Effect of Public-Private Partnerships and Nontraditional Procurement Processes on Highway Planning, Environmental Review, and Collaborative Decision Making (2013)

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79 General Guidance and Research Reports General guidance documentation available to assist in screen- ing P3 opportunities was reviewed with the objective of relating P3 opportunities to the decision points in the TCAPP, now known as PlanWorks, Decision Guide. For the most part, exist- ing literature discussing use of P3s as a possible project delivery tool either provides a broad overview (FHWA 2007; Rall et al. 2010)—as in the case of a state without P3 experience— or focuses on specific analyses performed when weighing the decision to use a P3, for example, the best practices for perform- ing value for money, or VfM, analyses (Williamson et al. 2011; Morallos et al. 2009; Buxbaum and Ortiz 2009). Given the rela- tive inexperience with P3s in the United States and the concerns and skepticism that often accompany P3 projects (e.g., unease regarding foreign ownership of transportation assets or con- cern over private-sector control of a tolled roadway and its toll rates), it is not surprising that these two perspectives character- ize the majority of existing literature and guidance (e.g., govern- ment sponsored, academic, industry). A thorough synthesis of the literature as of early 2011, which covers a range of considerations when weighing the benefits and risks of applying a P3 approach, is in National Cooperative Highway Research Program Synthesis 391, Public Sector Decision Making for Public–Private Partnerships (NCHRP Synthesis; Buxbaum and Ortiz 2009). The literature reviewed in that syn- thesis generally is not re-reviewed here. It includes Federal Highway Administration (FHWA) resources; U.S. Government Accountability Office reports; studies by states, regions, and toll road authorities investigating P3 options; Transportation Research Board papers; academic and industry papers; and other resources. In addition, survey results were compiled by querying state DOTs and Canadian provincial counterparts on P3 decision making, including 1. Criteria used to select P3 projects; 2. Measures and/or strategies used to protect the public interest; 3. Level of importance of public concerns related to P3s; 4. Tools used by state DOTs to evaluate P3 proposals; and 5. Information provided to decision makers, including who provides. The NCHRP Synthesis includes a summary of P3 valua- tion processes, which “should include the careful selection of inputs/variables that properly characterize the chosen procure- ment method and risk allocation, using quantitative methods that include sensitivity analysis to better assess the risk vari- ables for a particular project.” Tools that have been used in the United States include VfM, shadow bids and market valuation (Texas), and asset valuation (Chicago and Indiana). The study defines VfM as a financial model that “calculates the difference between the costs and benefits associated with both traditional and PPP procurements.” Similarly, shadow bids are, “detailed estimates of design and construction costs, operating costs, and a detailed financial model” prepared by the state to com- pare with private-sector proposals. VfM has seen widespread use internationally with some application also in the United States (e.g., Florida, Virginia, and Oregon). Often, to apply VfM, a public-sector compara- tor (PSC) model is developed, which attempts to capture the life-cycle project costs (construction, operations, maintenance, additional improvements) if the project were developed using traditional public resources and delivery methods. Then, “an estimate of VfM is achieved by calculating the present value of the PSC and . . . comparing it with one or more bids from private companies.” It should be noted that the PSC approach has been criticized based on the premise that the elements associated with public versus private development are too dif- ferent to allow a meaningful comparison. The NCHRP Synthesis discussion notes that a project’s scope needs to be advanced enough to make realistic estimates of the inputs required of the valuation process, many of which may be known or become pertinent only at stages or decision points past those identified in the TCAPP Decision Guide A p p e n d i x B Literature Review and Additional P3 Resources

