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17 Authority or the contractor to default on their normal Procurement responsibility to amicably and fairly settle their differ- ences by indiscriminately referring them to the DRB. History The Authority and contractor would be encouraged to The concept for rail to DIA developed in 1990 when resolve potential disputes without resorting to the DRB the Virginia Commonwealth Transportation Board procedures. (CTB) adopted a Dulles Corridor Transportation Pro- A dispute would be referred to the DRB only when it gram with rail service as its goal. In 1995, the Com- appeared that the normal Authority/contractor dispute monwealth of Virginia enacted the PPTA. This act al- resolution effort was not succeeding, and before insti- lows private entities to enter into agreements with the tuting action under the "Disputes" clause of the General Commonwealth to construct, improve, maintain, and Provisions. However, a dispute would be referred to the operate transportation facilities. DRB only when the contracting officer and the contrac- In 1998, an unsolicited conceptual proposal for a rail tor jointly agreed to do so and agreed to the scope of the project came from Raytheon Infrastructure, Inc. (now DRB review. URS) to the Virginia Department of Rail and Public Project Performance Transportation (DRPT). The proposal included design, construction, operation, and maintenance services for a Work proceeded as planned, and the segments NW- new rail line and a Bus Rapid Transit (BRT) system. In 2, NW-3, and NW-4 opened slightly ahead of schedule accordance with PPTA implementation guidelines, the on December 6, 2010. Project personnel were inter- conceptual proposal was posted and published. A com- viewed, and it is reported that no preconstruction peting proposal was received in January 1999 from the claims or significant changes occurred. TysonDulles Corridor Group, a consortium consisting of Bechtel and West*Group. IV. DULLES CORRIDOR METRORAIL PROJECT The Initial Review Committee considered both pro- posals and determined that the Raytheon proposal mer- Project Overview ited further review. In February 2000, CTB adopted a resolution approving Raytheon's conceptual proposal The Metropolitan Washington Airports Authority and invited a detailed proposal. An Advisory Panel was (MWAA) is in the process of constructing a 23-mi exten- formed to handle subsequent matters in accordance sion to the existing Metrorail system, with the project with PPTA implementation guidelines. By October being commonly known as the "Dulles Corridor Metro- 2000, Raytheon announced the formation of Dulles rail Project." When completed, the project will be turned Transit Partners (DTP), a consortium of Raytheon, over to another agency, the Washington Metropolitan Bechtel, and West*Group (West*Group eventually Area Transit Authority (WMATA), for operation and withdrew from the consortium), an occurrence that the maintenance and will be known as the "Silver Line." Advisory Panel acknowledged. The project will provide transit from East Falls Church, In late May 2002, DTP submitted its detailed pro- Virginia, to Washington Dulles International Airport posal, and by June 2002, DTP had submitted a draft (DIA) and west to Ashburn, Virginia. Importantly, the environmental impact statement (EIS) to DRPT. The new line will provide service to Tyson's Corner (a major Draft EIS proposed several transportation alternatives, commerce center in Northern Virginia), the Reston including bus, combined bus/rail, and exclusively rail Herndon area, and will be a one-seat ride from DIA to options. The full Metrorail system emerged as the Lo- downtown Washington, D.C. cally Preferred Alternative to increase nonvehicular The project is broken into two phases and is expected access to Tyson's Corner, Dulles, and Loudon County. to have a total cost in excess of $5 billion. The first WMATA, the CTB, Fairfax County, Loudon County, phase will be approximately 13 mi, and have four sta- and MWAA all approved or endorsed the project in De- tions in the Tyson's Corner area. Utility and right-of- cember 2002. DRPT and DTP began to negotiate a com- way acquisition work along the Phase 1 corridor started prehensive agreement (CA) in January 2003. The CA in August 2007, and Full Notice to Proceed with final was executed in June 2004. design and construction under a DB contract was au- The CA called for, among other things, DTP to per- thorized in March 2009. Phase 1 is expected to be com- form preliminary engineering on Phase 1 and then pro- pleted by 2013. Phase 2 will extend the transit system vide a fixed-price proposal to DRPT to complete the to DIA and eastern Loudon County, Virginia. final design and construct Phase 1. DTP performed the This case is an example of how the Virginia PPP pro- preliminary engineering and ultimately submitted a curement statute provided the authorization for Phase Final EIS in December 2004, which received FTA ap- 1 of this complex project to reach fruition. The case proval in March 2005. study will provide an overall background to the corridor MWAA became involved in the project when, in De- transit project while focusing upon Phase 1 of the pro- cember 2005, it submitted a proposal to the Common- ject and procurement. wealth of Virginia proposing that the Dulles Toll Road be transferred to MWAA in consideration of MWAA operating the Dulles Toll Road and using toll revenues as a nonfederal source of funding to construct the pro-

