P3 Teams Update:Procurement Team

Engineering and Operation TeamFinancing Team

July 11, 2007

Procurement Team

Ruth DillardDirector, Office of Administration

July 11, 2007

3

PPP Goals

• Procure services, not assets, from private sector

• Require output terms as part of each PPP Procurement providing opportunity for innovation and risk transfer

• Bundles include Design-Build-Finance at a minimum, and where appropriate, Operations-Maintenance, resulting in an Integrated, Efficient, Service Delivery

• Project partially or fully financed by private sector

• Risks allocated to party best able to manage them

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FDOT Procurement Successes

• Outsourcing transportation projects since the 1960s

• Construction Outsourcing composed of:

Building roads and bridges – 100% outsourced

• Maintenance Outsourcing – 80% outsourced

• Engineering Service – 80% outsourced

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PPP Foundation

Well-Established FDOT Procurement Processes

• Construction, Design/Build, Professional Services and Asset Maintenance

• Rules

• Procedures

• Refined and improved over the years as more and more processes have been done

• Input from internal and external customers

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2 Triggers for P3s

• Solicited Proposals

• Unsolicited Proposals

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Solicited PPP Proposals• Design/Build and Asset Maintenance procurement

processes solid foundations to build upon

• DOT will advertise projects utilizing established processes

- Contracts Administration website: http://www.dot.state.fl.us/cc-admin/

- Procurement website: http://www.dot.state.fl.us/procurement/

• Firms not prequalified may be qualified via the procurement process

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Solicited PPP Proposals (continued)

• Transparent Process

• Sunshine Law applies, except:

10 days after Proposal is received

Exempt items such as company financial statements

• Time Added from Short-List and Issuance of RFP for Interaction Between Teams and FDOT on Draft Documents and Technical Issues

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Solicited PPP Proposals (continued)

• One on Ones will occur during this time for discussion, not decision-making

• Fair, Open, and Competitive

• Best Value Approach

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Unsolicited PPP Proposals

What is Different?

• Please talk to FDOT prior to a submittal of unsolicited proposal

• May submit a concept proposal, provided FDOT can determine the project being proposed

• When unsolicited proposals are submitted - $50,000 fee required

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Unsolicited PPP Proposals (continued)

• DOT will publish notice in the Florida Administrative Weekly AND newspaper of general circulation at least once a week for 2 weeks and accept proposals for 120 days after initial publication

• Substantial deviation from project purpose requires permission

• Teams submitting proposals must meet minimum qualifications, which the Department will publish

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Strict Procurement Process

• RFQ Issued

• “Cone of Silence”

Once RFQ is issued, FDOT will not talk about or take comments from one proposer about another proposer

“Cone” covers Evaluation Team members, Selection Team members, those “Up Line”

• DOT will evaluate the submitted information

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Strict Procurement Process (continued)

• Firms will be short-listed

• Short-listed firms will be posted

• Request for Proposals will be issued to short- listed firms

• Proposals move to “Sunshine” after 10 days

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Strict Procurement Process (continued)

• Once in the Sunshine, all non-exempt information subject to review

• Proposals will be evaluated

• Proposals will be ranked

• DOT will finalize the agreement

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Ethics Policy Considerations

FDOT employees not allowed to take ANY gift or benefit from a company doing business with or seeking to do business with FDOT.

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Final FDOT PPP Procurement Vision

• Open, Fair, Competitive Process

• Draft process today, open for input

• Evolution into standard process

• PPP Procurement Questions:

Ruth Dillard – ruth.dillard@dot.state.fl.us

Juanita Moore – juanita.moore@dot.state.fl.us

Engineering and Operations Team

Ananth PrasadChief Engineer

July 11, 2007

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Engineering and Operations Task Team

• Objective to “mainstream” P3s by

Developing Policies and Procedures

Boilerplate documents such as RFP, Technical Requirements.

• While recognizing that these documents are “living” documents and will change as we continue to learn from such projects.

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Technical Requirements

• Being developed by the various disciplines within the Department (i.e. Roadway Design, Pavements, Structures, Construction, Maintenance, etc.)

• FDOT has extensive Design-Build and Warranty experience.

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Technical Requirements

• Design Criteria

• Construction Criteria

• Alternative Technical Concepts

• Maintenance and Handback Requirements

• Oversight Role

Owner/FHWA

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Technical Requirements

• General Philosophy is that our standards and specifications are the baseline.

Use the Alternative Technical Concept Proposals to submit innovative ideas.