80 points in the Decision Guide include early cost considerations, such as 1. Higher private-borrowing costs; 2. Foregone tax revenue on tax-exempt debt; 3. Cost of reviewing unsolicited proposals; 4. Cost of contracting financial and legal advisors or devel- oping expertise in house; 5. Cost of performance monitoring; and 6. Cost of a project warranty (contractor includes contingency funds). Each of these considerations could represent a critical deci- sion point regarding whether a P3 is an appropriate choice for a project in question. Alternatively, assuming a P3 is the likely project delivery option, a project’s scope and the later stages of its planning could be affected by changes deemed necessary to accommodate any one of these considerations and mitigate their negative consequences. Beyond the NCHRP Synthesis, two comprehensive guid- ance documents on the use of P3s are worth noting: FHWA’s User Guidebook on Implementing Public–Private Partnerships for Transportation Infrastructure Projects in the United States (FHWA 2007) and the National Conference of State Legisla- tures’ (NCSL) Public–Private Partnerships for Transportation: A Toolkit for Legislators (Rall et al. 2010). The FHWA guide (included in the NCHRP Synthesis) is “aimed at both the early practitioners of PPP projects as well as those agencies just beginning to consider the possibility [of] instituting some form of PPP arrangement . . .” whereas the toolkit has been prepared for state legislators as they consider whether and how they pursue P3s in their states. The FHWA User Guidebook is often cited among the litera- ture and offers a broad overview of P3s, including a rationale for considering P3 approaches and definitions, and applica- tions of different forms of P3s. In terms of screening a P3 opportunity, the document first lays out various criteria for evaluating the suitability of a P3 as a project delivery tool from a general perspective, as well as the perspectives of public sponsors and private entities. The general criteria cited include 1. Legal authority and stakeholder desire; 2. Demonstrated transportation need; 3. Sponsoring agency lacking resources; 4. Strong commitment by key stakeholders; 5. Large and complicated project; 6. Adequate funding potential; 7. Strong partner relationships; and 8. Level playing field for bidding teams. These criteria require additional context and specific appli- cation to understand their impact on the transportation (i.e., post-ROD), including advanced project design, value engineering results, and refined traffic and (toll) revenue stud- ies. Estimates of life-cycle improvements and future expansions/ extensions would be required of the P3 project planning pro- cess if these valuation tools are to be effective—estimates that are not necessarily captured in existing infrastructure plan- ning processes. If they are, a high level of confidence would be required to make the valuation process credible. Indeed, criti- cism of the PSC and VfM techniques centers on their being an examination of only a hypothetical scenario, with varying degrees of uncertainty associated with the necessary inputs and assumptions. Overall, with respect to P3 valuation, the report concludes that “the most pressing research need surrounding PPPs is related to PPP valuation tools.” In attempting to synthesize the state of the practice of valu- ation tools, the NCHRP Synthesis concludes that other lit- erature has found that “the industry would benefit from a compilation of existing valuation methodologies, a description of the advantages and disadvantages of each of these tools, sample applications, and the development of a framework that would help project sponsors to evaluate potential PPP deals objectively.” Even so, many of these tools’ applications may fall outside the Decision Guide’s scope. Among concerns raised over P3s—identified in NCHRP Synthesis—are issues of environmental safeguards and the envi- ronmental review process that occur during the planning pro- cess. Concerns exist that private-sector interests can limit or bypass the environmental review process, and the extent to which safeguards are put in place in response to any one issue could be deemed inadequate or compromised. Of course, any use of federal funding would require the project to comply with NEPA, and many states have their own environmental laws and requirements that afford similar protections. However, one of the NCHRP Synthesis survey responders recommended that P3 project approval not occur until after the completion of the NEPA process to “ensure the unbiased analysis of project alter- natives and environmental impacts,” among other reasons. In addition, one principal result of the survey was a concern that private investors could circumvent the planning process when submitting unsolicited proposals, because they would represent only the most profitable projects that, at the same time, may not be the highest priority for the public. One response to this assertion is that safeguards to protect the public interest need to be in place, and if the proposal is not deemed to be in the public’s best interest, there is no need to consider it. A simple mitigation is to require all proposed projects to be consistent with state, local, and MPO transportation plans. Allowing sufficient time for the submission of competing pro- posals would also help to alleviate these concerns. Other concerns that may occur earlier in the P3 develop- ment process (e.g., before beginning the procurement pro- cess) and consequently may overlap or affect the decision

81 process or considerations would change once legal authority or a P3 program is put in place. Therefore, it is difficult to extract specific decision points and relate them to the Decision Guide. The NCSL’s A Toolkit for Legislators offers a perspective on making policy decisions related to P3, but by taking a broad- based, high-level approach suffers from the same limitations as the FHWA User Guidebook. The toolkit provides key defini- tions and characteristics of P3s and summarizes the expected benefits, concerns, and controversies from applying a P3 approach. Accompanying that background, the focus of the toolkit is a set of nine principles for state legislators to follow when making policy decisions. They are presented as “general good governance principles that can support legis lative deci- sion making about whether and how to involve the private sector . . . [in] providing transportation infrastructure.” The planning process decision points. The document identifies criteria “to determine if a project is suitable for delivery as a PPP project.” This information is replicated in Table B.1, which demonstrates that four primary considerations tend to drive P3 project selection: project scale, public/stakeholder demand, project stage and risk profile, and project revenue and funding potential. Several criteria in the matrix relate directly to the planning process (e.g., obtaining public and political support and including the project in state and local transportation improvement plans). However, throughout the FHWA User Guidebook, many of these lists of criteria lack specific context and explanation on how one would go about applying them in practice. Specifically, the FHWA User Guidebook lacks a discussion on the timing and duration of decision points, whether the discussion relates to a single P3 project, a program of P3 projects, or both, and how the Table B.1. FHWA User Guidebook Table of Criteria Threshold Criteria for Considering P3s Decision Factors for Selecting P3 Approach Project Scale Public/Stakeholder Demand Project Stage and Risk Profile Project Revenue and Funding Potential Project size in terms of cost and financing requirements—the higher the cost, the more likely the private sector will be needed to bridge the financing gap. Urgency of project to satisfy transportation mobility need. Preliminary concept planning favors joint development and life-cycle P3 approaches that maximize potential for cost minimization and value-capture maximization. Scarce public funding sources to meet transportation program budgets are enhanced by pool- ing multiple modal program resources. Project design and construction complexity—the more complex the design and the more sophisticated the financing, the greater the potential role of private partners. Significant transportation-related economic development potential. Public sector takes responsibility for environmental clearance, obtaining most permits, and most right-of-way acquisition, including advanced acquisition. P3s enhance ability of project to secure adequate financing and funding to support the project’s development based on user pricing and/or economic devel- opment value capture. Project functional scope (whether financing and/or operations and maintenance are included)—the broader it is, the more likely pri- vate partners can leverage pub- lic resources to meet the needs. Broad public support for P3 approach to project delivery, financing, and funding approaches used. Design is at less than 30% to optimize best practice input by P3 team. Legal authority must exist to per- mit sponsoring agency to engage in P3s that include use of private capital financing. Capability of sponsoring public agency not adequate to deliver project by itself in a timely manner. Broad and sustaining political support for P3 approaches to leverage scarce public funds and expedite project delivery. Postconstruction responsibility for operations and maintenance and preservation transfers sig- nificant project performance risk to the P3 team through operations and maintenance contract or brownfield long- term concession lease. Projects with high initial costs and long-range revenue poten- tial require alternative financial approaches, which can be more readily obtained through a P3 arrangement. Low-risk tolerance of sponsoring public agency for large, com- plex projects. Presence of project in state or local transportation improve- ment plans (statewide trans- portation improvement program or transportation improvement program). The greater the risks of the proj- ect and the public sponsor’s aversion to risk, the more likely that a P3 approach will be considered. Projects that lack financial feasi- bility will not attract private sector interest—therefore sponsoring agencies should not limit P3s to the least feasible projects. Source: FHWA User Guidebook.

