Ref N°: ACS-2002-CMR-OCM-0008
Private Partnerships (P3)–
et privés (P3) -
That the Corporate Services and Economic Development Committee recommend Council approve:
1. That the following projects be considered on a priority basis for implementation under public-private partnerships and that staff be authorized to request expressions of interest and qualifications for these projects:
· Ice surfaces in the east and west sections of the City
· Domed/indoor playing facilities and outdoor playing facilities
· Construction of the Garry J. Armstrong Long Term Care Centre
· Construction of the Emergency Medical Services facility
2. That the policy relating to the receipt of unsolicited proposals (The Ottawa Option) be included in the Procurement by-law as recommended in this report.
RECOMMANDATION DU RAPPORT
Que le Comité des services organisationnels et du dévéloppement économique recommande au Conseil d’approuver :
1. que les projets suivants soient pris en compte de façon prioritaire et mis en œuvre en vertu de partenariats entre le secteur public et le secteur privé et que le personnel soit autorisé à demander des manifestations d’intérêt et des qualifications pour ces projets :
· aménagement de patinoires dans les secteurs est et ouest de la ville
· aménagement de terrains de jeu couverts/intérieurs ainsi que des installations de jeu extérieures
· construction du centre de soins de longue durée Garry-J.-Armstrong
· construction des installations des Services de planification des mesures d’urgence.
2. que la politique relative à la réception de propositions spontanées (La méthode d’Ottawa) soit incluse dans le règlement municipal sur l’approvisionnement telle qu’elle est recommandée dans le présent rapport.
On 26 June 2002, Council endorsed the concept of more fully utilizing public-private partnerships as a tool to identify, analyze, and implement innovative opportunities for cost effective capital project development. It also endorsed the creation of a Strategic Delivery Unit to co-ordinate the City’s P3 efforts and work closely with each Department to investigate potential P3 initiatives. Finally, Council addressed the issue of unsolicited proposals and approved a framework for dealing with these types of proposals in a fair and transparent manner.
With the endorsement of the P3 policy by Council and the creation of the Strategic Delivery Unit, it is now necessary to define the process which will apply in the implementation of P3 initiatives, and to select some priority projects that should be investigated for implementation under a P3 effort. It is also necessary to identify the types of projects that would or would not qualify under unsolicited proposals.
Generally, it is intended that the city will proactively assess the potential to establish P3’s for projects identified in the capital budget, as a matter of course, over time. It is suggested that the initial criteria to select potential projects could be as follows:
As the city gains more experience in creating P3’s, it will be possible to amend and refine the selection criteria accordingly.
In addressing a process to deal with unsolicited proposals, Council approved that a “Swiss Challenge” type framework be utilized to deal with these proposals in a fair and consistent manner. This concept is being developed to reflect how it can apply to the city’s needs. Accordingly, it is suggested that this new framework be referred to as “The Ottawa Option” to emphasize that it is being tailored to meet the specific objectives of the city. Appendix A details the general steps involved as part of The Ottawa Option and describes the anticipated role and responsibilities of the private sector proponent and the city.
Again, this is a framework that is new to the city and before it can be applied, detailed guidelines need to be developed to clearly express the city’s expectations with respect to the level of details it requires to assess the merits of the proposal and to determine its interest in pursuing the proposal. If the city decides to follow through with an unsolicited proposal, evaluation criteria will need to be developed prior to receiving any counter proposals to measure the relative value of each proposal.
It is important to note that while the city encourages new ideas and business propositions from the private sector, it does so under a competitive and accountable process. As such, it is expected that the city would not consider any unsolicited proposals for projects which have already been initiated by the city or which are being planned for initiation by the city under a P3 effort. As well, the city will not consider any unsolicited proposals unless the requirements outlined in Schedule “A” are met.
Generally, unsolicited proposals should only be considered where the proponent can bring unique value to a project or where a novel approach to providing infrastructure or a service is being proposed. Even in these cases, the city may decline to pursue an unsolicited proposal for many reasons including the ranking of the project within overall city priorities and its inability to fund its share of the implementation, should that happen to be the case.
The fact that the city is developing The Ottawa Option as the framework to address unsolicited proposals does not create an obligation on the city’s part to follow through with every proposal received, but rather provides a process to implement those proposals which the city supports in a fair and accountable manner.
As The Ottawa Option supplements the procurement process currently in place at the city, it is recommended that the Procurement by-law be amended by adding the following section to avoid any perceived conflict between the two:
Public Private Partnerships (P3)
While the discussion around the creation of partnerships normally focuses on public-private partnerships, it is evident that the city is not limiting its perspective on partnerships with the private sector. There is an equal interest and ability from the city to explore partnership opportunities with any public organization, whether it is with senior levels of government or with the Municipal/Utilities/Schools/Hospitals (MUSH) sector or other agencies, or with incorporated non-profit or incorporated community groups.
