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Introduction to P3 BootcampDoug Koelemay, Virginia P3 Office
Jeremy Becker, JLLBarney Allison, Nossaman LLP
Virginia Office of Public-Private Partnerships (VAP3)
• Adopted Public-Private Transportation Act (PPTA) enabling legislation in 1995
• Public-Private Education & Infrastructure Act (PPEA) followed• Created VAP3 office in 2010 in response to P3 project
experience, new industry practices and growing need for more public engagement drove significant process changes
• Updated PPTA Manual & Guidelines in 2014 to make process more open, transparent, accountable
• General Assembly incorporated some changes into law in 2015
• Set VAP3 goals as building a strategic program, extending Virginia leadership, expanding to non-transportation projects
Virginia PPTA Project Delivery Framework
*Parties to be notified and briefed upon request after the Oversight Board decision: ‒ Chairs of General Assembly committees ‒ MPO’s ‒ Interested members of General Assembly ‒ Special interest groups ‒ Regulatory Agencies ‒ Public
Briefing Focus: ‒ RFI results (as appropriate) ‒ Schedule ‒ Refresh on the high points from Project Development ‒ Preliminary Procurement documents ‒ Risk Analysis and Value-for-Money ‒ Estimated project cost ‒ Potential public subsidy ‒ Potential economic benefits ‒ Preliminary Business Points ‒ Initial Finding of Public Interest
Briefing Focus: ‒ Detail-Level Screening Report ‒ Desirability as P3 ‒ Feasibility as P3 ‒ HB 2 Prioritization ‒ Duration of P3 development and procurement
Briefing Focus: ‒ Major Business Points‒ Updated Risk Allocation & Management Plan ‒ Statutory Audit results ‒ Final Value-for-Money Analysis ‒ Updated economic benefits ‒ Project bid results ‒ Public subsidy (if required) ‒ Final Finding of Public Interest
Draft and Final Contract Documents posted on P3 Website for review & comment
Final Contract Documents posted on P3 Website
Benefits of New Guidelines
• Aligns political support at project development stage (P3 Advisory Committee includes oversight board members, staff representatives of House and Senate, non-Agency state financial expert)
• Gets oversight board commitment before procurement begins and private sector begins to spend money on proposals (oversight board resolution of approval necessary to advance P3 projects from project development to project procurement)
• Includes regular notifications and briefings to legislature (General Assembly Appropriations, Finance and Transportation Committees)
• Encourages competition (review of RFQ/RFP if project procurement results in a single response)
• Establishes accountability for P3 decision (Commissioner, SecTrans sign Finding of Public Interest document)
• Requires review if material changes in scope, financial terms or risk allocations
High Level Screening Questions
• Can Virginia transfer risk?• Does Virginia have a need for funding requirement?• Can the potential project to raise private capital?• Can the Virginia agency effectively leverage private sector
innovation and expertise?• Is a partnership consistent with Federal requirements? • Can Virginia accelerate project development?• Can a partnership satisfy the public need?• Does the potential project address priorities in state, regional or
local plans?• Are there project efficiencies possible through a public-private
partnership?
Detail Level Screening Questions• Does the project address the needs outlined in the local, regional and state transportation plans? • Will the project enhance the Commonwealth's economic development efforts? • What is the extent of support or opposition for the project?• Are there any legislative concerns about tolling, user fees or use of public funds? • Is the proposed schedule for project completion clearly outlined and feasible? • Is the project’s technical approach based on proven technology? • Is the project consistent with applicable state and federal statutes and regulations?• Is the proposed project consistent with environmental statutes and regulations? • Is the project compatible with local land use and comprehensive plans? • Are public funds required and clearly stated? • Is the preliminary financial plan feasible?• Are there any particular risks unique to the project?• Is the proposed term of concession consistent with market demand? Does it provide a Best Value
solution for the Commonwealth? • Is the proposed term optimal for a whole-life approach? • Does the project include a process for long-term performance management, inventory and hand
back provisions?