82 The author then evaluates three P3 case studies (the SR 91 Express Lanes in Orange County, California, and two inter- national P3s in the United Kingdom and Australia) against these criteria to examine how actual experience compared with the questions raised. The examination concluded that, in the short term, “private-sector involvement in project financing and delivery does not appear to have significantly distorted the government’s regional planning objectives or investment priorities.” Rather, a greater impact was felt at the “scale of project design and policy.” The P3 project delivery model was found to disrupt the public involvement process and access to information and to limit accountability in deci- sion making. The case studies also revealed that in the long term, “DBFOM PPP arrangements highlighted conflicts in planning objectives, demonstrating that maximizing private returns was sometimes, but not always, congruent with gov- ernment social or environmental policy.” These findings raise valid points that may arise at decision points throughout the planning process; however, the impacts of these decisions were found to have a greater effect past the planning process as defined by the Decision Guide (e.g., dur- ing detailed project design and the negotiation and setting of contractual arrangements that transfer risks). Although the conclusions of this article offer a good starting point for eval- uating P3s from a planning perspective, further research is required to better understand impacts on specific planning decision points and processes. State Guidance documents The literature review also included a scan of state P3 program implementation guideline documents, policies and proce- dures manuals, rules, and other related documentation. The extent and detail of these documents vary considerably across state P3 programs, from marginally informative, with unclear decision points, to significantly detailed, with decision points clearly identified or at least made apparent. Of the states examined, a select group of four and their programs are sum- marized in Table B.2. The table lays out key information about each program, beginning with the source and timing of proj- ects for consideration as a P3, through the compilation, pri- oritization, and selection of specific projects to advance to procurement, and on through the procurement process, including RFQ/RFP issuance and the negotiation with and selection of a P3 partner. The details provided for each of these categories summarize briefly the decision points and decision makers involved as the process advances, to the extent that information is made available in the documentation examined. Not all guidance on the programs presented in the table offers information on each of these topics. most germane to the evaluation of P3 opportunities is one principle that advises a legislator to “support comprehen- sive project analyses,” which seek to show that a P3 is a bet- ter option than traditional project delivery. As discussed, these analyses refer to project valuation techniques (such as VfM and the use of a PSC), but given their limited application to date in the United States, their impacts on decision making during the planning process—assuming the analyses are undertaken early enough in the planning/project develop- ment process—are not well understood. Overall, the prin- ciples and recommendations included in the toolkit are designed to support state-level policy makers with limited knowledge and experience with P3s. They do not offer sig- nificant insight on potential impacts to the Decision Guide’s decision points. One additional feature of the NCSL’s toolkit is Appendix B, which details state P3-enabling legislation including statute reference, the authorization’s provisions, and whether legisla- tive approval is needed for specific P3 projects. The list of enabling legislation was current as of October 2010 and was updated in a March 2012 Updates and Corrections adden- dum (Rall 2012). One recent journal article on evaluating P3s that incor- porates a planning focus that is not covered in the NCHRP Synthesis detailed earlier is “Delivering Transportation Infra- structure through Public–Private Partnerships: Planning Concerns” (Siemiatycki 2010). The article presents a “set of criteria on which to evaluate the procedural, spatial, design, public policy, and political implications of . . . PPPs from a planning perspective.” As the author states, “there has been only limited examination of infrastructure PPPs through the disciplinary lens of planning.” To help close this gap, a set of nine criteria (six pertaining to short-term concerns and three pertaining to long-term con- cerns) are presented to assist planners in evaluating whether P3 project delivery is a proper tool to use by asking the follow- ing questions: 1. Will it tap new money for infrastructure? 2. Will it undermine systemwide planning? 3. Will it spur project-level innovation? 4. Will it limit meaningful community consultation and involvement? 5. Will the project be within budget and on time, meet traffic forecasts, and deliver desired community benefits? 6. Will supply and demand risks be transferred to the private partners? 7. Will DBFOM contracts constrain future options? 8. Will the P3 deliver value for public money? 9. Will conflict between the partners threaten project success?

