Public Private Partnerships P3s What the Public Sector Considers When Selecting the Right Private Partner Jose A. Galan - Division Director Miami-Dade County – Internal Services Department Real Estate Development Division

Introduction A P3 project includes a public agency contracting with a private party to provide a public purpose Each project is unique and no one method will work for every project Projects typically include some or all of the following: finance, design, construct, operate, maintain a facility or system in whole or in part Seven keys to success include: public agency champion, statutory environment, public agencies organized structure, detailed contract/business plan, clearly defined revenue stream, stakeholder support and partner selection Partner selection may be the most critical

The Selection Process Expressions of Interest (EOI), Request for Qualifications (RFQ) and a Request for Proposals (RFP) Importance of the Public agency providing project parameters, public contribution of funds, timeline, current condition of the facility or proposed facility location Importance of the Public agency requesting the following information from prospective partners: Description of the proposed partner, qualifications and experiences, financial capability, references, transfer of risk, and litigation and controversy The goal is select a partner that will bring the best value to the project as opposed to the lowest bidder

Partner Selection Criteria Identification of the proposed partner as well as the proposed management style Overview of the proposed partner including history of the organization, ownership and corporate structure Additional information that conveys the potential partner’s plan to fulfill the agencies objectives This information should provide the agency with a comfort level with who the prospective partner is Agencies should have their legal council should review all agreements to ensure their rights and remedies are well represented and legally enforceable agreements provide the basis for the P3 and protect all parties Review description of the proposed partner’s proposal which should include

Partner Selection Criteria Depending on the structure of the proposed P3, the agency should be considering the relevancy and extent of specific technical experience and expertise of key staff members of the proposed partner and not just the entity as a whole Benefits can include: accelerated project delivery, greater access to technology and innovation, transfer of risk, alternative financing methods and cost efficiencies Review a list of the prospective partner’s projects completed and under construction Schedule interviews to meet prospective partners one-on-one with all parties involved in the selection process present Past performance can serve as an indicator of future performance Review the partner’s qualifications and experience

Partner Selection Criteria Review the most recent financial data, including audited financial statements Confirm available net working capital and net worth of submission team Review proposed alternative funding approaches An independent financial consultant chosen by the agency prior to final prospective partner selection Financial capability

Partner Selection Criteria Request and contact references The public agency should confirm that the person listed as a reference actually worked directly with the prospective partner in question and their capacity List of references should include projects and agencies which are similar to the proposed project References

Partner Selection Criteria Agencies should select a prospective partner that is better equipped or more experienced than it to handle certain risks associated with the project These could include project costs, financing, construction schedule and quality assurance The goal should be to combine the best capabilities of the public and private sectors for mutual benefit Transfer of risk

Partner Selection Criteria Another issue of due diligence to be performed by the public agency is to ensure the prospective partner is not involved in any litigation and free of controversy that might jeopardize the P3 project The potential partner should provide a written statement that the proposed company and individual team members are not the subject of any litigation or material controversy Litigation and controversy

Conclusion The selection process should identify and pre-qualify those prospective partners that have the greatest potential for developing and delivering the proposed project as a P3. A successful partnership should ensure that both the public agency and private partner will have an effective business relationship

References 1.Contracting & Public-Private Partnerships – A guide for State & Local Government Officials & Administrators, 2014 Edition. Dr. Lawrence Martin & Dr. Joe Saviak 2.Deloitte Research Study – Partnering for Value Structuring Effective Public-Private Partnerships for Infrastructure 3.Agency for Public Private Partnership – A Step-By-Step Guide to Public Private Partnerships, July Zagreb 4.California Debt & Investment Advisory Commission - Public-Private Partnerships: A Guide to Selecting A Private Partner, March OECD Better Policies for Better Lives – Public Governance and Territorial Development Public Management Committee, 32 nd Annual Meeting of Working Party of Senior Budget Officials. June 6- 7, Luxembourg