Alternative Project Delivery Mechanisms

1. Alternative Project Delivery Mechanisms The J. K. Spruce Experience Katherine Yates Assistant General Counsel

2. Overview • J.K. Spruce #2 planned as early as 1986. • Authorized to proceed without permit in 2004. • Chose Design-build methodology. • Issued Two Phase RFP. • Two Offerors Responded/Awarded July 2005. • Issued LNTP’s in August 2005 and full NTP in April 2006. • Provisional acceptance expected no later than March 2010.

3. Traditional Process • Chapter 252 of Local Gov. Code governed procurement activities. • Design-Bid-Build was only available method. • Bids advertised, opened and awarded publicly. • Award based on Lowest responsible bidder.

4. New Processes • Chapter 271, Subchapter H added in 2001. • Authorized “best value” determination. • Five new methods for project delivery: • Competitive sealed proposals • Design-build • Construction manager-agency • Construction manager-at-risk • Job-order contracting

5. Design-Build process • Single entity provides design and construction. • Two phase procurement process: • Phase One RFQ based on qualifications, references, past experience. • Phase Two RFP based on schedule, implementation plan, technical approach, cost. • Award to best value offeror.

6. Design-Build Advantages • Fast-track schedule and construction • Single point of contact. • Cost savings due to value engineering. • Less owner administrative burden during construction phase. • Potential for minimization of change orders.

7. Initiation of CPS Energy Process • Board Resolution selecting “best value” process. • Engage Owner-Engineer to develop Design Criteria Package. • Functional specification and conceptual layout. • Desired equipment margins. • Quality and performance guarantees. • Transmission access. • Geotechnical and environmental information. • Engaged the services of a surety consultant • Joint development of RFPP/RFP and evaluation matrices. • Pre pre-bid meeting held with interested parties.

8. Phase One-RFPP • RFPP advertised and sent to attendees. • Pre-bid meeting held with Site visit. • Evaluation criteria: • Ability to bond penal value of $250 million. • Financial status. • Reputation in industry. • Past experience. • Resumes of proposed project team. • References. • Two offerors qualified to proceed to Phase Two.

9. Phase Two • Offerors given the RFP. • Agreement to reimburse losing entity of up to $1 million for preparation costs. • Evaluation criteria: • costs • Implementation plan • Project schedule • Safety record • Workforce and training plans • Costing methodology • Initial Design drawing and schematics

10. (con’t.) Phase Two • Interviews conducted to clarify exceptions and technical response. • Offerors asked to resubmit responses based on discussion and to provide pricing to remove exceptions. • Signed agreement “fixing” responses for evaluation. • Evaluation and recommendation of selected offeror. • Negotiations with selected offeror and award based on reaching satisfactory contract.

11. Post Award • Limited Notices to Proceed: • LNTP #1- Early planning and engineering for procurement of long lead time items. • LNTP #2- Vendor engineering. • LNTP #3- Preparatory site construction work • LNTP #4- Material and Equipment purchase release • LNTP #5- Controls upgrade • Full Notice to Proceed upon issuance of permit.

12. Keys to Success • Clear and comprehensive Design Criteria package. • Effective integration of proposed Design-Build Team. • Full and consistent communication. • Owner involvement.

13. Commercial Considerations • Testing and commissioning done by third party. • Contract price. • Payment and performance bonds. • Construction risks. • Bidding stipend. • Bonus for early completion. • Payment of prevailing wage. • Use of a Local Government Corp.