83 Included among the four state programs in Table B.2 is the earliest and arguably most advanced P3 program—Virginia’s Public–Private Transportation Act (PPTA) of 1995. A sum- mary of earlier guidance dating from 2005 (Commonwealth of Virginia 2005) is presented alongside recently revised and reissued guidance from 2010 (Commonwealth of Virginia 2010). The new guidance was a response to an independent audit performed on the program and establishment of a new PPTA Office within the Virginia DOT. The revised program and guidance makes significant changes in identifying and articulating the decision points and details of the P3 process. In the earlier guidance, for example, it was not clear how projects were compiled, prioritized, or selected, nor was the NEPA process discussed with respect to the timing of the start of the procurement process and solicitation of proposals. In the newly reissued guidance, key decision points are identi- fied, and it is easier to overlay or map steps in the transportation planning process to those laid out for P3 project consider- ation. Flowchart diagrams of the processes for solicited and unsolicited proposals and identification of decision points (taken directly from the Implementation Manual and Guide- lines) are shown in Figures B.1a, B.1b, and B.1c. The three other state programs shown in Table B.2 are Ari- zona’s recently enacted P3 Program Guidelines issued in Sep- tember 2010, Georgia’s P3 Program Guidelines from February 2010, and the Louisiana Transportation Authority’s P3 Pro- gram Guidelines issued in 2009. Louisiana’s P3 program was created by statue in 2006. Georgia and Arizona’s programs are newly established, and the procedures put forth in their respective guidelines have been done so through careful and deliberative processes. Louisiana is included because, although it has yet to procure a project through its P3 pro- gram, it offers another good example of guidance documen- tation for analysis and comparison purposes. Taken as a whole, state P3 program documents, including those presented in Table B.2, reveal little about how P3s are to be considered during the planning process. For the most part, these documents refer to the compilation of potential proj- ects that, under a certain set of stated criteria, can be put forth as a possible P3, either on a solicited basis from the state DOT (or other agency, local government, or MPO in some cases) or, frequently, on an unsolicited basis from a qualified pri- vate entity. These guideline and procedure documents focus on institutional and procedural aspects of a P3 program, often outlining the roles and responsibilities of a P3 office, within or separate from the state DOT, specially established over- sight or steering committees, and a state transportation board or secretary’s office. Collaborative decision making often takes place among members of these specially composed committees (P3 program oversight or steering committees), with high-level approvals sought from a state transportation board or department secretary. The documents also tend to discuss at a high level the procedures and timing for prioritiz- ing potential P3 projects, selecting them for development, and pursuing presolicitation and procurement activities, including the issuance of requests for information, RFQs, RFPs, holding industry forums and one-on-one meetings, and selecting and negotiating with a preferred partner. With the exception of Virginia’s program, the state P3 pro- grams examined offer little insight on how decisions made during the planning process—including early project selec- tion, prioritization, programming, and the application of the NEPA process—could be influenced by the consideration or selection of a P3. Guideline and procedure documents by their nature (and as described above) offer only a framework for implementing P3 projects (often in a linear, stepwise fashion) and do not consider the dynamics of the processes themselves. Some state guideline documents make only a brief mention of a list of projects for P3 consideration that could emanate from any qualified public agency during the planning process. The specific case of an unsolicited proposal, where appli- cable, could have a significant impact on an environmental or decision-making process because timing for such pro- posals is not as strictly controlled as in the case of solicited proposals. This consideration could potentially lead to unfore- seen changes to a project’s status, either within a planning document (long-range plan, programmatic document) or a pre-ROD project development phase, or be proposed for the first time outside existing planning considerations. These con- siderations, however, are generally not addressed in state P3 program guidelines. The P3 process flowcharts for Arizona (Figures B.2 and B.3) and Georgia (Figures B.4a and B.4b) are similar to those referenced earlier for Virginia. Like Virginia, Arizona’s guide- lines are accompanied by two flowcharts depicting the state’s solicited and unsolicited P3 proposal processes. Georgia does not publish a flowchart of its process, but one has been con- structed based on the procedures outlined in the state’s P3 Guidelines. The flowcharts show that the processes are proce- dural in nature with distinct, linear steps. Generally they show a single path from start to finish and do not account for a P3’s influence on the planning process. Indeed, most aspects of the planning process are assumed to be complete or incor- porated as a static process early on, with a greater focus on process steps that take place following the selection of a par- ticular project, including procurement, proposal evaluation, and contract award activities. (text continues on page 95)

