Dollars with some kick

Jan. 1, 2005

Increasingly, state legislatures are enacting statues to creatively finance transportation construction projects. In 2003, the Texas legislature enacted the Texas Public-Private Ventures Act to provide additional transportation construction funding and encourage public-private partnerships. The new act and rules allow TxDOT to enter into agreements with private entities for the design, construction, financing, maintenance or operation of transportation projects.

Increasingly, state legislatures are enacting statues to creatively finance transportation construction projects. In 2003, the Texas legislature enacted the Texas Public-Private Ventures Act to provide additional transportation construction funding and encourage public-private partnerships. The new act and rules allow TxDOT to enter into agreements with private entities for the design, construction, financing, maintenance or operation of transportation projects.

Developing developers

Contractors are now becoming “developers,” and as such they need to understand the selection process. In Texas, there are both solicited and unsolicited proposals. In either case, to be successful, a contractor’s proposal should be detailed and specific to allow TxDOT to evaluate it. For unsolicited proposals, the project must be necessary, useful or beneficially related. These considerations are subjective and can be very political. Confidentiality is a major concern for contractors. Under the Texas regulations, all proposals become property of TxDOT and may be subject to disclosure under the Public Information Act. If TxDOT receives a request for disclosure, it will notify the proposer so it may assert an exception under the Public Information Act. Also, if there are special concerns about trade secrets, proprietary information or other information excepted from discovery, the proposer should clearly mark such information in the proposal.

Solicited Proposals

TxDOT solicites proposals when it desires private participation. The proposal can be for construction of an existing design, or any part of the project TxDOT feels is necessary. TxDOT issues a Request for Proposals and Qualifications containing at least the criteria for professional expertise, financial capability and end-product expectation. The request must be published in the Texas Register and at least one newspaper. Contractor teams responding should include their experience, technical competence, capability to complete a proposed project and a proposed financial plan. TxDOT will evaluate the submissions based upon the entity’s financial condition, management stability, technological capability, experience, staffing, organizational structure, project commitment and other relevant qualifications. After evaluating the qualifications, TxDOT will request proposals.

The proposals will be evaluated based on feasibility, realistic time frame, assumptions, forecasts, financial exposure and benefit to TxDOT, compatibility with other planned or existing transportation facilities, likelihood of obtaining approval and support, cost and pricing, toll rates and projected usage, scheduling, environmental impact, manpower availability, use of technology, governmental liaison, and project coordination. After evaluation, TxDOT ranks the proposals and decides on the one that offers the best value. Negotiations to develop a final Comprehensive Development Agreement then commence.

Unsolicited Proposals

Private entities may submit an unsolicited proposal to TxDOT, containing “the limit, scope, and location of the proposed project, including all interconnections and other transportation facilities; the results expected from the implemented project and the critical factors in the project’s success; all studies previously completed concerning the project; and complete information concerning the expertise, experience, technical competence, and other qualifications of the members of the proposal team.” The proposal must also contain the financial plan including the projected cost and proposed source funds, the level and nature of participation sought from TxDOT, a listing of potential opponents, social impacts, environmental impacts and any other relevant information. The commission initially evaluates whether the proposal is in line with TxDOT’s goals and is compatible with existing or future facilities. If so, TxDOT publishes notice in the Texas Register and one or more newspapers, stating that an unsolicited proposal has been received. This allows others to submit competing proposals within a 45-day period. Once the time period has expired, the process for evaluation mirrors the process for solicited proposals stated above. I predict that solicited and unsolicited proposals will increasingly become the way contractors obtain work. To be successful contractors need to thoroughly understand their DOT’s needs and how proposals will be evaluated.

Under the Texas regulations, all proposals become property of TxDOT and may be subject to disclosure under the Public Information Act.