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[Federal Register Volume 89, Number 219 (Wednesday, November 13, 2024)]
[Notices]
[Pages 89692-89700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26210]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. DOT-OST-2024-0103]

Evaluation of the Appropriateness of Public-Private Partnership 
Project Delivery Including Value for Money or Comparable Analyses; 
Bipartisan Infrastructure Law

AGENCY: Build America Bureau, Office of the Secretary (OST), and 
Federal Highway Administration (FHWA), U.S. Department of 
Transportation (DOT).

ACTION: Proposed guidance, request for comments.

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SUMMARY: The Build America Bureau (the Bureau) and the Federal Highway 
Administration (FHWA) propose guidance to help the public understand 
statutory requirements to evaluate the appropriateness of using public-
private partnerships (P3s) to deliver infrastructure projects. This 
proposed guidance intends to inform project sponsors of the Bureau's 
implementation of the evaluation requirements when seeking Federal 
credit assistance through the Transportation Infrastructure Finance and 
Innovation Act of 1998 (TIFIA) and the Railroad Rehabilitation and 
Improvement Financing (RRIF) credit assistance programs and FHWA's 
implementation of the major project financial plan requirement perform 
detailed Value for Money (VfM) analysis. The Bureau and FHWA invite 
public comment on this proposed guidance. In addition to general 
comments, the Bureau is seeking specific feedback on the implementation 
of certain statutory requirements. The guidance does not contain any 
new criteria, does not impose any new legal requirements, and has no 
legal effect.

DATES: Written comments on this proposed guidance must be submitted on 
or before December 31, 2024 after posting. The Bureau and FHWA will 
consider comments received after that date to the extent possible 
without incurring additional expense or delay.

ADDRESSES: You may submit comments, referencing Docket ID No. DOT-OST-
2024-0103 by using the Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments.
    Instructions: All submissions received must include the agency name 
and docket number for this proposed guidance. All comments received 
will be posted without change to https://www.regulations.gov/, 
including any personal information provided. Please

[[Page 89693]]

see the Privacy Act heading in the SUPPLEMENTARY INFORMATION section of 
this document for Privacy Act information related to any submitted 
comments or materials.
    Docket: For access to the docket to read the proposed guidance or 
comments received, go to http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Innovative Finance Technical 
Assistance Team at the Build America Bureau: 
[email protected], or call Jennifer Hara, Strategic 
Partnerships Program Manager at 202-839-0199.

SUPPLEMENTARY INFORMATION:

Contents

1. Introduction
2. Definitions
3. Principles of P3 Analysis
4. P3 Analysis Requirements
5. Compliance Guidelines
    A. Early Phase P3 Evaluation (Stage 1)
    B. Progressive P3 Procurement (Stage 1A)
    C. Subsequent P3 Evaluations (Stage 2)
    D. Auditing and Public Information
6. P3 Post-Implementation Review Requirements

1. Introduction

    A public-private partnership (P3) is an infrastructure project 
delivery method in which a public owner and project sponsor (called the 
public sponsor) leverages private sector resources and methods through 
a long-term contract that finances the project and typically includes 
design, construction, maintenance, and/or operations. A mutually 
beneficial P3 aligns public and private interests through the 
commercial and financial terms of a project agreement, herein referred 
to as the concession agreement.
    Where appropriate, P3 delivery could provide more value for 
projects as compared to conventional public delivery. However, in some 
cases, P3 delivery also creates complexities and limitations for the 
public sponsor. Public sponsors can analyze these complexities, 
including project risks, and consider how best to manage them before 
choosing a P3 with its long-term partnership obligations. The general 
term for the process of analyzing and comparing advantages and 
disadvantages of P3 versus conventional public delivery options is 
value for money analysis (VfM). The analysis demonstrates whether 
delivering a project using a P3 would yield more or less value to the 
public sponsor than the most suitable public delivery option. The 
analysis also documents the goals, objectives, and underlying 
assumptions for the project delivery. The intent of VfM is not to 
analyze the benefits of the project itself but to document the analysis 
underlying the public sponsor's chosen delivery option based on 
expected benefits to the public.
    Federal surface transportation statutes require public sponsors to 
conduct a VfM or comparable analysis for certain projects, as described 
below and shown in Exhibit 1. A VfM or comparable analysis is required 
for:
     Any project type using any delivery method where the 
project cost is over $750 million, the project sponsor is a public 
entity seeking federal credit assistance, the project is in a state 
with P3 laws, and the project generates revenue or user fees;
     Any surface transportation project receiving federal 
financial assistance under title 23, United States Code, using a P3 
delivery method with a project cost over $500 million; and
     Any project type using a P3 delivery method and seeking 
federal credit assistance. On November 15, 2021, the President signed 
the Infrastructure Investment and Jobs Act (also known as the 
``Bipartisan Infrastructure Law'') (IIJA or the BIL) into law.\1\ 
Section 70701 of the BIL requires that certain projects with an 
estimated total cost of more than $750,000,000 conduct a VfM analysis 
or comparable analysis. Additionally, section 11508 of the BIL requires 
that Major Projects \2\ under section 106(h) of title 23, United States 
Code, for which the project sponsor intends to carry out the project 
through a P3 shall include a detailed VfM analysis or similar 
comparative analysis. In addition, many states' P3 laws require public 
sponsors to conduct due diligence analysis, such as VfM, to determine 
whether the P3 delivery method would provide more value and benefits to 
the public sponsor than other delivery methods.
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    \1\ Public Law 117-58 (2021).
    \2\ A Major Project is a project funded with Federal financial 
assistance under title 23, United States Code, with a total 
estimated cost of $500 million or more and such other projects as 
identified by the Secretary of Transportation pursuant to 23 U.S.C. 
106(h).
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    This proposed guidance is not aimed at building the capacity or 
capability of entities to develop and deliver infrastructure projects 
through P3s. Entities that want to build their capacities and 
capabilities may access Bureau and FHWA educational and technical 
assistance resources.\3\ Through such resources, Bureau and FHWA 
subject matter experts are available upon request to conduct targeted 
workshops and provide training materials for project sponsors.
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    \3\ https://buildamerica.dot.gov/buildamerica/andhttps://www.fhwa.dot.gov/ipd/p3/toolkit/.
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    To improve readability, clarity, and brevity, this proposed 
guidance describes the requirements with words that might differ from 
statute and regulation. The proposed guidance does not contain any new 
criteria, does not impose any new legal requirements, and has no legal 
effect. The contents of this document do not have the force of law and 
are not meant to bind the public in any way. This document is intended 
only to share information with the public on existing requirements 
under the law or agency policies and is not intended to modify any 
Major Projects requirements under 23 U.S.C. 106(h). The proposed 
guidance only applies to Major Projects that require a VfM analysis.
BILLING CODE P

