Solving Challenges Others Cannot

Statutory Frameworks for

Public Private Partnerships

HMFA Lone Star Chapter 2009 Winter Institute

Dallas, TXChristopher D. Lloyd

January 23, 2009

Presentation Overview

• What is a Public Private Partnership?

• Virginia’s PPEA• Benefits of PPP• PPP Success Stories

What is a Public Private Partnership?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 contracting practices- Leverage private sector expertise to meet public goals- Opportunity to foster innovative financing

What it is NOT?- A panacea that resolves all procurement issues- A way to get something for nothing- Privatization

What is a Public-Private Partnership?

• Does not require a formal statutory framework

• Does require a willingness to innovate and use “non-traditional” procurement methods

• Transparency and accountability are vital

Virginia’s 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, services, and applications– 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 Process• 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 Project Structure

• “Turn-key” project delivery• Contractor assumes project cost and schedule

risk• Opportunity for other revenue generating

activities to reduce government cost• Team members provide free advice that helps

the government even if project is not developed

• Often achieves project cost savings through value engineering and faster schedule

• Innovative financing permitted, but government owns in the end

Benefits of PPEA Delivery• Private sector participation permits use of tax

credits and other financing vehicles that have no value to the public sector

• PPEA and design-build are nationally recognized procurement tools with accepted contract structures

• Allows for more local government participation in the procurement decision – not managed by a “one-off” entity

• Public disclosure requirements may insulate against criticism of closed door negotiations

PPEA Trends

• 100+ projects completed or under review

• 2/3 unsolicited, 1/3 solicited• First submission usually wins in

unsolicited, but competition helps reduce price

• More innovative financing• Focus on use of surplus land or facilities

PPEA Success Stories

• New education facilities• State and regional correctional

facilities• Water and wastewater• Public safety centers• Information technology

infrastructure• IT services

PPEA Success Stories

NCPPP National Award - 2005

Texas PPP Opportunities• Public hospitals and healthcare• Water and wastewater• Colleges and universities with

small foundations• Public safety and corrections

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