Alternate Procurement & Alternate Procurement & Funding in Washington StateFunding in Washington State

Erin L. Anderson Stoel Rives LLP

February 12, 2008

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Alternate Procurement and Funding Alternate Procurement and Funding Options for New Capital Facilities in Options for New Capital Facilities in

Washington StateWashington State• Washington legislation provides a large

toolbox of statutes for both developers and government to creatively finance and contract for the construction infrastructure.

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Traditional Design-Bid-BuildTraditional Design-Bid-Build

• Design: Comprehensive bid required for contracting for architectural and engineering services under Ch. 39.80 RCW

• Bid: – Materials and supplies, Services or Public

Works

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Traditional Design-Bid-BuildTraditional 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

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Traditional Design-Bid-BuildTraditional Design-Bid-Build

• Bid: – Limits on city employee contribution to total public

works– Code Cities > 20,000 residents OR 2nd Class,

Towns, Code Cities < 20,000– Project costs thresholds vary depending on single

or multiple trades.

• Build: Construction after design is complete• Change orders

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Alternate Procurement: Alternate Procurement: Design/BuildDesign/Build

• RCW 39.10 (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

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Alternate Procurement: Alternate Procurement: Design/BuildDesign/Build

• RCW 39.10 (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

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Alternate Procurement: Alternate Procurement: Design/BuildDesign/Build

– Benefits: • Acceleration:

– Construction starts in early-mid design

• Risk allocation/shift:– Geotechnical investigation, e.g., WSDOT

– Design constructability

– Some permitting

– Warranties

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Alternate Procurement: Alternate Procurement: Design/Build/Maintain/OperateDesign/Build/Maintain/Operate

• RCW 39.10 (SSHB 1506 – July 2007) – Acceleration– Lower permitting/admin costs for total project– Risk allocation/shift:

• Operations• Permit compliance

– Fixed and negotiated operations costs

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Alternate Procurement: Alternate Procurement: Design/Build/Finance/OperateDesign/Build/Finance/Operate

• RCW 70.150– 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

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Alternate Procurement: Alternate Procurement: General Contractor/Const. General Contractor/Const.

ManagerManager• RCW 39.10 (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

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Alternate Procurement: Alternate Procurement: General Contractor/Const. General Contractor/Const.

ManagerManager• RCW 39.10 (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

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Alternate Procurement/FinanceAlternate Procurement/FinanceDesign/Build/Finance/OperateDesign/Build/Finance/Operate

• RCW 70.150– 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

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Other Alternate Other Alternate Procurements/FinanceProcurements/Finance

– Latecomer agreements:• RCW 35.72 – Streets

• RCW 35.91 – 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

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IssuesIssues

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

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Questions?Questions?

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The End

Alternate Procurement & Alternate Procurement & Funding in Washington StateFunding in Washington State