Be open minded on ATCs.

• Allow choices to be made on Life Cycle Analysis

Asphalt pavement vs. Concrete Pavement

Concrete Bridge vs. Steel Bridge

Median Guardrail vs. Median Concrete Barrier Wall

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Alternative Technical Concepts (ATC)

• The ATC process allows proposers to incorporate innovation, flexibility, creativity and construction time and cost savings into the design and construction of a project and to obtain the best value for the public.

• ATC’s are accepted by the Department at their discretion.

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Alternative Technical Concepts

• The RFP indicates ATC areas that are off limits. Any proposed changes shall provide a solution that is equal or better to what is required by the RFP as determined by the Department.

• A concept is NOT an ATC if it reduces quality, performance, or reliability.

• Strict confidentiality shall be maintained during the ATC review process through meetings.

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ATC Submittals

• ATC Submittals need to include information such as:

Description

Usage – How being used?

Explain deviations from the RFP

Analysis justification

Impacts

Risks

Quality

Changes to Operations and Maintenance

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ATC Advantages

• Promotes innovation and taps expertise

• Can result in reduction of project costs

• Justifies the stipend for unsuccessful proposers when their ideas can be incorporated

• Provides the Owner with new ideas, techniques, or materials to use in future projects

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ATC Disadvantages

• Be careful not to accept proposals that cut the scope (i.e. drop lanes, reduce shoulder widths, delete components)

• Can make comparison of proposals somewhat difficult

• Typically adds an extra month to the proposal process

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Concessionaire’s Oversight Role

• Complies with the Approved Project Management Plan (PMP)

• Complies with all Contract Requirements

• Signs and Seals all Engineering Drawings

• Self-Reports on Non-Compliance (monitoring compliance)

• Conducts Inspection Testing and Acceptance

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Owner’s Oversight Role

• Monitors the Concessionaire’s Compliance with Concession Agreement

Conformance to the PMP

Public and End User Safety

Monitors Project Performance Over Term of Concession Agreement

Handback Standards (Residual Life Expectancy)

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Owner Oversight Philosophy

• Owner will have oversight commensurate to the concession period

Every contract will have some oversight.

• Use Department’s process for Disputes Review Boards to resolve disputes.

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Owner/FHWA Oversight Philosophy

• Materials Testing

DOT’s Contractor Quality Control (QC) Model

- Open to ATC such as ISO Accreditation, Different QC Model.

Owner reserves the right to perform independent tests

- No set frequency but commensurate with history of results and risk.

- Failing tests requires resolution.

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Maintenance Requirements

• FDOT has extensive experience in Asset Management and Asset Maintenance Contracts.

• Asset Maintenance Contract criteria to be included

Criteria is performance based.

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Maintenance Requirements• Should cover the following areas and more:

Customer Response

Incident Response

Roadway (Potholes, Raveling, Shoving, Depressions, etc)

Roadside (Unpaved Shoulders, Slopes, Fence, etc)

Traffic Services (Striping, Pavement Markings, Guardrail, Signs, Lighting, etc)

Drainage (Cross drains, ditch, inlets, sweeping, etc)

Vegetation and Aesthetics (Mowing, Litter, Tree Trimming, Turf, etc)

Bridge Condition

Signals

ITS

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Major Repairs/Rehab

• Pavements

Pavement Conditions Surveys (every year)

- Flexible Pavement are rated for Rutting, Ride, and Cracking on a scale of 0 (worst) to 10 (best). Rigid Pavement are rated on defect and ride.

- Pavement segments with any rating of 6.4 or below are classified deficient and require replacement.

• Structures

Bridge Condition Survey (every 2 years)

- Bridge Condition Index should always be 6 (satisfactory) or higher

– Structural Elements shows minor deterioration

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Handback Requirements

The terms, conditions, requirements and procedures governing the condition in which Concessionaire is to deliver the Project and Project Right-of-Way to the Owner upon expiration or earlier termination of the Agreement and Lease, as set forth in the Technical Requirements.

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Handback Requirements• Renewal Work Schedule – each year before Handback

Concessionaire’s calculation of Residual Life

Estimates cost of the Renewal Work

• Major Residual Life Categories

Pavement

Structures

Building and Maintenance Facilities

Toll Collection and Traffic Management Facilities

Drainage

Safety Appurtenances

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Handback Requirements

• Develop Residual Life Methodology

• Perform Residual Life Inspections

- First Inspection – Between 58 and 62 months before Handback.

