Successful PPPs in the public transit arena, whether involving innovative contracting or infusion of long-term private investment, require implementation in accordance with appropriate laws and regulations. State and local transit agencies contemplating the use of PPPs should review their authorizing statutes and charters to determine whether additional procurement and contracting authority is needed to allow:
• The project sponsor to bundle a wide range of services from pre-development through long-term operations:
• A variety of project delivery systems, including design-build, DBOM, DBFO and concessions
• Use of qualifications-based procurement methodologies, such as two-stage "best value" procurements;
• Development of evaluation criteria for procurements that will result in selection of the best developer for the job and the greatest value to the project sponsor;
• The use of alternative forms of financial security; and
• Transit agency participation in the early planning and development stages of multimodal projects with other public sponsoring agencies (representing other complementary modes of transportation) and private sector partners prior to completion of the NEPA process.
Although changes to State and local laws must be initiated and pursued at the local level, FTA could provide technical assistance to transit agencies wishing to pursue PPP project delivery to help them better understand the range of statutory issues that may arise with respect to varying forms of PPPs.
With respect to Federal law and procedure, FTA has recognized that changes in their procedures for processing New Starts and other grant applications would encourage the greater use of PPPs for transit fixed guideway projects. The Pilot Program will demonstrate how PPPs reduce new construction risks, accelerate project delivery, improve the reliability of projections of project costs and benefits, and enhance project performance. Adjusting New Starts ratings to reflect private contributions and modifying the risk assessment process in recognition of the greater assumption of pricing and completion risk by the private partner should encourage more innovation and private investment in transit projects. In addition, accelerating design approvals and providing earlier funding assurances will reduce project delays and attendant costs.
If the results of the Pilot Program are successful, the kinds of flexibility and streamlining allowed for the pilot projects should be made available to PPP transit projects generally. FTA should also engage participants in the Pilot Program to help it identify further reforms that would attract more robust private sector participation in transit projects.
FTA should also expand its efforts to address institutional challenges by providing greater access and resources related to PPPs and lessons learned, and should undertake a substantive training program for its own personnel and local agency administrators. Creation of a special projects group to cultivate alternative project delivery processes and further public understanding and acceptance should also be considered.
By reducing the cost of delays inherent in traditional FTA grant approval processes, and giving credit to the unique contractual and financial benefits of PPPs, FTA can help improve the quality and feasibility of transit projects supported by Federal funds.