BUILDING contracts
Local and state governments contract with the private sector for various reasons. From saving money to accessing outside expertise, the key to a successful contract lies in the agency’s careful preparation before signing on the dotted line. While contracting is not the solution to every problem, local officials in two communities — Raleigh, N.C., and Johnson County, Kan. — found that working with the private sector helped overcome issues that, in some cases, had been festering for years.
Raleigh’s Blount Street
For the past 30 years, a 33-acre, state-owned parcel of land immediately adjacent to the Raleigh capitol complex has been sliding into disrepair. By the end of 2002, the state was looking at the option of spending funds for deferred and future maintenance or selling the property. In July 2003, the North Carolina General Assembly approved legislation authorizing the sale of the property.
To help make the decision, state property managers first developed a procurement model to leverage state-owned assets and satisfy existing historic district requirements. That included an expression of interest statement from the development teams, a formal request for proposals (RFP) followed by an evaluation and finally a signed contract.
During the first phase, officials asked the local development community about the financial viability of potential mixed uses for the property. The state also asked for mixed-use plans using a form-based code with varying degrees of density. The form-based code allowed the state to describe the development’s building heights, aesthetic qualities and image, rather than solely by type of use. Developers created a wide range of uses for the property, such as medium-density office, medium-density mixed-use, high-density residential, low-density residential and high-density mixed-use office.
With historic homes and landmarks located throughout the protected 33 acres, government officials could not understand how the land could be converted to reworkable parcels. However, working with the local preservation commission, city and state officials were able to relocate historic buildings to a central core, opening up larger spaces for development.
Simultaneously, lease rates were analyzed in and around the capitol area, including its core, which is adjacent to a college. Using historic lease patterns and potential retail and residential revenue, government leaders determined how their property could be best developed. They also considered that selling part of the parcel for development could eliminate a $25 million deferred capital reserve and could draw compatible uses for the area around the capitol complex.
After analyzing its options, the state decided to sell 21 acres of the parcel and issued an RFP to a short list of development teams. The winning proposal includes a plan to sell the property for $20 million plus anticipated annual taxes in excess of the property sale price.
Using a carefully developed method to define their needs and choose an appropriate contractor, the state ended up with a selling-price for development rights that was higher than initially anticipated. When the initial phase opens, local and state taxes will provide the government with a steady revenue stream for the next 20 years.
Facilities master plan
Johnson County, Kan., is growing by about 10,000 people each year. That, of course, places the burden for new county services directly on government officials.
To cope with the increasing population, six years ago, county officials began developing a Strategic Facilities Master Plan (SFMP). “The Strategic Facilities Master Plan comprehensively evaluates the strategic objectives of Johnson County, resulting in a rational facilities planning tool that informs the organization, provides a framework for sound decision-making, and enables the county to effectively anticipate, respond to and manage growth and change,” says Neal Angrisano, the county’s deputy facilities director.
The SFMP’s goals are to address the needs of five major county facilities, including the Downtown Olathe Complex, the Adult Detention and Corrections Complex, the Juvenile Detention and Olathe Mental Health Complex, the Northeast Offices Building, the Health and Human Services building and properties at a Sunset Drive building. The SFMP provides direction for delivering governmental services for the next 20 years through several phases.
The Board of County Commissioners endorsed the plan in May 2002, and it became a guide for future funding initiatives, including an approximately $400 million improvements package. The county decided to build a new county administration building as its first SFMP project and began selecting a consultant in fall 2003. The new facility would house various government services, consolidate several other agencies located around the county and eliminate office space leases. The county also wanted the building to qualify for the United States Green Building Council (USGBC)’s Leadership in Energy and Environmental Design (LEED) Gold certification.
The county chose a best value contract, which includes the project’s objectives and a fixed cost. Although a design/build contract was considered, the county did not want to choose a plan solely based on cost. Using a best value contract, the county could evaluate many more factors, including the team’s individual qualifications, creativity and the building’s lifecycle costs.
The county chose three teams to participate in the next selection stage and provided them with a stipend, recognizing their design efforts while reserving the rights to their concepts. “The resultant proposals were evaluated on carefully defined criteria, including highest value rather than lowest cost,” Angrisano says. “[That required] design-builder teams to maximize value by increasing quality and driving innovative approaches and solutions for achieving the project’s goals.”
Because a best value contract gives the design team control over all creative decisions, detailed design documents were not prepared. However, the team received programming, architectural aesthetic guidelines, engineering performance criteria, site information, project budget information and LEED goals.
When the administration building opened a few months ago, county officials were pleased to have achieved many of their initial goals, including consolidating county services in one location; creating an environment that promotes innovation and productivity, and enhances customer service; and providing an environmentally responsive structure to reduce maintenance and operational costs.
Local government officials should consider several steps to establish successful contracts with private sector businesses. They should create clear goals, analyze internal staff capabilities and consult experts if needed. They also need to determine the project delivery method, establish a steering committee of users to develop technical criteria, determine how prescriptive the procurement information should become and develop an RFP with the procurement department.
Contracting agencies also should ensure that their staff understands the alternative delivery methods, selects a partner that shares the agency’s philosophy, and develops a thorough and complete procurement process. That way, government officials will help drive innovation and value to new levels.
Mike Brenchley is senior vice president and director of alternative delivery services, and Jeff Goodale is vice president of corrections and detention design for Omaha, Neb.-based HDR Architecture.