It is also quite conceivable that for some projects, a public-public-private partnership could be developed. The city’s intention is to proactively seek the involvement of other partners where it is beneficial to do so and to acknowledge that in some cases the partner best able to bring added value to a project may be another public or non-profit organization.
In the development and implementation of P3 initiatives, it is also important to recognize and appreciate the role and responsibilities that each needs to play to make the effort successful.
Foremost, the creation of a P3 must be in direct response to a program need generated within a city department and approved by Council. The City Manager and the Senior Management Team therefore play a key role in advocating, supporting, reviewing, and recommending the approval of proposals for implementation under a P3 concept, under the initiation of the Strategic Delivery Unit. All projects will be subject to Committee and Council approval.
The Strategic Delivery Unit has been created as the centre of expertise for P3 initiatives. It will research, develop, and update best practices and procedures, it will develop and implement a city process, it will scan capital budgets for potential candidates, it will lead and/or advise internal and external project teams, it will negotiate terms of the partnerships, and it will recommend the implementation of P3 initiatives in concert with each department.
Finally, because of the long-term nature of P3’s, the construction, management, and transfer of assets normally included in the partnership, the distribution of risk, and the financial issues that need to be addressed, the development of successful partnerships tends to be a complex effort requiring careful assessment by all parties.
It will therefore be necessary to supplement the role of the City Manager, Senior Management Team, and the Strategic Delivery Unit with external advisors/consultants to provide on-going advice and feedback on the P3 process, the criteria used in evaluating proposals, the fairness and consistency of the process, the review of unsolicited proposals, and specific financial, legal, and technical expertise relating to the various projects recommended for implementation.
This division of roles and responsibilities, and the synergy amongst these three groups will ensure a highly credible process and will allow for innovative approaches for capital project development while at the same time safeguarding the city’s interests in the delivery of services to its citizens.
Projects Recommended for Earliest Implementation
While it is too early at this stage of the process to identify all projects and all benefits that are expected to accrue to the city through P3 initiatives, it is nevertheless possible to identify some projects that could be investigated for implementation under a P3 effort immediately.
The People Services Department has identified a need for a minimum of two additional ice surfaces in each of the east and west sectors of the city. Even though the final results of their detailed needs analysis is not available yet, there is enough evidence to confirm this immediate need. Generally, the city’s intention is to seek a partnership where the city might provide a long-term commitment for blocks of ice time at specified times during the year, as well as other involvements that might prove mutually beneficial.
The private sector has also shown some interest in the construction of new ice surfaces and a number of proponents have indicated their interest to partner with the city to provide these facilities. This project meets the criteria for a potential P3 initiative and should be considered as part of the initial priority list.
The rapidly increasing popularity of a number of sports such as soccer and ultimate frisbee, as an example, and the impressive increase in population over the past few years have created significant pressures on the need for additional outside playing facilities. Equally important is the need for domed/indoor playing facilities to allow for winter access. Implicit with these facilities is the need for artificial turf, similar to the surface installed at Lansdowne Park.
There has been significant interest shown by the private sector and local associations to partner with the city to advance the construction of these facilities and it is recommended that this project be also considered as part of the initial priority list.
This is the remaining long term care facility that needs to be built, following the opening of the Peter D. Clark Long Term Care Centre in 2001. The site investigation on Porter’s Island has been completed and a design concept for the new facility has been developed. Once this facility is in operation, the existing Allan House will be surplus to the city’s need.
The building condition report commissioned to assess the integrity of Allan House indicated that while the various building components of the facility have reached the end of their economic life, the base structure of the building is very sound and could be retrofitted to accommodate a retirement home or be modified to accommodate, for example, senior’s apartments.
Given this assessment, it is likely that one could create a P3 initiative to transfer the ownership of Allan House to the private sector in return for a lower construction cost for the Garry J. Armstrong LTCC. It is therefore recommended that this project be considered as a priority project under the P3 program.
Emergency Medical Services Facility
In early 2000, internationally recognized Emergency Medical Services Consultant Fitch & Associates was retained to develop a performance based system design for ambulance services within the City of Ottawa.
The Fitch design proposed a single report to work station in the high-density area to allow for efficient and effective use of supervisory staff, vehicle maintenance staff and paramedics. Fitch proposed that the single start station would minimize movement during the shift period while allowing for maximum coverage and improved response times.
Because of time constraints leading up to the January 1, 2001 implementation date, staff established a temporary Single Report to Work Station at 530 Tremblay Road. The Tremblay facility does not meet the current operational requirements of the EMS Branch and the building lease is set to expire at the end of 2002 (a one-year lease extension is currently being negotiated with the Ontario Realty Corporation). Anticipated needs are for a garage floor space in the order of 45,000sq.ft. to house approximately 60 EMS vehicles.
Accordingly, the City should proceed immediately to review P3 options to build an appropriate EMS facility. A likely option under a P3 initiative for this type of facility would be a design/build/finance/operate/transfer partnership.