- Second Inspection – Between 15 and 18 months before Handback.

- Final Inspection – Not later than 90 days before Handback.

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PPP Guidelines

• The Guidelines will document

the Department’s activities with respect to implementing P3 projects.

• The manual will consist of sections that focus on the procurement process, from the planning phase through final award of the project.

• The goal is for the Department and the Industry to be aware of the major considerations involved in the process and to promote the consistency necessary to ensure the best value statewide.

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PPP – Engineering Issues

Finally, we would like to hear your thoughts and comments.

Ananth Prasad

(850) 414-5240

ananth.prasad@dot.state.fl.us

Financing Team

Marsha Johnson, CPADirector, Office of Financial Development

July 11, 2007

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Finance Presentation

• What’s “Not” New with P3

• Alphabet Soup

• What’s “New” with P3

• Summary

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Cash Management

• FDOT utilizes various cash management techniques to manage revenues and expenditures

• Cash management techniques include INNOVATIVE FINANCE TOOLS

• We call it “The Tool Box”

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Innovative Financing Tools

• Federal Flexibility

• Reasonable Level of BondingTurnpike Revenue Bonds

Right of Way and Bridge Bonds

GARVEE Bonds

Seaports Bonds

• State Infrastructure Bank

• P3 – Public-Private Partnerships• Other Innovative Financing Options

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Public Private Partnership (PPP, P3)

• Contractual agreement between public and private partners which allows more private sector participation than traditional contracting.

• Alphabet soup construction D-B (design-build)

D-B-B (design-bid-build)

D-B-F (design-build-finance)

D-B-O-M-F (design-build-operate-finance)

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HB 985 Financial Policies • Leasing of Existing Toll Facilities and P3s

Allows Existing FDOT Facilities to be Leased to a P3, except the Turnpike

Leases of Existing Toll Facilities must be approved by the Legislative Budget Commission Prior to Awarding a contract

Allows P3 to Deliver New Toll Facilities

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HB 985 Financial Policies

• Policies on All Toll Facilities

Toll Rates Regulated by FDOT through Concession Agreement

Requires FDOT to Receive a Portion of the Excess Revenues as Part of the Agreement

Provide Investment Grade Traffic and Revenue Study and detail Finance as part of the Proposal

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HB 985 Financial Policies

• Cost-effectiveness and Overall Public benefit Study

Value for Money analysis

Prior to moving forward with the procurement

Prior to awarding the contract

Independent Financial Advisor Will Perform

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HB 985 Financial Policies

• Indexing of the Toll rates

Index to Annual Consumer Price Index or Similar Index

No more Frequently than Once a year and

No Less Frequently than once Every 5 years

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HB 985 Financial Policies

• Availability Payments/Shadow Tolls

Allows for Payments based on Availability of Facility or based on the level of traffic using the facility

Payments included in the Work Program and Long-Range Plan ahead of New Capacity Projects

Subject to Annual Appropriation by the Legislature

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HB 985 Financial Policies

• Link of Project Development and Financial Policies

P3 projects Must Meet All Planning and Environmental Requirements Before Moving Forward

FDOT will Normally develop Project to Completion of Environmental Clearance

Will Ensure Project is Supported and Well Developed

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HB 985 Financial Policies

• Financial Security Package

Allows Use of Flexible Approach to Secure Delivery of Project

Includes Combination of Surety Bonds, Letters of Credit, Parent Company Guarantees and Related Items

Balance the Structure of the Security Package for the P3 that Ensures Performance and Payment of Subcontractors with the cost of the security to ensure the most efficient pricing.

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HB 985 Financial Policies

• Terms at 50, or up to 75 Years

• Limit on FDOT Funds for P3s

• Clarifies FDOT may use innovative financing techniques such as hedges associated with P3s

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Financial Advisor Update

Financial Advisory ExpertsSeven Short-listedWill Narrow to Three, then to One for Each

New P3 ProjectAlso, Advise on Overall ProcessWill Work Closely with Legal Team who will

be Experienced in P3 Transactions

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Summary• The “Deal” must fit the project!

• Help develop an understanding and knowledge on P3s

• Help define common sense rules, bench mark on the best approaches for successful P3s

• Remain focused on what is “best” for the public

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PPP – Finance Issues

Marsha Johnson

(850) 414-4647

marsha.johnson@dot.state.fl.us

presentations\p3\FTBA P3 Team Update.ppt

Questions or Comments?