Innovations in Infrastructure Procurement – The Virginia Experience Design-Build Institute of America Washington, DC Chapter Chris Lloyd McGuireWoods Consulting September 20, 2006

Presentation Overview Legislative History Overview and Process Virginia Experience – Examples PPEA vs. Design-Build

Built on the successes of the PPTA (895, 288, 28, Coalfields Expressway) Design-Build Review Board created in 1996, overly cumbersome process Passed General Assembly in 2002 Model Guidelines issued in October 2002, state guidelines in December First comprehensive agreement signed July 1, 2003 Amendments occur in 2003, 2004, and 2005 Additional changes in 2006 regarding FOIA, public disclosure, oversight PPEA History

What is it? - An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer - Vehicle to use design-build practices What it is NOT? - A panacea that resolves all procurement issues - A way to get something for nothing PPEA

Allows for solicited and unsolicited proposals to develop or operate a qualifying project A qualifying project is: –education facility (public school and higher ed) –equipment to enhance public safety and security at public buildings –utility and telecommunications and other communications infrastructure –recreational facilities –Technology infrastructure –any building or facility that meets a public purpose and is developed or operated by or for any public entity –any improvements necessary or desirable to any unimproved locally- or state-owned real estate PPEA

Public body adopts PPEA guidelines Private entity submits proposal to public body or public body issues a solicitation for proposals Public body makes a written determination whether the project is developed using competitive bid or competitive negotiation Competitive negotiation can proceed if the public body determines that this method is “likely to be advantageous” because of the “probable scope, complexity or urgency of the project” or “risk sharing, added value, an increase in funding or economic benefit from the project that would not otherwise be available” PPEA process

Private entity secures confidentiality agreement for FOIA protection Private entity submits a conceptual proposal for review (qualifications and experience, conceptual schedule and cost, public benefit) Open competition period of not less than 45 days (no minimum for solicited projects) Public body determines whether or how to proceed If public body moves forward, asks for a detailed submission (accelerated process permitted) At this phase, schedule and price become locked in One proposer is elevated to the interim/comprehensive agreement stage PPEA process

PPEA Guideline Implementation City of SalemChesterfield City of RichmondStafford City of WinchesterRoanoke City of Manassas ParkFrederick City of Virginia BeachLoudoun City of FredericksburgCity of Chesapeake City of Falls ChurchJames City City of ManassasYork City of LynchburgBedford Norfolk Airports AuthorityFairfax Clarke CountyFauquier County City of SuffolkCity of Norfolk SouthamptonCity of Roanoke Town of HerndonHenrico Bedford PSASpotsylvania Rockbridge CountyCampbell County City of Staunton PPEA - implementation

What is happening across Virginia? School facilities in Falls Church, Fredericksburg, Chesterfield, Winchester, Bedford County, Warren County, Stafford County, City of Harrisonburg - agreements signed Pending school projects in Cumberland and Northumberland Counties Public safety facilities in Roanoke, Stafford, and Frederick Counties Capitol Square redevelopment James City County recreational facilities DOC Prison construction program (Centex), regional jails Parking decks (Fredericksburg, Roanoke, Winchester) Technology projects (VITA) Virginia School for the Deaf and Blind consolidation Prince William and Chesapeake human services offices Bedford County Public Service Authority facilities Crater Regional Public Safety Training facilities Virginia Beach Performing Arts Center Prince William Service Authority facilities Herndon downtown redevelopment project PPEA - implementation

Fredericksburg Parking Deck Project Fredericksburg adopts PPEA guidelines on May 13, 2003 Donley’s makes initial contact with City, reviews prior parking needs studies Donley’s narrows potential properties, partners with a local broker to secure options on the preferred site Fredericksburg receives unsolicited proposal from Donley’s on January 27, 2004 and opens 45-day competition period No competing proposal is received, Donley’s (in cooperation with the city) begins meetings and makes a presentation to city council Downtown merchants group assembled by Council to work on design, several changes are made, Fredericksburg agrees to enter into comprehensive agreement with Donley’s, groundbreaking on 11/11/04, opens November 2005 PPEA - implementation

Stafford County Public Safety Center Stafford Board authorizes solicitation for public safety building in December 2003 Two competing proposals are submitted in March 2004 Stafford retains outside consultants to assist with program review County works with both teams to refine scope, ultimately decides to proceed to comprehensive agreement negotiations with Northrop Grumman County signs agreement with Northrop Grumman in December 2005, 112,000 square feet, $36.4 million project Project funded with locally issued debt Groundbreaking on July 18, 2006 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 Cost overruns and scope creep Public sentiment turns away from development Negotiations never end Responsible parties are not coordinated Project is overly defined or restricted PPEA - implementation

Senate Bill 732 PPEA had largely displaced formal design-build process since 2002 Allows any locality with over 100,000 residents to get a one-time approval to use design-build Loudoun, Alexandria, and Virginia Beach have secured approvals Potential expansion in 2007 or 2008 Design-Build Catches Up

PPEA is better because… Process has “sex appeal” among legislators Public entity has right to charge a review fee for proposals Contracts and processes becoming standardized No Richmond involvement Encourages innovation and creativity Design-Build vs. PPEA

Design-Build is better because… PPEA is a long and involved process Press is suspicious of PPEA Has more national standing Public entity has greater control Design-Build vs. PPEA