ARTBA Comments Supporting FHWA’s Draft Availability Payments Concessions Public Private Partnership Model Contract Guide
October 29, 2015
United States Department of Transportation
Docket Management Facility
1200 New Jersey Avenue S.E.
Washington, D.C. 20590-0001
Re: Docket ID Number FHWA-2014-0006, Draft Availability Payment Concessions Public
Private Partnership Model Contract Guide
On behalf of the more 6,000 members of the American Road and Transportation Builders
Association (ARTBA), I offer these comments on the draft availability payment concessions
public private partnerships model contract guide (AP Concessions Guide) recently published by
the Federal Highway Administration (FHWA). Founded in 1902, ARTBA’s membership
includes private and public sector members that are involved in the planning, design,
construction and maintenance of the nation’s roadways, bridges, ports, airports and transit
systems. Our industry generates more than $380 billion annually in U.S. economic activity and
sustains more than 3.3 million American jobs.
ARTBA maintains ongoing and thorough involvement in federal legislative, policy, regulatory
and legal developments relating to transportation infrastructure development and investment.
This includes public private partnerships (P3s) in transportation, with which ARTBA has a long
history. Our P3 Division dates back more than 25 years and includes prominent concessionaires,
planning and design firms, contractors, law firms, financial entities and other parties in the P3
field. Through the reauthorization processes which have produced a series of federal surface
transportation bills in recent decades, ARTBA has advocated for provisions that have helped
make P3s a viable option for the financing and delivery of transportation improvement projects
in appropriate circumstances around the country.
ARTBA has also worked closely with the U.S. Department of Transportation (U.S. DOT) and its
agencies as they have implemented these statutory provisions on P3s, including Section 1534(d)
of the Moving Ahead for Progress in the 21st
Century Act (MAP-21), which became law in 2012.
In this section, Congress instructed U.S. DOT to develop and disseminate model contracts for
“the most popular types” of P3 arrangements relating to transportation facilities.
In this regard, ARTBA participated in a related listening session conducted by FHWA on
January 16, 2013. As a follow up, ARTBA submitted detailed written comments on May 31,
2013, outlining our suggested approach to, and content of, these forthcoming model contract
documents. Additionally, ARTBA submitted comments on March 12, 2014, regarding the first
part of the Toll Concessions Guide. Accordingly, we incorporate by reference each of these
earlier submissions into our present comments.
FHWA published its AP Concessions Guide on October 8, 2015. This document is almost 150
pages in length and – understandably – very detailed in its subject matter. Within the 30 days
allotted for the comment period, ARTBA, and its interested members, have reviewed the
document, but it is obvious that its complexity demands further discussion. Therefore, as the
agency has done in earlier stages of this process, we would respectfully suggest that FHWA
engage in additional interaction with affected stakeholders before finalizing the guide’s contents.
This could involve an extension of the 30-day comment period and/or an interactive session of
some sort. We particularly welcome this at ARTBA because, as noted above, our P3-related
membership includes representatives from the entire sector, including members of the public and
private sectors, as well as consultants for each, who have considerable expertise – as well as
unique viewpoints – on certain details of the AP Concessions Guide. As in the past, ARTBA
would be pleased to host or facilitate any such session with our P3 Division membership.
What follows is an initial reaction to the AP Concessions Guide:
Educational Nature of the Guide
There are some overarching issues that reflect consensus from ARTBA’s standpoint. Chief
among them is the nature of the AP Concessions Guide itself. In addressing MAP-21 Section
1534(d) through our 2013 comments, ARTBA’s main recommendation was that FHWA’s model
contract documents should be educational – rather than prescriptive – in nature. Given that P3s
seek to take full advantage of market efficiencies in financing and delivery projects, even the
implication that FHWA’s model terms are “mandatory” would be unfortunate and
counterproductive. Therefore, we are pleased that the agency explicitly agreed with this
viewpoint in its recent request for comments, which is also reflected in the tone and content of
the AP Concessions Guide itself.
Scope of the Guide
The AP Concessions Guide is meant to be utilized by a broad audience. This may well include
parties who are inexperienced in P3 projects, but eager to learn about their history and context.
Realizing this, ARTBA suggests the guide contain an up-front, broad discussion of the P3
process in two parts. First, this segment should address the entire life-cycle of the project –
screening, development, procurement, contract operations and maintenance. The discussion
should focus on explaining the benefits of AP concession deals to Owners as primarily a life-
cycle risk transfer. Specifically, focus should be placed on how to explain the value of the
availability payment concessions process to the taxpaying public who will be using the project
once it is completed.
Second, ARTBA recommends a separate section devoted to the procurement process.
Specifically, this section would cover key procurement matters, such as:
The Owner’s having a definitive and clear P3 policy and governance regarding project
selection and transparency to the public and elected officials, including when and how
project and contract approvals should be gathered; and
Recommendations on maximizing fair and open competition within the private sector,
while addressing considerations for such specific items as proposal evaluation,
confidentiality, consideration and approval of alternative technical concepts (ATCs),
shortlisting, and stipend policies.
The concept of risk transfer to the private sector is fundamental to all P3 policy discussions.
Again, however, this area produces complexities that are difficult to address in a short comment
period. Within the P3 community there are some related differences of opinion. The key point
is that a major benefit of an AP concession deal is the allocation of life-cycle and other risks to
the private sector for its management, while some make the point that any transfer of risk comes
at a cost which can make the project more expensive. It should be clear in any such policy
document that there is an optimal level of risk allocation, through which the taxpayer is gaining a
value and benefit that can be documented in a Value-for-Money analysis. However, when risk
transfer exceeds that optimal level, the taxpayer will not likely realize good value. While there
are various opinions as to where this optimal point lies on any particular project or specific risk,
there needs to be recognition this concept exists and is in fact a pivot point in the matter of
taxpayer value and P3 projects.
ARTBA also recommends further discussion within the AP Concessions Guide of the following
Contract delays (i.e. supervening events and relief events) and their associated impacts on
Benefits and risks associated with milestone and substantial completion payments;
Differing approaches to performance security packages and their impacts on financing;
Handbacks regime and joint party responsibility for such; and
Availability deducts regime as it relates to deducts and measurement of such.
Finally, beyond the AP Concessions Guide, ARTBA also stresses the need for future forums in
which information-sharing can take place. One of the most effective ways to encourage the use
of P3s is a constant continuation of a dialogue among all participants in the industry on what
works and what does not work. Again, ARTBA offers our P3 Division network and events such
as our large annual P3s in Transportation Conference for this purpose.
Again, these comments constitute initial feedback upon review of FHWA’s AP Concession
Guide, and in many ways suggest areas for further discussion rather than definitive opinions on
the many details of that draft.
We appreciate FHWA’s consideration of these initial views and the request for more interaction
as the agency further refines the AP Concessions Guide. As noted previously, ARTBA and its
P3 Division remain available to work with U.S. DOT through the remainder of this process, as
well as any other activities relating to P3 policy. Please contact ARTBA’s Senior Vice President
for Strategic Initiatives Rich Juliano, who serves as managing director of ARTBA’s P3 Division,
at any time.
T. Peter Ruane
President & CEO