84 85 Table B.2. Overview of State P3 Programs in Arizona, Georgia, Louisiana, and Virginia P3 Programs When Are Projects Identified? Who Identifies Them? How Are They Screened/ Compiled? How Are They Prioritized? How Are They Selected for Procurement/Developed? Guidance on NEPA Procurement Planning/ Presolicitation RFQ/RFP Selection and Award Process Steps ADOT P3 Program Guidelines ( September 7, 2010) Not really referenced. Reference to an “internal project selection process.” Solicited: ADOT. Unsolicited: private entities. Office of P3 Initiatives has responsi- bility (reports to Executive Direc- tor for Planning and Policy, and in turn, to Arizona DOT director). Process for solicited proposals not explicitly discussed. Unsolicited proposers encouraged to request one-on-one meetings with the department to discuss “sufficient merit.” Unsolicited: 3-step evaluation pro- cess: pass/fail (meet require- ments?), initial evaluation (does it have value?), and detailed evalu- ation (may involve public input; technical, financial, legal exami- nation); after, may initiate request for competing proposals. Not specified. Input from the P3 Advisory Committee, which serves at the pleasure of Arizona DOT director. P3 Technical Advisory Committee advises on technical issues of candi- date projects and advises during solicitation process. Not specified. Use some or all of: RFI, RFQ, proposer review meetings, RFP—project-specific. One-step or two-step process. One option is a procurement delivery agreement (PDA) approach—proposal for ser- vices for a project in early stages (no firm technical scope, pricing, or financing; environmental approvals may not be in place); PDAs focus on conceptual plans. A lot of detail is given on the required content of the responses to these requests but not on the process of utilization, decision making, or timing. If RFQ, a short-list is developed from state- ments of qualifications (SOQs). Evaluation criteria and their weightings determined on a project-specific basis. Best value evaluation methodology expected in most cases—Office of P3 Initiatives will determine in advance an internal proposal evaluation plan. Best and final offer (BAFO) pro- cess may be used. Georgia DOT PPP Guidelines ( February 2, 2010) Anytime during the planning process; no unsolicited proposals. GDOT, also other state agencies, local govern- ments, MPOs. An initial project screening list is developed and reduced to a final project screening list by applying Screening Committee-developed criteria/methodology. Requested project data and a workshop facilitate the process and include project delivery method recom- mendations. A report is gener- ated, and a list of candidate projects is ultimately approved by the state transportation board. Included as part of the screening report and evaluation workshop results. Not specified. Not specified. A Procurement Team develops a work plan, master schedule, and conducts a risk workshop. The work plan identifies tech- nical, financial, legal, and pub- lic outreach tasks to be performed before solicitation. Presolicitation industry outreach can include an industry forum and one-on-one meetings. A public information and stake- holder outreach plan is prepared. A one-step (RFP) or two-step (RFQ/RFP) process is selected. Project delivery method is con- firmed, and payment consider- ations made. If RFQ: The procurement team develops an eval- uation methodology and manual for the Selection Recommen- dation Committee (SRC) to review and rank SOQs. A recom- mended list of 2–5 pro- posers receives an RFP. Draft RFPs and one-on- one meetings optional. The procurement team develops an evaluation methodology and manual for SRC to identify two or more proposers. Discussion and interviews held to select one or more to negotiate. BAFO solicited. Recommendation made to the board, which decides on the award. Louisiana Transportation Authority PPP Guidelines (March 19, 2009) Not specified. Solicited: Authority identi- fies them and conducts economic feasibility stud- ies to substantiate project need and feasibility. Must be part of approved transportation plan and Louisiana Department of Transportation and Devel- opment program. Unsolicited: private entities. Authority considers a range of issues (e.g., demonstrated need, political support, funding, transfer of risks, expedited project delivery). Not specified. Not specified. Unsolicited proposal to include preliminary list of local, state, and federal permits/approvals. Two-step process used; RFI optional before RFQ/RFP. Joint proposer workshops or one-on-one meetings may be held before submission of proposals. If authority proceeds with pro- curement from an unsolicited proposal, public hearing held with information submitted to House and Senate Commit- tees on Transportation. After this, a one- or two-step pro- curement process is initiated to solicit competitive proposals and qualifications. Evaluations may include the invitation for observation of representatives from federal, state, or local agencies. May select proposer for com- prehensive or predevelopment agreement with or without negotiations or select more than one for competitive negotiations. Best value used, other selection processes possible. (continued on next page)

