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Suggested Citation:"IV. DULLES CORRIDOR METRORAIL PROJECT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
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Suggested Citation:"IV. DULLES CORRIDOR METRORAIL PROJECT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
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Suggested Citation:"IV. DULLES CORRIDOR METRORAIL PROJECT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
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Page 19

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

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

19 performance, just as it is required to do under the lump- sum component of the contract. Selection and Award Criteria Since the CA was developed in accordance with the requirements of the PPTA, its complementary imple- mentation guidelines governed the selection of contrac- tors for public–private projects. The PPTA guidelines include suggestions for evaluation criteria, including: experience with similar infrastructure projects, past performance, demonstration of ability to perform work, leadership structure, project manager experience, man- agement approach, project ownership, participation of small businesses, participation of locally-owned or women- or minority-operated businesses, safety record and plan, and liability. The allowance portion of the DB contract for the Dul- les Metrorail Project called for evaluation of subcontrac- tor bids for the allowance items according to the follow- ing selection criteria: • Schedule. • Evaluated price. • Scope. • Commercial compliance. • Technical expertise. • Safety. • DBE participation. • Quality assurance/quality control. • Key personnel. • Prior relevant experience. • Performance history. • Claims history. • Execution plan. The contract does not stipulate the order of impor- tance of the selection criteria, as it will be the preroga- tive of the parties to decide which subcontractor bid is most appropriate. Key Contract Provisions The terms of the design-build contract reflect both a public and private sector large project dynamic. Among the unique clauses are limitations of liability and a combination parental guarantee/performance bond se- curity backstop provided by DTP to secure its obliga- tions. Additionally, the Amended and Restated Design- Build Contract identified another element of the deal, whereby the FTA required MWAA to identify funding sources for a $200 million Capital Reserve Account (CAPRA), with the CAPRA being created to ensure that sufficient funds will be available to cover risks on the project in the event that project cost exceeds allocated and unallocated contingency levels. DTP agreed to con- tribute up to $25 million of this CAPRA amount, which will be drawn on a pari passu basis (proportionally or at an equal pace) with all other amounts drawn from the CAPRA. In addition to the above, some of the more significant clauses are discussed below. Ownership of Documents The title of all work product developed by DTP pass- es to MWAA on the earliest of the date: 1) DTP has prepared or received such work product, 2) payment has been made by MWAA for such work product, or 3) MWAA terminates the contract for DTP default. DTP retains intellectual property rights to all DTP back- ground data, including designs, plans, models, draw- ings, prints, samples, transparencies, specifications, reports, manuscripts, working notes, documentation, manuals, photographs, negatives, tapes, discs, data- bases, and software that DTP or subcontractor owns or prepared before the contract effective date. However, DTP must grant a nonexclusive, irrevocable, royalty- free license for the background data to MWAA. DTP must also make an effort to provide MWAA with the necessary permissions, waivers, or licenses for any software used by or for the project. Design Review DTP has the full responsibility to execute the design in accordance with the contract documents regardless of any documentation or information provided by MWAA or other persons. Consistent with one of the purposes of the CA, DTP also has the responsibility for the accuracy and completeness of the preliminary engineering (as it developed this design) and any subsequent engineering. MWAA has the right to review all draft plans and speci- fications for compliance with the contract documents, and maintains the right to disapprove any designs that are inconsistent with preliminary engineering plans and specifications. MWAA can conduct over-the- shoulder reviews of the designs during normal business hours in the presence of the design professionals in ad- dition to reviewing any design or engineering submit- tals. Suspension and Termination MWAA has the right to suspend the work for its con- venience at any time with written notice to DTP. The suspension entitles DTP to a change order if DTP claims the suspension has affected the project’s cost or schedule performance. DTP might be subject to com- pensation in the event of a change order but not for markup for profit. MWAA can suspend work for up to 24 hours twice in a 12-month period with no penalty. MWAA also has the right to suspend the work if DTP fails to provide a safe environment for workers, does not execute the work according to the contract documents, or fails to carry out orders properly given. Such suspen- sions do not entitle DTP to compensation. The contract entitles DTP to suspend work if MWAA fails to pay undisputed amounts owed to DTP within 21 days. If the suspension affects the cost or schedule of the project, the contract entitles DTP to a change order. DTP can terminate the project if failure to pay extends past 180 consecutive days. DTP receives payment for any work completed according to the contract up to the termination date and compensation for demobilization

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TRB’s Transit Cooperative Research Program (TCRP) Legal Research Digest 39: Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies explores the use of various project delivery methods, including design-build, construction management at risk, and a number of options considered public-private partnerships, through the examination of seven separate construction projects in various parts of the United States.

The examinations of the seven selected projects are designed to show how particular, and often unique, problems were addressed in each project by utilizing a wide variety of procurement and delivery methods.

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