MONTGOMERY COUNTY

PUBLIC PRIVATE

PARTNERSHIP CONTRACTSLessons Learned

Overview

How can P3 meet the County’s needs?

What place do P3s have in County

Procurement?

County approach to P3s

A Public Private Partnership generally involves:

A long-term contract between a public agency and a

private sector party, in which:

The public agency and the private sector party share

in the risks and rewards of the project.

Ideally, the public agency leverages the private

sector party's experience to deliver the project more

efficiently

The private sector party may be responsible for

financing, designing, constructing, operating, and

maintaining the project (or any combination of these

services).

The Private sector party generally receives

some form of project generated revenues in

the form of tolls/fares/user fees, and assumes

the risk as to the availability of these revenues.

Alternatively, the private entity may receive

periodic fixed payments from the public entity.

Public entity generally maintains

ownership/control over project.

P3 projects are often used to meet a public entity’s infrastructure needs.

County infrastructure needs are relatively limited.

Under standard P3 framework, public entity need not have entire funding committed at project outset.

County must be able to commit total project funds at project outset.

County Charter Sec. 311: No expenditure of County funds shall be made or authorized in excess of the available unencumbered appropriations therefor.

Payments may be stretched out over term of contract.

Use of grant funds.

Use of genuine P3s is relatively new to County projects.

Beneficiary of State P3 – Purple Line

Partial Funding.

Not party to State Agreement with Concessionaire.

Use of quasi-P3 framework

Public Safety Radio System

Wheaton Redevelopment

Other Design – Build Projects

MD 355 BRAC

County issues with traditional PC projects

Infrastructure needs

No P3 enabling legislation akin to Article

10A of the MD State Finance and

Procurement Code.

County Law and Structure

11B-1 Montgomery County Code

County Procurement:

buying, purchasing, leasing or otherwise acquiring any goods, services, or construction. It also includes all functions

that pertain to the obtaining of any goods, service, or

construction, including description of requirements, selection

and solicitation of sources, evaluation of offers, preparation

and award of contract, dispute and claim resolution, and all

phases of contract administration.

Unless there is some recognized exception to the application

of the County’s Procurement law, all County contracts for goods, services, or construction are subject to its provisions.

County Procurement Law governs

Solicitation of County Procurements

Contract Formation

Contract Administration

Dispute Resolution

Ethics in Public Contracting

Other Governmental Requirements

Involvement of Multiple County Agencies

Office of Procurement

Division of Business Relations and Compliance

Using Department

Primary Point of Contact

Responsibility for managing contract - Contract

Administrator and Department Director

Department of Finance

Risk Management

Office of Management and Budget

AVERY ROAD TREATMENT CENTER

Provided a Unique set of challenges for the

County.

Significant amount of work during early stages,

with multiple County agencies to come up

with framework for the project.

Avery Road Treatment Center provides residential,

non-hospital detoxification and intermediate care

services for adults.

Design – Build – Operate

One Vendor

Thirty Year Operation term

County and State Funded

Private entity contribution

Financing

Project Framework

One vendor provides design, construction and operational

capacity for the ARTC.

Because ARTC is an existing facility, the vendor must be able

to maintain operations during design and construction phase.

County, State, and private funding provides basis for design

and construction phase.

County and State funding will provide basis for operational

phase.

Vendor financing is dependent upon continued operations.

High risk endeavor for vendor, relatively low risk for County.

County Agency Involvement in Procurement

and Contract Process

Office of Procurement

Department of General Services

Department of Health and Human Services

Office of Management and Budget

Department of Finance

County Council

Two – Step County Procurement Process

Pulled from recent experience with design – build and quasi-P3 arrangements.

Request for Expressions of Interest (REOI)

Essentially a Pre-Qualification Process.

Generally more involved that State of Maryland REOI.

Information gathering process for follow-on solicitation.

Feedback from prospective vendors.

Request for Proposals – Best Value (RFP)

Outlines County’s needs for entirety of Project.

Contains contractual framework for Project.

Due to requirements of County Law, cannot be one single contract

document.

Contractual Framework

General Development Agreement

Turnkey Design – Build Contract

Operations Agreement

Building and Land Lease

General Development Agreement

Outlines the overarching relationship between the

parties

Outlines overall funding obligations

Contains overall project timelines

Ties all other contract documents to project

Not a procurement instrument

“Turnkey” Design Build Contract

Procurement Contract

Department of General Services is the “Using

Department”

Guaranteed Maximum Price

County Requirements

Bonds, Insurance

Prevailing Wage

MFD Requirements

Standard termination provisions

Pre-Design Build Status

Ideally lessens risk profile for vendor.

Existing site that is County-owned.

Geotechnical studies complete

Worst-case scenario should ideally be

avoided.

County is committed to the project – has

retained some level of risk at this stage.

County will manage design build process as it

ordinarily does for any other County

construction project.

Ensure that project objectives are met

Monitor progress and funding requirements

Operations Agreement

Procurement Contract

HHS is the Using Department - provides contract

administration

30 year term

Program Requirements set by State and County

Performance

Vendor must keep up with State and County

requirements or face termination

Building and Land Lease Agreement

Not a Procurement Contract

Held by DGS

Tied to Operations Agreement

Leasehold Interest

Standard Lease termination provisions

The “Silent” Partner

Bank interest in Project

Must be given opportunity to

provide substitute performance

Operations

Re-payment schedule

Unique set of challenges in

undertaking the P3.

County can make it work.

Will be ready for the next one…

Questions…?