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[GRAPHIC] [TIFF OMITTED] TN13NO24.000

BILLING CODE C
    A. Proposed Guidance Public Comments. The goal of this guidance is 
to help public sponsors fulfill VfM or comparable analysis requirements 
for federally assisted projects where applicable. The Bureau and FHWA 
invite public comment on this guidance. In addition, the Bureau is 
asking for public input on two matters.
    First, the Bureau is seeking input about applying the VfM statutory 
requirement for projects with costs exceeding $750,000,000 that are 
``anticipated to generate user fees or other revenues that could 
support the capital and operating costs of such project.'' \4\ In 
theory, the provision requires a public sponsor to conduct VfM if the 
project might generate a single dollar of user fees or other revenues. 
The statute does not specify an amount of revenue generated below which 
VfM is not required. The Bureau invites the public to suggest ways to 
apply the requirement without unduly burdening public sponsors.
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    \4\ Public Law 117-58, sec. 70701(b)(3)(B) (2021).
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    The proposed methodology for VfM analyses in this guidance is 
useful for Major Project financial plan requirements under section 
106(h)(3)(D) as added by BIL section 11508.\5\ The proposed methodology 
will also be useful for Major Projects receiving title 23 assistance 
that are intended to be delivered as a P3. However, we note that not 
all of the VfM requirements in this proposed guidance apply to all 
Major Projects. Only those Major Projects that also meet the threshold 
requirements of BIL sections 11508 and 70701 and section 116(e)(3) of 
title 49, United States Code, would need to satisfy the VfM 
requirements described therein, as supplemented by this proposed 
guidance. For more information on FHWA's Major Projects requirements, 
see FHWA's Major Projects proposed guidance documents, available at 
https://www.fhwa.dot.gov/majorprojects/.
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    \5\ Public Law 117-58, sec. 11508(d)(1)(C) (2021).
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    Second, the Bureau is asking for public input on ``other 
information'' that would be advantageous for the Secretary of 
Transportation to require in detailed P3 VfM evaluations. The VfM 
requirement in BIL section 70701 lists required elements for VfM or 
comparable analysis and authorizes the Secretary to require additional 
information, as appropriate.\6\ Examples of additional information that 
could be beneficial to include as part of VfM are long-term commitments 
and risks the P3 agreement creates for the public sponsor, such as non-
compete clauses and revenue protections that could lead to compensation 
from the public sponsor; and impacts of P3 delivery on business and 
labor, including disadvantaged business enterprises, local contractors, 
and public and private employees.
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    \6\ Public Law 117-58, sec. 70701(a)(5) (2021).
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    The Bureau asks for comments from the public to better inform its 
proposed guidance process. The Bureau will post these comments, without 
edit, including any personal information the commenter provides, to 
www.regulations.gov, as described in the system of records notice (DOT/
ALL-14 FDMS), which is available at www.dot.gov/privacy. To facilitate 
comment tracking and response, we encourage commenters to provide their 
name, or the name of their organization; however, submission of names 
is

[[Page 89695]]

completely optional. The Bureau will fully consider all timely 
comments, whether or not commenters identify themselves. If you wish to 
provide comments containing proprietary or confidential information, 
please contact the agency for alternate submission instructions.

