Public Private Partnerships for School Development

1. Public Private Partnerships for School Development Montgomery County School BoardChristopher D. LloydDecember 7, 2010

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

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. 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 with about 20-30 other projects statewide

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 • Over 100 projects completed or underway statewide

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

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. 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. 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 • School Board retains right to reject, modify, expand, or amend proposals at any time • Project costs can be covered by proposers • Staff augmentation and single point responsibility

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. 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. 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. 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. 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. 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. 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 • Bedford County

17. Project Examples

18. Project Examples

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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