86 87 Table B.2. Overview of State P3 Programs in Arizona, Georgia, Louisiana, and Virginia (continued) P3 Programs When Are Projects Identified? Who Identifies Them? How Are They Screened/ Compiled? How Are They Prioritized? How Are They Selected for Procurement/Developed? Guidance on NEPA Procurement Planning/ Presolicitation RFQ/RFP Selection and Award Process Steps Virginia PPTA Implementation Guidelines (October 31, 2005) Project selected for solicited proposals—not specified. Unsolicited propos- als anytime. VDOT/Virginia Department of Rail and Public Trans- portation (DRPT)/Virginia Department of Aviation (VDOA)/Virginia Port Authority (VPA) may solicit proposals in general or for specific projects. Private entities (unsolicited—skip to selection process steps). Not specified. Not specified. Not specified. Not specified. SFP (solicitation for proposal) (conceptual proposal). Asked to outline “the independent process(es) for environmental review and compliance,” that is, they must specify how the project will satisfy NEPA and all applicable state and/or fed- eral laws. Preproposal confer- ences optional. Unsolicited proposals (if accepted) will trigger notice that competing proposals will be solicited. 6 Phases, including 2 in adjacent column: 1. Quality control—does (conceptual) proposal meet requirements of law and guidelines. 2. Independent Review Panel evaluation and recommendation, includes public comments. 3. Oversight board concurrence/rejection and decision to seek detailed proposal. 4. Submission of detailed proposal via request for detailed proposals and final selection of detailed proposal (step can be skipped in certain cases). 5. Negotiation of interim and/or comprehensive agreement— determines maximum return on revenue, liability, end date. 6. Attorney General review/ approval, then final review by department administrator. Virginia Public-Private Transportation Act (PPTA) Implementation Manual and Guidelines ( December 8, 2010) PPTA office main- tains a portfolio and periodically performs a high- level screening. Solicited proposals from various sources: state planning docu- ments, General Assembly legisla- tion, STIP, LRTP. Unsolicited propos- als anytime. Solicited: planning staffs from all transportation agencies, offices, and MPOs—use a candidate project form for submission. Unsolicited: private entities. VDOT/DRPT/VDOA/VPA planning divisions and PPTA office manage the process. All submissions (solicited and unso- licited) go to the PPTA Office. Phase 1 Solicited: high-level screening (twice per fiscal year as neces- sary); guidance provided in man- ual; recommendations made for detail-level screening. Unsolicited: policy review, evalua- tion of concepts and benefits; guidance provided in manual. Phase 2 Detail-level screening at least once every 2 years; produce project screening reports. PPTA Steering Committee reviews reports and approves/rejects projects. For Unsolicited: advance to com- petitive procurement; may have to add project to appropriate planning documents. Steering Committee prioritizes into short-, medium-, and long- term (financial close in <2 years, 2–4 years, 4–6 years); prioritization criteria provided in manual. Includes projects from unsolicited proposals that meet approval and are added (if necessary) to depart- ment transportation plan/program; may require coordination with MPO to reflect project in LRTP/TIP. Selected from prioritized list. Critical steps: NEPA, public involvement, procurement strategy assessment, and initial VfM. Solicited: relevant department or agency responsible for com- pletion of environmental document before inviting proposals (procurement). After this, PPTA Office makes a decision on advancing project as a P3. Typically two-step (RFQ/RFP) but could be merged. RFQ issued. PPTA office reviews, scores, and ranks SOQs received; approval from Steering Committee for short list for RFP. RFP issued. Option to issue as draft and hold one-on-one meetings to solicit feedback. Before selection, final VfM analy- sis to compare department’s public-sector comparator (PSC) and preferred proposer’s proposal. Conditional award made based on PPTA office recommenda- tion and Steering Committee decision. Audit conducted (traffic and revenue forecasts, public costs, and liabilities). Comprehensive agreement executed to reach commercial close. Note: PPP = public–private partnership. Source: Parsons Brinckerhoff.

88 Figure B.1a. Virginia PPTA Implementation Manual and Guidelines: Project Delivery Framework Flowchart (Solicited Projects). Source: VDOT.

89 Source: VDOT. Figure B.1b. Virginia PPTA Implementation Manual and Guidelines: Project Delivery Framework Flowchart (Unsolicited Projects).

90 Figure B.1c. Virginia PPTA Implementation Manual and Guidelines: Project Delivery Framework Flowchart (Solicited and Unsolicited Projects). Source: VDOT.

91 Source: ADOT. Figure B.2. ADOT P3 Solicited Proposal Process Flowchart.

92 Figure B.3. ADOT P3 Unsolicited Proposal Process Flowchart. Source: ADOT.

93 Figure B.4a. GDOT Public–Private Partnership Guidelines Flowchart. (Continued on next page.) Source: Parsons Brinckerhoff.

94 Figure B.4b. GDOT Public–Private Partnership Guidelines Flowchart. (Continued from previous page.) Source: Parsons Brinckerhoff.