2. Definitions

    For purposes of this proposed guidance, the definitions in Exhibit 
2 apply. If the exhibit does not specifically define a term, industry 
standard definitions apply.

        Exhibit 2--Definitions of Terms in This Proposed Guidance
------------------------------------------------------------------------
             Term                              Definition
------------------------------------------------------------------------
Public-private partnership     A long-term arrangement between a public
 (P3).                          sponsor and a private entity for
                                delivery of a project that includes at
                                least the following elements: design,
                                construction, financing, and either
                                operations or maintenance or both of the
                                project over a term specified in a
                                concession agreement (as defined below).
Agreement types:
    Concession Agreement.....  An agreement between a public sponsor and
                                private entity (e.g., concessionaire or
                                developer) signed after a preferred
                                bidder is selected or contract price is
                                agreed upon. Other names for such
                                agreements include P3 agreement, project
                                agreement, project development
                                agreement, and comprehensive project
                                agreement. BIL section 70701(a) uses the
                                term ``Project Development Agreement,''
                                which the Bureau interprets as a
                                concession agreement.
    Pre-development Agreement  An agreement between a public sponsor and
                                private entity to develop and design the
                                project further and finalize a committed
                                proposal.
Contract types:
    Long-term Contract.......  A contract between a public sponsor and a
                                private entity to deliver a project,
                                including some or all elements for
                                design, construction, financing,
                                operations, and maintenance over the
                                concession term.
    Short-term Contract......  A contract between a public sponsor and
                                private entity to deliver a project that
                                does not include operations or
                                maintenance.
Evaluation types:
    Screening Evaluation.....  An evaluation that sets high-level
                                criteria based on the public sponsor's
                                project goals and objectives.
    Qualitative Evaluation...  Before detailed project scope, cost, and
                                schedule are available, an evaluation
                                that compares advantages and
                                disadvantages of all practical
                                conventional and alternative delivery
                                options including public-private
                                partnership delivery. The public sponsor
                                documents the process for selecting the
                                preferred delivery option based on the
                                project's characteristics, feasibility,
                                goals, and objectives.
    Detailed Evaluation......  An evaluation that compares all practical
                                conventional and alternative delivery
                                options to select the most suitable
                                public delivery option and most suitable
                                P3 delivery option and then estimates
                                the likely quantitative outcomes of
                                public and P3 options. Conventional VfM
                                quantifies differences in financial
                                outcomes to the public sponsor and
                                evaluates other outcomes qualitatively.
                                Detailed P3 evaluation may account for
                                non-financial benefits such as
                                differences in service levels for the
                                public and costs to the public and
                                society at large by use of benefit-cost
                                analysis methodology. For example, if
                                one delivery method results in an
                                earlier start of operations than the
                                other, the public will benefit earlier
                                from higher service levels, which can be
                                quantified in economic terms.
Federal financial assistance.  Includes grants and loans from the
                                Federal government to support
                                infrastructure investment, not including
                                private activity bond allocations and
                                grants for technical assistance.
Major Project................  A project funded with Federal financial
                                assistance under title 23, United States
                                Code, with a total estimated cost of
                                $500 million or more and such other
                                projects as identified by the Secretary
                                of Transportation pursuant to 23 U.S.C.
                                106(h).
P3 procurement types:
    Conventional P3            Public sponsor seeks competitive, fixed
     Procurement.               price, and certain schedule bids from
                                qualified bidders after the public
                                sponsor completes a limited preliminary
                                design of the project.
    Progressive P3             Through a competitive process early in
     Procurement.               project development, the public sponsor
                                selects a qualified private entity to
                                develop a project without a bid price.
------------------------------------------------------------------------

3. Principles of P3 Analysis

    The appropriateness of P3 delivery as an option should be evaluated 
during the early phases of the project life cycle (such as project 
identification and delivery option screening) and as the project 
progresses during project development and procurement. With better and 
more information available later in the project life cycle, and as the 
commercial and financial terms or assumptions change, the public 
sponsor should update the P3 evaluation by conducting detailed VfM to 
ensure a P3 model is still appropriate and in the public interest.
    To ensure compliance with statutory VfM or comparable analysis 
requirements, the Bureau expects public sponsors to evaluate the 
appropriateness of, and value to be generated from, P3 project delivery 
at two decision points in the project lifecycle: (1) after project 
identification and before the project development phase, and (2) after 
the P3 procurement and before entering into a concession agreement 
between the public sponsor and private developer at commercial close. 
Exhibit 3 below shows these two decision points in a simplified P3 
project lifecycle.

