. Contract ComponentDispute Resolution - Goals • Contractor/Lenders want streamlined process that is not biased against contractor • Ability of concessionaire to pursue claims quickly through expeditious process • Ability to resolve disputes through a means other than having Agency unilaterally making the determination

13. Contract Component: Dispute Resolution • Choice of law; choice of venue • “Partnering” • Management Review • Mediation • Arbitration • Courts • Early notice to avoid prejudice • Forced combination of related claims

14. Contract ComponentWorkforce Development • Minority, local outreach • Training Programs • Reporting • Safety • Wage rate regulation/commitments

15. Negotiation Options • Select on “best value,” – schedule, technical - not just lowest cost • “BAFO”s • Maintaining confidentiality of proposals is critical • Rank proposers • Incorporation of ideas proffered by unsuccessful bidders • get rights in stipend agreement • Scope/contract clarifications and refinements • Reserve right to reject proposal and negotiate with next highest-ranked proposer

16. Evaluation Process:Selection Committee • Written evaluation guidelines • Separate price and technical submission Technical subcommittees • Role of financial, legal advisors • Submit questions, comments in writing • Technical subcommittees report to Evaluation Committee • Evaluation Committee makes final recommendation based on combination of price and technical factors

17. Contact Karen J. Hedlund, Esq. Partner Nossaman Guthner Knox & Elliott LLP 2111 Wilson Blvd., Suite 600 Arlington, Virginia 22201 Phone: (703) 351-5010 Fax: (703) 351-9506 Email: khedlund@nossaman.com www.nossaman.com