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Public Private Partnerships – Statutory Frameworks for Alternative Project Delivery

Public Private Partnerships – Statutory Frameworks for Alternative Project Delivery. Virginia Municipal League L. Preston Bryant, Jr. October 4, 2010. Design-Build. Originated in private sector, began public sector use in 1980s/1990s

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Public Private Partnerships – Statutory Frameworks for Alternative Project Delivery

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  1. Public Private Partnerships – Statutory Frameworks for Alternative Project Delivery Virginia Municipal LeagueL. Preston Bryant, Jr.October 4, 2010

  2. Design-Build • Originated in private sector, began public sector use in 1980s/1990s • Design-Build Review Board created in 1996 to grant project specific approvals • Law amended in 2006 to allow one-time board approval to certain public entities (localities over 100,000) • Engineer and contractor propose as a common team with shared risks and rewards • Public entity often uses on-call or in-house expertise to scope project and assist with team evaluation • Widely used by VDOT, about 20-30 other projects statewide

  3. Design-Build: Pros • Budget certainty • Qualifications based selection, price is not the sole factor • Reduces project delivery time • Collaboration between engineer and contractor can result in project efficiencies/value engineering • Contract forms (DBIA models) becoming generally accepted • Turnkey project delivery • Single point of contact

  4. Design-Build: Cons • Authority would have to seek approval from the Virginia Design-Build Review Board • Design and construction methods often feel fluid and decisions made “on the fly” • Project price could have significant contingency costs to cover risks shifted from the public entity • Procurement costs are borne by the public entity

  5. PPEA • Law passed in 2002 • Allows for both solicited and unsolicited proposals for development and/or operation of “qualifying projects” • Public entity must adopt guidelines to consider project proposals • 2 phase process – conceptual and detailed • Results in a de facto design-build procurement • Nearly 100 projects completed or underway statewide

  6. PPEA: Dispelling the Myths • Not a panacea • Not free money • Not a finance tool • Not secret negotiations • Not necessarily cheaper • Not privatization

  7. PPEA: Project Examples - Utilities • Bedford County Public Service Authority (completed) • Prince William Service Authority (completed) • City of Fredericksburg (completed) • Southampton County (under construction) • Virginia Beach pump stations (rejected) • Northampton County/Cape Charles (rejected) • Prince Edward County (entering IA phase) • Petersburg pump station (pending) • Augusta County Service Authority (under construction) • Hampton Roads Sanitation District (pending)

  8. PPEA: Process • Public entity solicits for proposals or accepts unsolicited proposals • Minimum of 45 day open competition period for unsolicited proposals • FOIA protections for confidential information are negotiated • Conceptual proposal outlines team qualifications, proposed scope, proposed scope and public benefits • Public entity may levy a proposal review fee on both solicited and unsolicited proposals • Proposal review fee is used to cover procurement costs

  9. PPEA: Process • All competing proposals are reviewed, followed by a downselect • Detailed proposals are requested – often relies on recommendations of outside/inside advisors • Detailed proposals start to lock in project scope, costs, schedule • Leads to an interim or comprehensive agreement with one firm • Significant requirements for public notification and hearings

  10. PPEA: Pros • Many of the same benefits as design-build • PPEA has a certain “cachet” with state regulatory and funding bodies • No non-local approvals necessary • Public entity retains right to reject, modify, expand, or amend proposals at any time • Project review costs can be covered by proposers • Staff augmentation and single point responsibility

  11. PPEA: Cons • Project scope and cost may not be defined until late in the negotiation process • Learning curve for public officials and public • Suspicions about “competitive negotiations” • Did I get the best possible price? • Negotiations can be lengthy and complex

  12. Mitigating PPEA Risks • Use of strong outside advisors with PPEA experience • Two step solicitation process • Establishing clear goals, particularly related to price • Use of interim agreement process • Circulate proposed comprehensive agreement at detailed review phase • Prepare contingency budgets and plans that share risk and rewards

  13. Thank You L. Preston Bryant, Jr. 804.775.1923 Business Expansion | Federal Public Affairs | Strategic Communications & Grassroots Mobilization State & Local Government Affairs | Emerging European Markets Atlanta • Charlotte • Charlottesville • Chicago • Columbia •Norfolk • Raleigh Springfield • Tyson’s Corner • Washington, D.C. | Bucharest, Romania www.mcguirewoodsconsulting.com

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