Pipeline promises

New deals that make up Virginia’s 2015 project pipeline are key to the state maintaining its reputation as a leading P3 player in the US

Virginia’s lauded Office of Public-Private Partnerships (VAP3) announced on Tuesday that new projects were in the offing following the release of its 2015 pipeline plan.

Among the plans are new highway projects – which is no surprise – as well as some rest area and interstate lighting projects, among others.

These new deals will be examined from a feasibility and desirability standpoint to allow the VAP3 to complete a Detail-Level Screening, with a recommendation to the public agency whether to advance the deals into procurement as P3 projects.

In addition, the document contains eight conceptual P3 projects identified.  These projects will be researched for potential benefits and challenges, ultimately being compiled into a High-Level Screening that will offer a recommendation to the public agency whether each one should be advanced for further consideration as a P3 Candidate project.

Great news for the market on first glance, especially with the VAP3’s track record. Seeing a state being so forthright about their P3 plans is encouraging and should be viewed as a statement of intent. The level of planning going into the proposals shows experience and the right dedication to procure the deals properly. Something that has too often not been the case with projects in the US, with some high profile casualties as a result.

But planning is one thing. It is whether the VAP3 can deliver on the proposals that is the most pressing concern as we approach a new year. Cast our minds back two years and the VAP3 (or Office of Transportation Public-Private Partnerships, as it was then known) was lauded as the most progressive and successful P3 agency in the country. The closest thing the US had to a state procurement agency that had contributed so significantly to the success across the border in Canada.

But progress since then has been slow. That’s mainly been as a result of gubernatorial and managerial changes, and the fallout from the Route 460 P3, which was scrapped in April after failure to secure the necessary environmental permits – despite hundreds of millions being paid to the Ferrovial/Cintra-led team that had won the contract in 2012.

Since then the VAP3 has rebranded and attempted to widen its remit, but new deals have been thin on the ground. In the meantime, states such as Florida, Colorado and Texas have developed their pipelines, leaving the title of ‘Most Progressive P3 State’ somewhat up for debate.

Virginia clearly has the experience, the will and the knowhow. And the market will not have forgotten that in a hurry, despite some bumps in the road. They will also recognize that there was always going to be a pause to learn lessons after the Route 460 issue, anything else would have caused a public outcry. But bringing new deals to market and procuring them effectively will be what ultimately speaks the loudest.

Governor Terry McAuliffe has recently criticized the old procurement methods that lead to the scrapping of the 460 deal and the legal issues that blighted the Midtown Tunnel project. Despite these criticisms, McAuliffe has left the door open for P3s, but stressed that new deals will have to be in the interest of the tax payer.

Of course there is the highly anticipated I-66 highway project, which is currently in the market at shortlist phase. 

But that, albeit a potentially significant project, is not without its controversies. The decision to not clarify the exact model the project will be procured under, despite issuing a request for qualifications, is a curious one and has raised eyebrows among the private sector. Despite the time, effort and enthusiasm that has gone into the deal across both sectors, it could end up not being procured as a P3. That sends a confusing message to the market.

But this pipeline at least shows that the will is there and that the state is still not afraid to use P3s to develop new projects, despite some high profile setbacks.

Get this right and Virginia could be very much back in the game.