Alternate Procurement & Funding in Washington State Erin L. Anderson Stoel Rives LLP February 12, 2008

2 Alternate Procurement and Funding Options for New Capital Facilities in Washington State Washington legislation provides a large toolbox of statutes for both developers and government to creatively finance and contract for the construction infrastructure.

3 Traditional Design-Bid-Build Design: Comprehensive bid required for contracting for architectural and engineering services under Ch RCW Bid: –Materials and supplies, Services or Public Works

4 Traditional Design-Bid-Build Bid: –Materials and supplies, Services or Public Works –Bid splitting – phases, parts –First Class & code cities > 150,000 residents –First Class & code cities <150,000 residents

5 Traditional Design-Bid-Build Bid: –Limits on city employee contribution to total public works –Code Cities > 20,000 residents OR 2 nd Class, Towns, Code Cities < 20,000 –Project costs thresholds vary depending on single or multiple trades. Build: Construction after design is complete Change orders

6 Alternate Procurement: Design/Build RCW (SSHB 1506 – July 2007) –Suitable for: Highly specialized d/c, technologies, & schedule Project design repetitive or incidental to construction Projects over $10,000,000 plus: –Parking garages –Pre-engineered/pre-fab modular buildings... Regardless of cost Regular feedback/interaction with owner during design not critical

7 Alternate Procurement: Design/Build RCW (SSHB 1506 – July 2007) –Features: Okay to negotiate on low bid Project review committee may authorize for < $10,000,000 SOQ RFP process: project description, evaluation factors and weighting, other Pre-set evaluation committee Honorarium for finalists

8 Alternate Procurement: Design/Build –Benefits: Acceleration: –Construction starts in early-mid design Risk allocation/shift: –Geotechnical investigation, e.g., WSDOT –Design constructability –Some permitting –Warranties

9 Alternate Procurement: Design/Build/Maintain/Operate RCW (SSHB 1506 – July 2007) –Acceleration –Lower permitting/admin costs for total project –Risk allocation/shift: Operations Permit compliance –Fixed and negotiated operations costs

10 Alternate Procurement: Design/Build/Finance/Operate RCW –Water pollution control facilities only Waste, stormwater –Acceleration –Lower permitting/admin costs for total project –Risk allocation –Financing of construction –Fixed and negotiated operations costs –Retained or split ownership/jurisdiction & service provider

11 Alternate Procurement: General Contractor/Const. Manager RCW (SSHB 1506 – July 2007) –Suitable for: Projects with complex scheduling/phasing Contractor participation at design stage Building in and with continued operations Historically significant buildings Complex or technical work environment –Expanded availability (no longer > $10,000,000) –Available to more governmental entities

12 Alternate Procurement: General Contractor/Const. Manager RCW (SSHB 1506 – July 2007) –Benefits Contingency amount required ADR mechanism mandated Contractor as owner’s agent Improved constructability/budget input Reduced claims Schedule, cost failure risk on GC/CM

13 Alternate Procurement/Finance Design/Build/Finance/Operate RCW –Water pollution control facilities only Waste, stormwater –Acceleration –Lower permitting/admin costs for total project –Risk allocation –Financing of construction –Fixed and negotiated operations costs –Retained or split ownership/jurisdiction & service provider

14 Other Alternate Procurements/Finance –Latecomer agreements: RCW – Streets RCW – Utilities Jurisdictional standards apply No public bid requirements No prevailing wage requirement Varied methods of calculating –Development Agreements (RCW 39.70B) All/some costs borne by developer Flexibility in negotiating type of procurement Public hearings required Recompense/capital recovery charges available

15 Issues Labor/prevailing wage issue For-profit service providers in government Risk allocation Lack of governmental oversight Quality with design/build Permit holder status

16 Questions?

17 The End Alternate Procurement & Funding in Washington State