[[Page 89696]]

[GRAPHIC] [TIFF OMITTED] TN13NO24.001

    The project life cycle presented in Exhibit 3 also applies to Major 
Projects under section 106(h) of title 23, United States Code, with an 
estimated total cost above $750 million that meet the other criteria 
under BIL section 70701. Additionally, under BIL section 11508, the 
Major Project financial plan for Major Projects being carried out 
through a P3 must include a detailed VfM analysis or similar 
comparative analysis. This analysis is submitted as part of the initial 
financial plan, or subsequent financial plan annual update where 
appropriate. For requirements applicable to Major Projects that do not 
meet these criteria, see FHWA's Major Projects guidance documents, 
available at https://www.fhwa.dot.gov/majorprojects/.
    Observing principles derived from lessons learned and best 
practices helps public sponsors objectively analyze the advantages and 
disadvantages of delivering an infrastructure project through a P3. 
Following these principles also helps public sponsors communicate to 
the public the basis of their decisions. The next paragraphs describe 
principles public sponsors should incorporate into their analyses to 
support requests for DOT federal financial assistance.
    A. Establish Delivery Option Goals. VfM provides insights to 
support decision-making, when the public sponsor defines goals related 
to the delivery method. Examples of delivery goals are maximizing use 
of innovative approaches and technologies, preserving flexibility for 
future improvements, and minimizing the taxpayers' near-term financial 
burden in subsidizing the project. Delivery goals may be different than 
project goals. Whether a project is likely to achieve project goals is 
better analyzed through techniques such as benefit-cost analysis or 
environmental or economic impact analysis, rather than VfM.
    B. Identify Practical Delivery Options. After setting project 
delivery goals, public sponsors can then consider which delivery 
methods are likely to fulfill the identified goals. Sponsors can then 
narrow their choices by screening out impractical ones. For example, a 
public sponsor might have authority for some delivery methods and not 
others. Documenting the basis for rejecting a delivery method enhances 
credibility of the public sponsor's process.
    C. Inform Subsequent Decisions. VfM analyzes tradeoffs between 
delivery options to identify the most suitable public delivery option 
and most suitable P3 option. The public sponsor can then determine 
whether the public or P3 option provides the most value relative to the 
established delivery option goals. The purpose of VfM is to inform 
selection of the project delivery method, not to justify project 
delivery decisions public sponsors previously made. Using VfM as 
intended, public sponsors will be able to show how the analysis 
preceded, and directly contributed to, the decision to advance the 
project with a P3 or other delivery approach.
    D. Analytical Framework and Data. VfM involves predictions, 
projections, and assumptions. Public sponsors should (a) use actual, 
verifiable data, if possible, and (b) where predictions, projections, 
and assumptions are necessary, provide the methodology and basis for 
the inputs.
    E. Transparency and Accountability. To the maximum extent 
practicable, public sponsors should make information available to the 
public, including (a) the project's delivery goals, (b) the information 
used in the VfM analysis, (c) how the VfM analysis was employed in the 
decision-making process, and (d) the decision-makers charged with 
selecting the final delivery method.

4. P3 Analysis Requirements

    Several provisions in the legislation established or amended 
statutory P3 evaluation requirements. Applicability of these 
requirements depends on project size, source of funding or financing, 
phase of the project life cycle, and other attributes. In 2005, the 
Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users defined the term major project, reduced the financial 
plan requirement threshold to $500 million, and required submission of 
project management plans.\7\ In 2012, the Moving Ahead for Progress in 
the 21st Century Act established the requirement to assess the 
appropriateness of a P3 for delivering major projects.\8\ The 2015 FAST 
Act established the requirement that public sponsors receiving credit 
assistance from the Bureau have conducted VfM or comparable analysis 
before deciding to advance projects as P3s.\9\
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    \7\ Public Law 109-59, sec. 1904(a) (2005), amending 23 U.S.C. 
106(h).
    \8\ Public Law 112-141, sec. 1503(a)(4)(B) (2012), amending 23 
U.S.C. 106(h).
    \9\ Public Law 114-94, sec. 9001(a) (2015), adding 49 U.S.C. 
116(e)(3).
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    Enacted November 15, 2021, the BIL established new, and amended 
prior, statutory P3 evaluation requirements.\10\ The BIL:
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    \10\ Public Law 117-58, secs. 11508 and 70701 (2021).

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[[Page 89697]]

     establishes a P3 evaluation requirement for projects with 
total estimated costs of more than $750 million. Sponsors of these 
projects are required to conduct VfM if they intend to seek TIFIA or 
RRIF credit assistance, are in a state in which there is a state law 
authorizing the use and implementation of P3s for transportation 
projects, and the project is anticipated to generate user fees or other 
revenues that could support project capital and operating costs.\11\ 
This provision of BIL further specifies the level of detail and 
specific elements to be included in this detailed P3 evaluation; \12\
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    \11\ Public Law 117-58, sec. 70701 (2021).
    \12\ Public Law 117-58, sec. 70701(a) (2021).
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     amends the requirements of section 106(h) of title 23 to 
require public sponsors of projects with an estimated cost of $500 
million or more, receiving title 23 assistance, and intended to be 
delivered as a P3, to conduct a detailed VfM or similar comparative 
analysis; \13\
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    \13\ Public Law 117-58, sec. 11508(d)(1)(C) (2021), adding 23 
U.S.C. 106(h)(3)(D).
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     stipulates reporting and transparency requirements 
throughout project delivery and following key project delivery 
milestones; \14\ and
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    \14\ Public Law 117-58, secs. 11508(b), (c), and 70701(c), (d) 
(2021).
---------------------------------------------------------------------------

     adds VfM as a TIFIA eligibility criterion for projects to 
be carried out through P3s.\15\
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    \15\ Public Law 117-58, sec. 11508(d) (2021), adding 23 U.S.C. 
602(a)(11).
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    Exhibit 4 summarizes the statutory requirements for projects 
required to conduct a VfM analysis and the expected evaluation type 
based on the project delivery type.

