As a result of legal or practical limitations, many state and local transportation agencies do not engage in performance-based procurements and instead are required to award contracts based on the "lowest responsive price." In addition, to promote transparency and fairness, these procurements must offer bidders the opportunity to bid on a uniform bid package without allowing for proposals that may differ from the bid specifications. In other words, this conventional approach to procurement does not consider total aggregate costs or other benefits that may arise from a performance-based competition. For example, the project sponsor may be precluded from considering the assumption of risks, the nonmonetary value of a commitment, or certain public policy considerations that may be equally if not more important than the initial capital costs.
The USDOT Model Legislation attempts to alleviate this potential impediment by providing sample procurement provisions for states to consider as they adopt or modify PPP legislation. The approach suggested by USDOT specifically provides that a state highway authority may use any of the following procurement approaches for PPP initiatives: 1) sealed bidding; 2) selection of proposals, with or without negotiations, based on qualifications, best value, or both; or 3) any competitive selection process determined to be appropriate or rea-sonable.182 The USDOT model statute provides that state highway authorities should select private partners "on a competitive basis to the maximum extent practicable." The sample legislation also provides a list of different factors that can be used in evaluating or selecting PPP proposals, including 1) the general reputation, qualifications, industry experience, and financial capacity of the private entity; 2) the proposed design, operation, and feasibility of the transportation facility; 3) the proposed cost and financial plan; 4) the ability of the proposal to improve safety, reduce congestion, in-crease capacity, and promote economic growth; and 5) the benefits to the public.183
Many states (including Colorado,184 Delaware,185 Georgia,186 North Carolina,187 Oregon,188 Texas,189 Utah,190 and Virginia191) have enacted legislation that permits public-sector agencies to engage in a variety of different types of procurements for PPP projects. These approaches include competitive RFQs and RFPs, procurements based on financial terms such as return on equity rather than price, and other innovative mechanisms that are more appropriate when considering greater private-sector involvement in the development of highway projects. One of the most controversial topics in the procurement area is whether state or local law will permit the public sponsor to accept unsolicited proposals from the private sector. This issue is discussed in more detail below.
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182 USDOT Model Legislation at § 1-102(c), available at http://www.apta.com/about/committees/public_private/documents/legis_model.pdf.
183 USDOT Model Legislation at § 1-102(d), available at http://www.apta.com/about/committees/public_private/documents/legis_model.pdf.
184 Colo. Rev. Stat. §§ 43-1-1201-1209, 43-4-801-812, 43-3-201-43-3-416.
185 Del. Code Ann. tit. 2, § 2003.
186 Ga. Code Ann. §§ 32-2-78-32-2-80.
187 N.C. Gen. Stat. §§ 136-89.180-136-89.198.
188 Or. Rev. Stat. §§ 383.001-383.019.
189 Tex. Transp. Code Ann. chs. 91, 22, 223, 227, 228, 366,370.
190 Utah Code Ann. §§ 63-56-502.5, 72-6-118, 72-6-201-206.
191 Va. Code Ann. §§ 56-556-56-575.