95 P3 Resources The following is a list of useful P3 resources as they pertain to their general definition and application, to the transportation planning and environmental review processes, and to spe- cific analyses conducted to gauge their value. The resources include research reports, general guidance and synthesis of best practice, and agency-specific publications on particular aspects of P3s or P3 programs. The set of resources includes those cited among the references used in the main research report for SHRP 2 Project C12 and in the literature review. The set also includes other resources that were consulted throughout the research and have been deemed helpful to practitioners and readers of the report. General P3 Guidance and Synthesis of Best Practice Buxbaum, J. N., and I. N. Ortiz. 2009. NCHRP Synthesis of Highway Prac- tice 391: Public Sector Decision Making for Public-Private Partnerships: A Synthesis of Highway Practice, Transportation Research Board of the National Academies. http://onlinepubs.trb.org/onlinepubs/nchrp/ nchrp_syn_391.pdf. Federal Highway Administration, U.S. Department of Transportation. User Guidebook on Implementing Public-Private Partnerships for Transportation Infrastructure Projects in the United States. http:// www.fhwa.dot.gov/ipd/pdfs/ppp_user_guidebook_final_7-7-07 .pdf. Accessed July 7, 2007. KCI Technologies, Inc. 2005. Current Practices in Public-Private Partner- ships for Highways. July. http://transportationfortomorrow.com/ final_report/pdf/volume_3/background_material/23_current_ practices_in_public_private_partnerships.pdf. Perez, B. G. 2004. Achieving Public-Private Partnership in the Transport Sector, iUniverse, Bloomington, Ind. Rall, J. Public-Private Partnerships for Transportation: A Toolkit for Leg- islators March 2012 Updates and Corrections, National Conference of State Legislatures. http://www.ncsl.org/documents/transportation/ PPPTOOLKIT-update-March2012.pdf. Rall, J., J. B. Reed, and N. J. Farber. 2010. Public-Private Partnerships for Transportation: A Toolkit for Legislators, National Conference of State Legislatures. October. http://www.ncsl.org/documents/transportation/ PPPTOOLKIT.pdf. U.S. Department of Transportation. Innovation Wave: An Update on the Burgeoning Private Sector Role in U.S. Highway and Transit Infrastruc- ture. http://www.fhwa.dot.gov/reports/pppwave/ppp_innovation_ wave.pdf. Accessed July 18, 2008. P3 Valuation Analysis Morallos, D., A. A. Amekudzi, C. Ross, and M. D. Meyer. 2009. Value for Money Analysis in U.S. Transportation Public-Private Partnerships. In Transportation Research Record: Journal of the Transportation Research Board, No. 2115, Transportation Research Board of the National Academies, pp. 27–36. Papernik, B. G., and D. J. Farkas. Using Alternative Technical Concepts to Improve Design-Build and PPP Procurements. Nossaman LLP E-Alerts. http://www.nossaman.com/using-alternative-technical- concepts-improve-designbuild-ppp. Accessed March 31, 2009. Siemiatycki, M. 2010. Delivering Transportation Infrastructure Through Public-Private Partnerships: Planning Concerns. Journal of the American Planning Association, Vol. 76, No. 1, pp. 43–58. Williamson, S., M. F. Lawrence, and J. Mueller. 2011. State-of-the-Art of Value for Money Analysis: Determining the Value of Public-Private Partnerships. Presented at 90th Annual Meeting of the Transporta- tion Research Board, Washington, D.C. State Guidance California Department of Transportation. Draft Public-Private Partner- ships Program Guide. http://www.dot.ca.gov/p3/documents/prog_ guide_final_draft_for_posting.pdf. Accessed Dec. 30, 2011. Commonwealth of Virginia. Public-Private Transportation Act of 1995 (as Amended): Implementation Manual and Guidelines. http://www .virginiadot.org/business/resources/PPTA/PPTA_Implementation_ Manual_FINAL_December_10_2010.pdf. Accessed Dec. 8, 2010. Commonwealth of Virginia. Public-Private Transportation Act of 1995 (as Amended): Implementation Manual and Guidelines. http://www .virginiadot.org/business/resources/PPTA_Guidelines_FINAL_ Revised_081205.pdf. Accessed Oct. 31, 2005. Georgia Department of Transportation. Public-Private Partnership Guide- lines. http://www.dot.ga.gov/informationcenter/p3/Documents/ P3Guidelines.pdf. Accessed Feb. 2, 2010. Louisiana Transportation Authority. Public-Private Partnership Guide- lines. http://www.dotd.la.gov/administration/lta/documents/Public- Private%20Partnership%20Guidelines.pdf. Accessed March 19, 2009. Office of P3 Initiatives, Arizona Department of Transportation. ADOT P3 Program Guidelines. http://www.azdot.gov/highways/Projects/Public_ Private_Partnerships/PDF/ADOT_P3_Guidelines.pdf. Accessed Aug. 30, 2011. Office of Transportation Public-Private Partnerships, Virginia Depart- ment of Transportation. 2011. PPTA Value for Money Guidance. April. http://www.vappta.org/resources/VDOT%20VfM%20guidance%20 document_final_20110404.pdf. Office of Transportation Public-Private Partnerships, Virginia Department of Transportation. 2011. PPTA Risk Analysis Guidance. September. http://www.vappta.org/resources/PPTA%20Office%20Risk%20 Guidance%20Document%20v2.1%2020110930.pdf. Office of Transportation Public-Private Partnerships, Virginia Depart- ment of Transportation. 2012. PPTA Project Identification and Screening Guide. April. http://www.vappta.org/resources/PPTA_ Project_Identification_and_Screening_Guide_April_2012%203 .pdf. NEPA Guidance American Association of State Highway and Transportation Officials. 2008. Using the SAFETEA-LU Environmental Review Process (23 U.S.C. 139), AASHTO Practitioner’s Handbook 09. January. http:// environment.transportation.org/pdf/programs/practitioners_ handbook09.pdf. Center for Environmental Excellency by AASHTO. 2007. Defining the Purpose and Need and Determining the Range of Alternatives for Trans- portation Projects, AASHTO Practitioner’s Handbook 07. August. http://environment.transportation.org/pdf/programs/PG07.pdf. Center for Environmental Excellency by AASHTO. 2006. Managing the NEPA Process for Toll Lanes and Toll Roads, AASHTO Practitioner’s Handbook 03. July. http://environment.transportation.org/pdf/ programs/PG03.pdf. (text continued from page 83)