                       Exhibit 4--P3 Evaluation Requirements by Project and Delivery Type
----------------------------------------------------------------------------------------------------------------
                                                             Required public sponsor P3 evaluation *
         Project type            Delivery type  ----------------------------------------------------------------
                                                       Stage 1               Stage 1A              Stage 2
----------------------------------------------------------------------------------------------------------------
All transportation projects    All delivery      Screening..........  n.a..................  Detailed.
 costing more than $750         types, except    Screening..........  Qualitative..........  Detailed.
 million that generate user     progressive P3.
 fees or other revenues        Progressive P3..
 carried out by certain
 public agencies in states
 with P3 authority, and
 seeking TIFIA or RRIF credit
 assistance \16\.
                                                ----------------------------------------------------------------
Title 23 projects costing      All P3..........  Detailed.**
 $500 million or more \17\.
                                                ----------------------------------------------------------------
All projects proposed for P3   Conventional P3.  Screening..........  n.a..................  Detailed.
 delivery and seeking TIFIA    Progressive P3..  Screening..........  Qualitative..........  Detailed.
 or RRIF credit assistance
 \18\.
----------------------------------------------------------------------------------------------------------------
Notes:
* Stage 1: early in project development before starting the procurement process.
Stage 1A: for a progressive P3, before signing a pre-development agreement.
Stage 2: before signing a concession agreement with a private P3 entity, if a P3 delivery method is selected in
  Stage 1.
n.a.: not applicable.
** The Major Project financial plan for Major Projects being carried out through a P3 agreement must include a
  detailed VfM analysis or similar comparative analysis. This analysis is submitted as part of the initial
  financial plan, or subsequent financial plan annual update where appropriate. Project sponsors of Major
  Projects under 23 U.S.C. 106(h) should consider whether their project also meets the requirements of the other
  VfM requirements detailed in this guidance. If so, their projects would also be subject to the additional VfM
  requirements detailed in this guidance.

5. Compliance Guidelines
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    \16\ Public Law 117-58, sec. 70701 (2021).
    \17\ Public Law 117-58, sec 11508(d)(1)(C) (2021).
    \18\ 49 U.S.C. 116(e)(3) and 23 U.S.C. 602(a)(11).
---------------------------------------------------------------------------

    This section details and clarifies aspects of the P3 evaluation 
requirements. Public sponsors and their projects often have unique 
attributes and circumstances that require in-depth analysis and review 
that might differ from the general descriptions herein. We encourage 
you to discuss your projects and applicable requirements directly with 
the Bureau and FHWA staff. Email us at [email protected] or 
[email protected].
    A. Early Phase P3 Evaluation (Stage 1). Outlining of strategies for 
the business case early in the project lifecycle, i.e., project 
identification and screening, is critical for successful project 
delivery selection. During project identification and screening, public 
sponsors should engage relevant stakeholders through brainstorming and 
risk assessment workshops and may use any tool for qualitative or high-
level quantitative analysis to compare the most suitable public project 
delivery option and the appropriate P3 option. Project sponsors seeking 
credit assistance under TIFIA and RRIF for all projects procured as P3s 
(regardless of size) are required to complete VfM or comparable 
analysis prior to deciding to advance the project as a P3.\19\ Because 
the decision to advance a project as a P3 is made at Stage 1, public 
sponsors that anticipate either seeking TIFIA or RRIF credit assistance 
directly or that TIFIA or RRIF might be part of their ultimate 
preferred bidder's financing package, must conduct VfM at Stage 1. 
Information available at Stage 1 is often limited, so the Bureau 
anticipates VfMs conducted at this stage would comprise a screening 
analysis for conventional P3s and any project required to perform 
detailed VfM analysis under BIL Section 70701.
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    \19\ 49 U.S.C. 116(e)(3) and 23 U.S.C. 602(a)(11).
---------------------------------------------------------------------------

    If the public sponsor cannot define a workable public delivery 
option (e.g., in a transit-oriented development project for which a 
private entity already owns the land or has secured development 
rights), VfM or comparable analysis might not be feasible. In such 
cases, the public sponsor can demonstrate compliance with statutory 
requirements by documenting before signing a concession agreement why 
it cannot complete a meaningful VfM or comparable analysis and why it 
decided to use a P3 delivery option.
    B. Progressive P3 Procurement (Stage 1A). In a progressive P3 
procurement, the public sponsor selects a private developer and 
executes a pre-development agreement to design and de-risk the project 
collaboratively. Then, the private developer negotiates and submits a 
firm price proposal for delivering the project. If the public sponsor 
accepts the proposal, the parties sign a concession agreement.
    The Bureau expects public sponsors using a progressive P3 
procurement to conduct a qualitative VfM before signing a pre-
development agreement and a detailed VfM prior to signing a concession 
agreement. Similar to the discussion of Stage 1 above, the Bureau 
expects the VfM at Stage 1A will be

