1. CONFIDENTIAL www.mcguirewoodsconsulting.com Montgomery County Board of Supervisors Christopher D. Lloyd October 25, 2010 Public Private Partnerships for School Development

2. 2 Virginia Procurement Opportunities Design-bid-build Design-build PPEA

3. 3 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”

4. 4 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

5. 5 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

6. 6 PPEA: Dispelling the Myths Not a panacea Not free money Not a finance tool Not secret negotiations Not necessarily cheaper Not privatization

7. 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. 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 School Board MUST secure Board of Supervisors approval before executing contracts Significant requirements for public notification and hearings

9. 9 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

10. 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 Currently not an authorized procurement vehicle for USDA funding programs

11. 11 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

12. 12 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”

13. 13 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

14. 14 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

15. 15 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 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

16. 16 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

17. 17 Project Examples

18. 18 Project Examples

19. 19 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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