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18 ject and for other transportation improvements in the One of the important procurement features of the Dulles Corridor. In March 2006, the Commonwealth of project involved the handling of certain subcontractors Virginia entered into a Memorandum of Understanding and suppliers. During the course of the negotiations on with MWAA agreeing to the transfer, and on December the DB contract, the parties concluded that portions of 29, 2006, the Commonwealth of Virginia and MWAA the work that were to be performed by certain subcon- entered into a transfer agreement which, among other tractors were difficult to price realistically. These sub- things, effected an assignment of the CA to MWAA. contracts involved work that was scheduled to be per- formed several years after the start of construction, and Scope of Work it appeared that the pricing prospective subcontractors The scope associated with Phase 1 of the Dulles Met- were providing had substantial contingencies, due to rorail Project is broad-based and includes administra- the combination of the level of design existing as of the tion, design, engineering, procurement, transportation, proposal pricing date, implementation schedule, and quality assurance, inspection, installation, construction market conditions. To deal with this situation, the par- supervision, management, documentation, maintenance ties carved out this work from the fixed-priced compo- demonstration, and testing services. The design-builder nent of the proposal and converted it to an allowance. also has responsibility to provide labor, equipment and Therefore the $1.6 billion DB contract price with DTP materials, machinery, tools, consumables, utilities, and includes approximately $600 million of allowances for other services dictated or enumerated by the contract. the following: Process Overview Track work. DTP finished the preliminary engineering and in Wiehle Parking Garage. January 2007 submitted a fixed-price DB proposal to Station finishes and mechanical, electrical, and MWAA for Phase 1. The parties negotiated the pro- plumbing work. posal, and on June 17, 2007, MWAA and DTP executed West Falls Church Yard sound and box platforms. the DB contract in the amount of approximately $1.6 Pedestrian bridges. billion. Site development. To advance the project and eliminate risks that were Installation of public art. considered inherent in the right-of-way acquisition and Communications and security. utility relocation scope of work, MWAA and DTP agreed Fire suppression. that this work would be performed under the CA on a Elevators and escalators. cost-reimbursable basis, as opposed to being part of the Spare parts. DB contract. This eliminated the need for DTP to put West Falls Church Yard service and inspection contingencies in its lump-sum contract for what were building. expected to be challenging and unknown conditions. Traction power supply. Having this work proceed under the CA also enabled Automatic train control supply. the project to mitigate the potential impact of this scope Corrosive and stray currents. of work, as DTP was able to start work on these activi- Contact rail. ties in August 2007--several months in advance of the Replacement parking. expected notice-to-proceed date (February 2008) for the DB work. This approach was viewed as mitigating the The contract requires DTP to include MWAA in impact to the project schedule that could come from oversight of the bidding and awarding of allowance item having this work performed concurrently with the re- contracts. DTP was to develop prequalification criteria lease of the DB package. Since MWAA would have ul- and submit them to MWAA 30 days before requesting timate financial responsibility for right-of-way and util- bids for subcontracted work. DTP also has responsibil- ity relocations, the cost-reimbursable contracting ity for drafting RFPs for allowance items. In the event approach offered under the CA also enabled MWAA to that it was necessary to engage different subcontractors have DTP serve as MWAA's representative in perform- for allowance item tasks, DTP was to develop separate ing this work, with MWAA ultimately controlling the RFPs for those items. DTP was also to open the bids in pace and disposition of the negotiations for land and the presence of MWAA and evaluate the bids according relocations. to established selection criteria. Because of delays to the FFGA, which called for the A key part of the allowance arrangement is that each FTA to provide $900 million for Phase 1, the start of the party has taken some risk in the arrangement. MWAA DB project was delayed beyond February 2008. The has taken procurement risk for the allowance subcon- parties proceeded to have certain work performed under tractors, since the ultimate price for the DB contract is the CA on a series of interim agreements, and an adjusted to reflect actual prices received from the bid- amended and restated DB contract was executed on ding process and how those prices vary from the allow- July 25, 2008, to address a number of issues that arose ance price within the contract for such scope of work. from the delayed notice to proceed. On March 10, 2009, Once the bidding is completed and the subcontract the FFGA was signed, and full release under the DB signed, DTP is to take full risk of the subcontractors for contract was issued shortly thereafter.