[[Page 89698]]

qualitative with limited information available regarding the project. 
After the private developer submits a committed bid price pursuant to 
the pre-development agreement, the Bureau would expect the public 
sponsor to update and finalize the VfM based on the terms and 
conditions of the proposed P3 agreement. At this point, the Bureau 
expects the public sponsor to conduct a detailed P3 evaluation prior to 
signing a concession agreement.
    C. Subsequent P3 Evaluations (Stage 2). The Bureau expects this 
Stage 2 detailed analysis to be done once the project sponsor has 
additional details on project cost, funding/financing, and risk 
allocation. However, the Bureau expects that the Stage 2 analysis would 
be completed before signing the concession agreement. If the Stage 1 
analysis resulted in the selection of a non-P3 delivery method, a Stage 
2 analysis will not be required.
    The detailed Stage 2 evaluation must include:

    i. the life-cycle cost and project delivery schedule;
    ii. the costs of using public funding versus private financing 
for the project;
    iii. a description of the key assumptions made in developing the 
analysis, including--
    a. an analysis of any Federal grants or loans and subsidies 
received or expected (including tax depreciation costs);
    b. the key terms of the proposed public-private partnership 
agreement, if applicable (including the expected rate of return for 
private debt and equity), and major compensation events;
    c. a discussion of the benefits and costs associated with the 
allocation of risk;
    d. the determination of risk premiums assigned to various 
project delivery scenarios;
    e. assumptions about use, demand, and any user fee revenue 
generated by the project; and
    f. any externality benefits for the public generated by the 
project;
    iv. a forecast of user fees and other revenues expected to be 
generated by the project, if applicable; and
    v. any other information the Secretary of Transportation 
determines to be appropriate.\20\
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    \20\ Public Law 117-58, sec. 70701(a) (2021).

    Project sponsors may choose any tool that provides analysis of 
items (i), (ii), and (iii), including items (iii)(a) through (f), above 
to meet the requirements for detailed VfM. The Bureau recommends public 
sponsors document the basis for the analysis, project goals and 
objectives, and the underlying assumptions and rationale and then make 
such analysis and documentation available for public review. Any 
enhancements or adjustments such as risk premiums should be based on 
actual data, to the extent possible, and reasonably verifiable.
    The Bureau strongly encourages public sponsors of P3 projects that 
anticipate seeking TIFIA or RRIF credit assistance to undertake both 
(a) a screening analysis at Stage 1 or a qualitative analysis at Stage 
1A and (b) a detailed VfM or comparable analysis at Stage 2. The Bureau 
will evaluate the type of VfM conducted at each stage to determine 
whether a public sponsor has satisfied all applicable requirements. In 
doing so, the Bureau will seek to ensure the public sponsor used 
information appropriate for the stage at which the analysis was 
conducted and that the VfM was thorough. The Bureau therefore expects 
to see a bifurcated analysis as described above and that public 
sponsors of P3 projects seeking Bureau credit assistance \21\ conduct a 
detailed VfM that includes evaluation of the elements in BIL Section 
70701. The Bureau is unlikely to find a public sponsor satisfied these 
requirements if a P3 project of any size or a project with an 
anticipated cost of more than $750 million that generates user fees or 
other revenues in states with P3 laws did not undergo a screening VfM 
at Stage 1 (or qualitative VfM for a progressive P3 at Stage 1A) and a 
detailed VfM at Stage 2 (for projects selected for delivery as a P3 as 
a result of Stage 1 analysis) that evaluates the elements in BIL 
Section 70701.
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    \21\ Including where the public sponsor is not itself directly 
seeking TIFIA or RRIF credit assistance but anticipates that its 
preferred bidder might do so.
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    If the public sponsor cannot define a workable public delivery 
option, the public sponsor can demonstrate compliance with statutory 
requirements by documenting before signing a concession agreement why 
it cannot complete a meaningful VfM or comparable analysis and why it 
decided to use a P3 delivery option.
    D. Auditing and Public Information. Transparency is an integral 
part of proper public sector decision making, particularly for long 
term commitments. The Bureau recommends public sponsors conduct an 
independent audit prior to signing contracts, such as concession 
agreements. An entity that has no ties to the project should conduct 
the audit and should ensure all processes have been followed and all 
major risks are properly identified, documented, and shared with 
decision makers and stakeholders. It should also ensure all local and 
federal approvals needed prior to execution of the concession agreement 
are in place and execution of the agreement will not impose any 
undisclosed major risks to the public.
    In addition to the foregoing, 49 U.S.C. 116(e)(3) requires public 
sponsors to make the analysis and key terms of the concession agreement 
publicly available at an appropriate time. The Bureau believes the 
appropriate time is as early as possible after signing the concession 
agreement, subject to any statutory limitations on a public sponsor's 
ability to make this information public. The Bureau expects public 
sponsors to make the analysis and key terms of the concession agreement 
(for P3 projects) publicly available (including on the website of the 
project, for projects described in BIL Section 70701 \22\) shortly 
after commercial close and prior to financial close. The Bureau does 
not expect to reach financial close on TIFIA or RRIF credit assistance 
for P3 projects or projects with anticipated costs of more than $750 
million that generate user fees or other revenues in states with P3 
laws if the requisite information has not yet been made public.
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    \22\ BIL section 70701(c) requires public sponsors to post the 
results of the analysis on the website of the project.
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6. P3 Post-Implementation Review Requirements