Addressing Risks for P3 Projects
Project Development
Comprehensive Agreement (CA)
Executed
Unsolicited P3 Projects
Detail-Level Screening with
Recommendations
Policy Review with Recommendations
Solicited P3 Projects
High-Level Screening with
Recommendations
Project ImplementationDesign and
Construction
Project ImplementationOperations and Maintenance
Project Handback
P3 Project Procurement
Part 1: Screening and Identification
Phase
Initial RiskWorkshop and
Discussions
Part 2: Project
Development Phase
Part 3: Procurement
Phase
Part 4:Construction
Phase
Part 5:Operations
Phase
Initial Risk Register
Initial Risk Management
Plan
Interim Risk Register
Interim Risk Management
Plan
Interim RiskWorkshop
Final CA Risk Register
Final CA Risk Management Plan
Final RiskWorkshop
Handoff from VAP3 to the Agency
VAP3 Lessons Learned
• Permanent office acts as champion, catalyst, guide• P3 leaders and program managers have vision, discipline &
imagination; are pragmatic & collaborative by nature• Consistent, detailed guidelines facilitate closure, realization of public
benefits• Continuous reviews of assumptions and conclusions improve project
decisions• Effective P3 communications focus on benefits produced, broad policy
goals advanced• Steady flows of information to agencies, officials, planners, media
build understanding and trust• Competition is growing as other states, provinces, countries develop
great ideas
11
Alternative Finance & Delivery
• Governance and oversight• Performance monitoring• Compliance audits• Financial audit• Contract management:
– Variation– Dispute resolution– Renegotiation– Capital costing and controls– Asset transfers
• Reporting/reporting systems• Liability management and
budgeting• Reporting and public accounting• Program and project management
• Policy & regulatory framework• Operating procedures and
P3 guidelines• Project screening/pipeline
development (including prioritization criteria)
• Asset optimization and monetization assessments
• Funding and delivery options analyses
• P3 institutional framework• Program risk identification and
mitigation strategies• Strategic communications &
stakeholder outreach• P3 program management and
monitoring systems
• Project scoping and structuring
• Feasibility and business case
• Scoring / accounting considerations
• Risk allocation
• Financial structuring
• Performance standards
• Economic regulation
• Investor targeting
• Procurement strategy
• Selection criteria
• Investor sounding
• Procurement documents
• Procurement management
• Proposal review and selection
• Award protest management
• Contract negotiations
• Commercial and financial close
• Transition assistance
• Permits and licensing
• Employee transfers (when applicable)
• Design/set-up of governance structures
Deal Structure Deal Execution Deal Closure
P3 Program Management
Funding/Financing Options
PSC and Value-for-Money Analysis
Affordability Analyses
Change Management/Stakeholder Outreach
Human and Institutional Capacity Development
Framework Transaction Partnership
13
IGNORANCE OF THE LAW IS NO EXCUSE
Before thinking great thoughts, Read the Statute!
Applicability of general contract code provisions to the P3
Prepare a detailed roadmap; always be 2 steps ahead in your planning
No deal is ENTIRELY free from protest
14
TRANSPARENCY VS THE NEED FOR CONFIDENTIALITY
How to deal with State public records act requirements
Bidders expect confidentiality for certain information
What to release, when to release it and to whom
Submissions in writing vs One-on-one Meetings
15
STIPENDS
Stipends paid if: the Agency cancels the procurement; losing bidders submit compliant bid
Demonstrates the Agency’s commitment to the procurement
Not intended to completely cover the bidders’ pursuit costs
Consideration paid for intellectual property Get authorization to pay before issuance of final
RFP
16
Developing the Technical Provisions
Critical part of the RFP and a “contract document” vs reference information
Performance Based (outcomes) vs Prescriptive (means and methods)
Role of the Standard SpecsAvoid the passive voiceApprove vs review and comment
17
P3’S ARE ABOUT INNOVATION
Be Flexible—Focus on goals/outcomesGive bidders the opportunity to highlight
their strengthsThe ATC processEncourage innovation in financing
structures
18
TIMING OF THE PROCUREMENT AND THE ENVIRO/PERMITTING PROCESS
Equity/Lenders will RARELY take on environmental approval risk
Pass through of mitigation measures to the private sector
How much is the permit dependent on final design?