96 Center for Environmental Excellency by AASHTO. NEPA Process Over- view. http://environment.transportation.org/environmental_issues/ nepa_process/. Accessed April 19, 2012. Center for Environmental Excellency by AASHTO. NEPA Process Research, Documents & Reports. http://environment.transportation. org/environmental_issues/nepa_process/docs_reports.aspx. Council on Environmental Quality. 1981. NEPA’s Forty Most Asked Questions, Question 2A. March 16. http://ceq.hss.doe.gov/nepa/ regs/40/40p3.htm. Federal Highway Administration, U.S. Department of Transportation. Environmental Review Toolkit. http://environment.fhwa.dot.gov/ index.asp. Federal Highway Administration, U.S. Department of Transportation. Memorandum from D. J. Gribbin (Chief Counsel) to Peggy Catlin (Deputy Executive Director, Colorado Department of Transporta- tion). http://www.environment.fhwa.dot.gov/guidebook/NEPA_ tollroads.asp. Accessed Oct. 15, 2004. Federal Highway Administration, Office of the Chief Counsel, U.S. Department of Transportation. Alternatives Analyses White Paper. http://www.fhwa.dot.gov/everydaycounts/pdfs/altsanalysespaper hccwhitepaperwebversion9_22_10.pdf. Accessed Sept. 22, 2010. Federal Highway Administration, U.S. Department of Transportation. SAFETEA-LU Environmental Review Process Final Guidance. http:// www.fhwa.dot.gov/hep/section6002/section6002.pdf. Accessed Nov. 15, 2006. Transportation Planning Process Federal Highway Administration and Federal Transit Administration, U.S. Department of Transportation. Environment and Planning Linkage Processes Legal Guidance. Memorandum from D. J. Gribbin (Chief Counsel, FHWA) and Judith S. Kaleta (Acting Chief Counsel, FTA) to Cindy Burbank (Associate Administrator, Office of Planning Environment and Realty, FHWA) and David A. Vozzolo, Deputy Associate Administrator, Office of Planning and Environment, FTA. http://www.fhwa.dot.gov/hep/plannepalegal050222.htm. Accessed Feb. 22, 2005. Federal Highway Administration and Federal Transit Administration, U.S. Department of Transportation. 2007. The Transportation Plan- ning Process Key Issues: A Briefing Book for Transportation Decision- makers, Officials, and Staff. Publication No. FHWA-HEP-07-039. September. http://www.planning.dot.gov/documents/BriefingBook/ bbook_07.pdf. Federal Highway Administration, U.S. Department of Transportation. Financial Planning and Fiscal Constraint for Transportation Plans and Programs: Questions & Answers. http://www.fhwa.dot.gov/ planning/fsclcntrntques.htm. Accessed April 15, 2009. Federal Highway Administration, U.S. Department of Transportation. Innovative Financing/Public Private Partnerships. Memorandum from Gloria Shepard (FHWA) to Division Offices Planning Staffs. http://www.fhwa.dot.gov/planning/invtvfnc.htm. Accessed May 21, 2007. Federal Highway Administration, U.S. Department of Transporta- tion. Link the Transportation Planning and National Environmen- tal Policy Act (NEPA) Processes. http://nepa.fhwa.dot.gov/ReNepa/ ReNepa.nsf/All+Documents/9FD918150AC2449685256FB100507 26C/$FILE/Planning-NEPA%20Guidance%20%20final%20%20 2-22-05.pdf. Accessed Feb. 22, 2005. Federal Highway Administration, U.S. Department of Transportation. Supplement to January 28, 2008, Transportation Planning Require- ments and Their Relationship to NEPA Process Completion. http:// www.fhwa.dot.gov/planning/tprandnepasupplement.htm. Accessed Feb. 9, 2011. Federal Highway Administration, U.S. Department of Transportation. Transportation Planning Requirements and their Relationship to NEPA Process Completion. http://www.fhwa.dot.gov/planning/ tprandnepa.htm. Accessed Jan. 28, 2008.