    The FAST Act and BIL require project sponsors to conduct post-
implementation reviews of the private partners' compliance with 
concession agreement terms, as a condition for receiving TIFIA and RRIF 
credit assistance.\23\ BIL directs the Secretary to require the public 
sponsor of title 23 P3 projects costing $100,000,000 or more that 
receive federal financial assistance, including Bureau credit 
assistance, not later than three years after the date of opening of the 
project to traffic, to:
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    \23\ 49 U.S.C. 116(e)(3)(A)(iii) and (iv) and Public Law 117-58, 
sec. 11508(b) (2021).
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     Review the project, including the private partner's 
compliance with the terms of the concession agreement;
     Certify to the Secretary that the private partner is 
meeting terms of the concession agreement for the project or notify the 
Secretary about the private partner's non-compliance, including a brief 
description of each violation of the concession agreement; and
     Make publicly available the above certification or 
notification without disclosing proprietary or confidential business 
information.\24\
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    \24\ Public Law 117-58, sec. 11508(b).
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    Section 116(e)(3)(A)(iii) of title 49 establishes a similar review 
requirement for any P3 project receiving TIFIA or RRIF credit 
assistance and further requires the public sponsor to provide a 
publicly available summary of total

[[Page 89699]]

federal financial assistance in the project.
    To satisfy these statutory review and disclosure requirements, the 
Bureau will require a public sponsor to sign a direct agreement with 
the Bureau prior to closing on Bureau credit assistance that 
memorializes the public sponsor's obligation to conduct and disclose 
the results of such review. A public sponsor should incorporate into 
its concession agreement the public sponsor's obligation to evaluate 
the concessionaire's performance and report as the law requires. The 
Bureau's loan agreement with the concessionaire will reference the 
relevant concession agreement and applicable statutory requirements and 
trigger a default in the event the public sponsor does not comply with 
its statutory obligations.

Appendix: Statutory References to Value for Money or Comparable 
Analysis Bipartisan Infrastructure Law (Pub. L. 117-58, 11508)

Sec. 11508. Requirements for Transportation Projects Carried Out 
Through Public-Private Partnerships

    (a) DEFINITIONS.--In this section:
    (1) PROJECT.--The term ``project'' means a project (as defined 
in section 101 of title 23, United States Code) that--
    (A) is carried out, in whole or in part, using Federal financial 
assistance; and
    (B) has an estimated total cost of $100,000,000 or more.
    (2) PUBLIC-PRIVATE PARTNERSHIP.--The term ``public-private 
partnership'' means an agreement between a public agency and a 
private entity to finance, build, and maintain or operate a project.
    (b) REQUIREMENTS FOR PROJECTS CARRIED OUT THROUGH PUBLIC-PRIVATE 
PARTNERSHIPS.--With respect to a public-private partnership, as a 
condition of receiving Federal financial assistance for a project, 
the Secretary shall require the public partner, not later than 3 
years after the date of opening of the project to traffic--
    (1) to conduct a review of the project, including a review of 
the compliance of the private partner with the terms of the public-
private partnership agreement;
    (2)(A) to certify to the Secretary that the private partner of 
the public-private partnership is meeting the terms of the public-
private partnership agreement for the project; or
    (B) to notify the Secretary that the private partner of the 
public-private partnership has not met 1 or more of the terms of the 
public-private partnership agreement for the project, including a 
brief description of each violation of the public-private 
partnership agreement; and
    (3) to make publicly available the certification or 
notification, as applicable, under paragraph (2) in a form that does 
close any proprietary or confidential business information.
    (c) NOTIFICATION.--If the Secretary provides Federal financial 
assistance to a project carried out through a public-private 
partnership, not later than 30 days after the date on which the 
Federal financial assistance is first obligated, the Secretary shall 
submit to the Committee on Environment and Public Works of the 
Senate and the Committee on Transportation and Infrastructure of the 
House of Representatives a notification of the Federal financial 
assistance made available for the project.
    (d) VALUE FOR MONEY ANALYSIS.--
    (1) PROJECT APPROVAL AND OVERSIGHT.--Section 106(h)(3) of title 
23, United States Code, is amended--
    (A) in subparagraph (C), by striking ``and'' at the end;
    (B) by redesignating subparagraph (D) as subparagraph (E); and
    (C) by inserting after subparagraph (C) the following: ``(D) for 
a project in which the project sponsor intends to carry out the 
project through a public-private partnership agreement, shall 
include a detailed value for money analysis or similar comparative 
analysis for the project; and''.
    (2) SURFACE TRANSPORTATION BLOCK GRANT PROGRAM.--Paragraph (21) 
of section 133(b) of title 23, United States Code (as redesignated 
by section 1109(a)(1)(C)), is amended by inserting ``, including 
conducting value for money analyses or similar comparative 
analyses,'' after ``oversight''.
    (3) TIFIA.--Section 602(a) of title 23, United States Code, is 
amended by adding at the end the following: ``(11) PUBLIC-PRIVATE 
PARTNERSHIPS.--In the case of a project to be carried out through a 
public-private partnership, the public partner shall have--``(A) 
conducted a value for money analysis or similar comparative 
analysis; and ``(B) determined the appropriateness of the public-
private partnership agreement.''.
    (e) APPLICABILITY.--This section and the amendments made by this 
section shall only apply to a public-private partnership agreement 
entered into on or after the date of enactment of this Act.

