CONFIDENTIALwww.mcguirewoodsconsulting.com

Montgomery County Board of Supervisors

Christopher D. LloydOctober 25, 2010

Public Private Partnerships for

School Development

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Virginia Procurement Opportunities

• Design-bid-build• Design-build• PPEA

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Design-Bid-Build

• Traditional procurement method allowed under the Virginia Procurement Act

• Begins with selection of engineer and design team through competitive negotiations

• Selected firm designs project to near complete drawings

• Design and bid specifications are put out for bid• Some public entities start with RFQ, then proceed to

RFP to help narrow list of potentially qualified contractors

• Contractor selection based on lowest responsible bid• Construction is “to the plans”

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Design-Build• Design-Build Review Board created in 1996 to grant

project specific approvals• Law amended in 2006 to allow one-time board

approval to public entities (Montgomery County NOT allowed to participate)

• 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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PPEA

• Law passed in 2002• Based on PPTA (Transportation) of 1995• 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

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PPEA: Dispelling the Myths

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

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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

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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• School Board MUST secure Board of Supervisors

approval before executing contracts• Significant requirements for public notification and

hearings

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PPEA: Pros

• Many of the same benefits as design-build• Provides opportunities for creative and innovative

approaches to addressing school needs• PPEA has a certain “cachet” with state regulatory

and funding bodies• No non-Montgomery County approvals necessary• County/School Board retains right to reject, modify,

expand, or contract proposals at any time• Project costs can be covered by proposers• Staff augmentation and single point responsibility

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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• Currently not an authorized procurement vehicle

for USDA funding programs

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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• County and School Board must be “on the same

page”• 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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PPEA: Why Unsolicited Proposals?

• Greater acceptance of use of project review fees• Greater flexibility to develop a project with

undefined scope• Opportunity to get “world class” ideas • Opportunity to get the “dream team”

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PPEA: Why Solicit Proposals?

• Public entity is in proactive, not reactive mode• Greater opportunity to narrow or define scope• May increase competition, number of proposals• Reduces requirements for staff time to meet with

proposers

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PPEA Implementation

What Makes Projects Go Well• Open and collaborative process between public and

private sectors• Atmosphere that encourages innovation and

creativity• Include public, press and other stakeholders• Objectives (cost savings, time, limits on risk) are

clear from the beginning

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PPEA ImplementationWhat Makes Projects Go Bad• Unnecessary closed door discussions• Public sector shifts all risk, not willing to pay for it• Staff objections to process• Owner did not establish clear criteria and goals

upfront to properly assess performance and success at end

• Cost overruns and scope creep• Public sentiment turns away from development• Negotiations never end• Project is overly defined or restricted

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PPEA: Project Examples - Schools

• Stafford County (2 schools)• City of Falls Church• Northumberland County• City of Fredericksburg (2 schools)• Frederick County• Chesterfield County• Cumberland County• City of Winchester• Warren County

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Project Examples

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Project Examples

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Praise for the PPEA

• “You have to do a lot of work up front,” Francis said of the PPEA process. “We made adjustments as we went along.” In the end, the project was early and under budget. - Bedford County

• Both projects were completed on time, Lafayette opening in September 2005 and James Monroe HS in September 2006, within 26 months, for a Guaranteed Maximum Price (GMP). Moreover, both have received design awards from Virginia school organizations. – City of Fredericksburg

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