Innovations in Water and Wastewater Infrastructure Procurement – The Virginia

Experience

Water Finance and Investment SummitNew York, NY

Chris LloydMcGuireWoods Consulting

November 9, 2006

Presentation Overview

• Legislative History• Overview and Process• Virginia Experience – Examples• PPEA vs. Design-Build

• Built on the successes of the PPTA (895, 288, 28, Coalfields Expressway)

• Design-Build Review Board created in 1996, overly cumbersome process

• Passed General Assembly in 2002• Model Guidelines issued in October

2002, state guidelines in December• First comprehensive agreement

signed July 1, 2003• Amendments occur in 2003, 2004,

and 2005• Additional changes in 2006 regarding

FOIA, public disclosure, oversight

PPEA History

What is it?- An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer- Vehicle to use design-build practices

What it is NOT?- A panacea that resolves all procurement issues- A way to get something for nothing

PPEA

• Allows for solicited and unsolicited proposals to develop or operate a qualifying project

• A qualifying project is:– education facility (public school and higher ed)– equipment to enhance public safety and security at

public buildings– utility and telecommunications and other

communications infrastructure – recreational facilities – Technology infrastructure– any building or facility that meets a public purpose

and is developed or operated by or for any public entity

– any improvements necessary or desirable to any unimproved locally- or state-owned real estate

PPEA

• Public body adopts PPEA guidelines• Private entity submits proposal to public

body or public body issues a solicitation for proposals

• Public body makes a written determination whether the project is developed using competitive bid or competitive negotiation

• Competitive negotiation can proceed if the public body determines that this method is “likely to be advantageous” because of the “probable scope, complexity or urgency of the project” or “risk sharing, added value, an increase in funding or economic benefit from the project that would not otherwise be available”

PPEA process

• Private entity secures confidentiality agreement for FOIA protection

• Private entity submits a conceptual proposal for review (qualifications and experience, conceptual schedule and cost, public benefit)

• Open competition period of not less than 45 days (no minimum for solicited projects)

• Public body determines whether or how to proceed

• If public body moves forward, asks for a detailed submission (accelerated process permitted)

• At this phase, schedule and price become locked in

• One proposer is elevated to the interim/comprehensive agreement stage

PPEA process

PPEA Guideline ImplementationCity of Salem ChesterfieldCity of Richmond StaffordCity of Winchester RoanokeCity of Manassas Park FrederickCity of Virginia Beach LoudounCity of Fredericksburg City of ChesapeakeCity of Falls Church James CityCity of Manassas YorkCity of Lynchburg BedfordNorfolk Airports Authority FairfaxClarke County Fauquier CountyCity of Suffolk City of NorfolkSouthampton City of RoanokeTown of Herndon HenricoBedford PSA SpotsylvaniaRockbridge County Campbell CountyCity of Staunton

PPEA - implementation

What is happening across Virginia?• School facilities in Falls Church, Fredericksburg, Chesterfield,

Winchester, Bedford County, Warren County, Stafford County, City of Harrisonburg - agreements signed

• Pending school projects in Cumberland and Northumberland Counties

• Public safety facilities in Roanoke, Stafford, and Frederick Counties

• Capitol Square redevelopment• James City County recreational facilities• DOC Prison construction program (Centex), regional jails• Parking decks (Fredericksburg, Roanoke, Winchester)• Technology projects (VITA)• Virginia School for the Deaf and Blind consolidation• Prince William and Chesapeake human services offices• Bedford County Public Service Authority facilities• Crater Regional Public Safety Training facilities• Virginia Beach Performing Arts Center• Prince William Service Authority facilities• Herndon downtown redevelopment project

PPEA - implementation

Bedford County Public Service Authority• 2 projects ($20 million) in Montvale and Moneta• Developer contributions were essential to deal• www.bcpsa.org has all solicitations and agreements

Prince William County Service Authority• $125-$150 million expansion of Mooney plant• Solicited proposals, received 2 responses• Hired CH2MHill as owner representative• Needed to meet Chesapeake Bay requirements• Will use interim agreement to design project

PPEA - implementation

What Makes Projects Go Bad• Unnecessary closed door discussions• Public sector shifts all risk, not willing

to pay for it• Staff objections to process• Cost overruns and scope creep• Public sentiment turns away from

development• Negotiations never end• Responsible parties are not

coordinated• Project is overly defined or restricted

PPEA - implementation

Senate Bill 732• PPEA had largely displaced formal

design-build process since 2002• Allows any locality with over

100,000 residents to get a one-time approval to use design-build

• Loudoun, Alexandria, and Virginia Beach have secured approvals

• Potential expansion in 2007 or 2008

Design-Build Catches Up

PPEA is better because…• Process has “sex appeal”

among legislators• Public entity has right to charge

a review fee for proposals• Contracts and processes

becoming standardized• No Richmond involvement• Encourages innovation and

creativity

Design-Build vs. PPEA

Design-Build is better because…

• PPEA is a long and involved process

• Press is suspicious of PPEA• Has more national standing• Public entity has greater control

Design-Build vs. PPEA