Pros Project Proposal

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					Public Private Partnerships ‟ Statutory
     Frameworks for Alternative Project
                               Delivery




                     Virginia Municipal League
                        L. Preston Bryant, Jr.
                                  October 4, 2010


                                     CONFIDENTIAL
                           www.mcguirewoodsconsulting.com
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



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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


                                                                        3
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




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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



                                                                               5
PPEA: Dispelling the Myths

„   Not   a panacea
„   Not   free money
„   Not   a finance tool
„   Not   secret negotiations
„   Not   necessarily cheaper
„   Not   privatization




                                6
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)             7
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



                                                                                   8
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




                                                                          9
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



                                                                                     10
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




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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




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                      Thank You
                       L. Preston Bryant, Jr.
                                804.775.1923

Business Expansion | Federal Public Affairs | Strategic Communications & Grassroots Mobilization
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                                  www.mcguirewoodsconsulting.com




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