Scan purpose and objectives:
Limited highway funds, unmet needs for new highway capacity, interest from private investors, and other factors have led to substantial discussion and implementation of P3 projects and programs at the state and federal level. The purpose of this scan is to examine programs and practices used by other countries that actively solicit and implement privately financed new highway (greenfield) projects. The objectives are to document lessons learned from public agencies that have completed highway concession contracts and/or are administering “mature” agreements with private operators of public roads. The scan will focus on contract procurement procedures, and project performance standards.
Current public-private partnership (P3) programs are relatively new to the United States. Public agencies in other countries have completed long-term concession agreements and the facilities have been returned to the public agency after many years of private operation. In addition, agencies have facilities that have been operated by concessionaires for more than five years. Although several states in the US have solicited concession agreements, none can look back on the experiences of a 30-year or 50-year contract. The results of this scan would enable US highway agencies to benefit from the collective experiences gained by other countries.
The scope of this scan will be limited to contract procurement procedures and contract performance standards. Significant contract procurement questions include:
- The timing of a solicitation relative to the development of a project,
- The procedures of a competitive solicitation, evaluation, and selection of a developer,
- Whether the significant terms and conditions are dictated in the solicitation or negotiated among the parties, and
- How various solicitation procedures may successfully attract investors with private equity.
The term of a concession agreement may be 30-years to 50-years, or longer. It is not possible to anticipate the potential changes in equipment, materials, methods, personnel, traffic volume and numerous other factors related to operation and maintenance of a highway facility for such long durations. Nonetheless, agencies have implemented and will agree to contracts that include terms and conditions for the long-term performance of such services. Furthermore, common maintenance contracts in the US have prescribed means and methods for routine or scheduled maintenance activities; a model which may not be well-suited to the future implementation of a long-term agreement.
A successful public-private partnership will include fair performance measures for the maintenance of physical infrastructure and the transportation of people and products through the facility. Equally important to the requirements for the initial physical conditions of the new facility, will be creative mechanisms to update an agreement to accommodate the future demands on the facility. The current US practice and knowledge base does not provide a wealth of experience in this area.
Benefits expected, including potential impacts on current technology or procedures:
An international perspective will be valuable to the US agencies that are partnering with foreign investors and developers. The scan tour report will document lessons learned and best practices experienced by public agencies in other countries. Such lessons or practices may be adapted to the US agencies that are implementing or considering P3 programs.
Specific impact areas are anticipated to be:
- Contract procurement practices
- Significant differences from design-bid-build, and publicly financed design-build procurement
- Common features to current competitive sealed bid procurement models
- Common aspects of successful procurements
- Agency resource needs
- Lessons learned
- Contract performance standards
- Deliverables pertinent to prescriptive standards
- Deliverables pertinent to performance standards
- Example standards from successful partnerships
- Contract modifications that were necessary but not anticipated in the original agreement
- How to accommodate change through the life of a long-term agreement
- Common aspects of successful partnerships
- Lessons learned
How the proposed scan fits into AASHTO and/or FHWA strategic goals:
This scan tour supports the following aspects of AASHTO’s 2005-2010 Strategic Plan:
- Accelerate project delivery by accessing new revenue sources through public-private partnerships
- Provide world-class technical services by identifying, communicating, and facilitating use of emerging processes, and programs
- Assist DOTs with leadership and performance by
- Providing a comprehensive framework for improved delivery of all transportation projects, and
- Developing customer-driven delivery models in the areas of system operations and management
The common FHWA strategic goals are:
- Improving System Operations: Improving the operation of the highway system and its intermodal linkages support the mobility, productivity and safety goals. … FHWA will promote partnerships among Federal, State and local agencies, and other stakeholders to identify and implement improvements to the NHS and connections to intermodal facilities that will enhance the safe and efficient movement of people and goods.
- Advancing 21st Century Technology: Through extensive public and private partnerships, domestically, and internationally, FHWA will strive to ensure integration and deployment of ITS technologies to dramatically increase the capacity of the current highway system for passenger cars and commercial vehicles. …
In addition, the FHWA has implemented numerous programs focused on public-private partnerships and accessing additional revenue sources, such as the Special Experimental Project 15, and the Value Pricing Pilot Program, and its Major Projects Team.