Normally there are four stages associated with the development of public-private partnerships:
Stage 1: Request for Expressions of Interest (RFEI)
Stage 2: Request for Qualifications (RFQ)
Stage 3: Request for Proposals (RFP)
Stage 4: Negotiations and Agreement
When projects are well defined and there is clarity on the city’s expectations vis-à-vis a project, it is possible to combine the RFEI and RFQ stages.
The timelines associated with each stage will vary depending on the complexity of the project and the need for formal review and approval by Committee and Council, but for each of the RFEI and RFQ stage, a three to four week period to receive the information and a four to five week period to assess the information and prepare for the next stage of the process is anticipated. For the RFP stage a five to six week period to receive the proposals from the private sector and a similar period to assess the proposals will be necessary.
As an example, a process with a combined RFEI and RFQ issued at the end of October would lead to a committee report in January to report on the short list of candidates and confirm the parameters of the RFP. The issuance of the RFP could follow immediately, with the analysis of the proposals taking place in March\April, and a recommendation on a final agreement presented to Council in the May\June timeframe. Again this would depend on the complexity and nature of the partnership being contemplated.
There are no environmental implications related to this report. Any project specific issue will be addressed as part of the project development process.
There are no rural implications related to this report.
The projects proposed for earliest implementation under a P3 effort are all supported by the respective departments. Public consultation will be undertaken as necessary as part of the development of each project.
There are no financial implications related to this report, other than the identified need for external advisors/consultants. Funding for the delivery of each project is anticipated to be on a project specific basis, as per established budgets.
Appendix A: The Ottawa Option - Unsolicited Proposals
The Strategic Delivery Unit will immediately initiate a P3 process for each of the projects identified in this report.
THE OTTAWA OPTION
The Ottawa Option provides the City of Ottawa with a method for receiving unsolicited bids for projects and then offer others an opportunity to improve and bid on the proposal, while at the same time protecting the ability of the original proponent to match any other competing proposal.
Adopting this approach overcomes many problems associated with traditional unsolicited bids. Typically, it is recommended that local governments should not consider unsolicited bids for a variety of reasons. For instance, the benefits of P3s are that they take advantage of competition among partners. Unsolicited proposals cannot be compared to proposals from other potential partners. Another possible concern with unsolicited bids is the potential for the perception of bias and unfair procurement procedures.
The Ottawa Option overcomes these concerns by providing an approach whereby the City of Ottawa can receive unsolicited proposals for a project in a fair and practical manner. The process is as follows:
Ø A Private Sector Participant submits an Unsolicited Proposal for a project which is innovative and, which was not initiated or is not planned to be initiated by the City of Ottawa. The submission must include:
i. Details of the technical, commercial, managerial and financial capability of the participant;
ii. Technical, financial and commercial details of the proposal;
iii. Draft contract principles for undertaking the project.
Ø The Private Sector Participant is advised of the “The Ottawa Option” process that the City follows and is requested to confirm that he/she is prepared to continue to participate in accordance with this process;
Ø The City of Ottawa would evaluate the Private Sector Participant’s technical, commercial, managerial and financial capability to determine whether the participant’s capabilities are adequate for undertaking the project;
Ø The City of Ottawa would then weigh the technical, commercial, managerial and financial aspects of the Private Sector Participant’s proposal and the Contract Proposal and determine if the scale and scope of the project is in line with the requirements, the funding ability, or the interests of the City. Also being determined is whether the sharing of risks as proposed in the Contract Proposal is acceptable to the City and if the project is in conformity with long term objectives;
Ø Based on this assessment, the City may decide to reject the proposal, to request amendments to the proposal, or to continue with the process;
Ø If the City recommends any modification in the technical, scale, scope and risk sharing of the proposal, the Original Private Sector Participant will be allowed to consider the recommendations and re-submit its proposal within a given time period;
Ø The City of Ottawa will then invite competing counter proposals giving adequate notice. The proposal and contract principles of the Original Private Sector Participant will be made available to any interested applicants. (Proprietary information contained in the original proposal would remain confidential and would not be disclosed);
Ø The Original Private Sector Participant will be given an opportunity to match any competing counter proposals that may be superior to the Original Proposal. In the case the Original Private Sector Participant matches or improves on the competing counter proposal, the Project will be awarded to the Original Private Sector Participant;
Ø In the event the Original Private Sector Participant does not match or improve on the competing counter proposal, the City can award the project to others, and the Contract Proposal prepared by the Original Private Sector Participant becomes the property of the City of Ottawa.
The City of Ottawa will assemble a review committee who will evaluate the proposals.
The Ottawa Option provides a framework for effective and fair competition when addressing unsolicited proposals. It also complements the City of Ottawa’s organizational culture, which advocates dynamic innovation and proactively encourages suggestions from the private sector.