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.