Bipartisan Infrastructure Law (Pub. L. 117-58, 70701)

Title VII--Public-Private Partnerships

Sec. 70701. Value For Money Analysis

    (a) IN GENERAL.--Notwithstanding any other provision of law, in 
the case of a project described in subsection (b), the entity 
carrying out the project shall, during the planning and project 
development process and prior to signing any Project Development 
Agreement, conduct a value for money analysis or comparable analysis 
of the project, which shall include an evaluation of--
    (1) the life-cycle cost and project delivery schedule;
    (2) the costs of using public funding versus private financing 
for the project;
    (3) a description of the key assumptions made in developing the 
analysis, including--
    (A) an analysis of any Federal grants or loans and subsidies 
received or expected (including tax depreciation costs);
    (B) the key terms of the proposed public-private partnership 
agreement, if applicable (including the expected rate of return for 
private debt and equity), and major compensation events;
    (C) a discussion of the benefits and costs associated with the 
allocation of risk;
    (D) the determination of risk premiums assigned to various 
project delivery scenarios;
    (E) assumptions about use, demand, and any user fee revenue 
generated by the project; and
    (F) any externality benefits for the public generated by the 
project;
    (4) a forecast of user fees and other revenues expected to be 
generated by the project, if applicable; and
    (5) any other information the Secretary of Transportation 
determines to be appropriate.
    (b) PROJECT DESCRIBED.--A project referred to in subsection (a) 
is a transportation project--
    (1) with an estimated total cost of more than $750,000,000;
    (2) carried out--
    (A) by a public entity that is a State, territory, Indian Tribe, 
unit of local government, transit agency, port authority, 
metropolitan planning organization, airport authority, or other 
political subdivision of a State or local government; and
    (B) in a State in which there is in effect a State law 
authorizing the use and implementation of public-private 
partnerships for transportation projects; and
    (3)(A) that intends to submit a letter of interest, or has 
submitted a letter of interest after the date of enactment of this 
Act, to be carried out with--(i) assistance under the TIFIA program 
under chapter 6 of title 23, United States Code; or (ii) assistance 
under the Railroad Rehabilitation and Improvement Financing Program 
of the Federal Railroad Administration established under chapter 224 
of title 49, United States Code; and
    (B) that is anticipated to generate user fees or other revenues 
that could support the capital and operating costs of such project.
    (c) REPORTING REQUIREMENTS.--
    (1) PROJECT REPORTS.--For each project described in subsection 
(b), the entity carrying out the project shall--
    (A) include the results of the analysis under subsection (a) on 
the website of the project; and
    (B) submit the results of the analysis to the Build America 
Bureau and the Secretary of Transportation.
    (2) REPORT TO CONGRESS.--The Secretary of Transportation, in 
coordination with the Build America Bureau, shall, not later than 2 
years after the date of enactment of this Act--
    (A) compile the analyses submitted under paragraph (1)(B); and
    (B) submit to Congress a report that--
    (i) includes the analyses submitted under paragraph (1)(B);
    (ii) describes--
    (I) the use of private financing for projects described in 
subsection (b); and
    (II) the costs and benefits of conducting a value for money 
analysis; and
    (iii) identifies best practices for private financing of 
projects described in subsection (b).
    (d) GUIDANCE.--The Secretary of Transportation, in coordination 
with the

[[Page 89700]]

Build America Bureau, shall issue guidance on performance 
benchmarks, risk premiums, and expected rates of return on private 
financing for projects described in subsection (b).

United States Code, Title 23, Section 106(h)

    (h) Major Projects.--
    (1) In general.--Notwithstanding any other provision of this 
section, a recipient of Federal financial assistance for a project 
under this title with an estimated total cost of $500,000,000 or 
more, and recipients for such other projects as may be identified by 
the Secretary, shall submit to the Secretary for each project--
    (A) a project management plan; and
    (B) an annual financial plan, including a phasing plan when 
applicable.
    (2) Project management plan.--A project management plan shall 
document--
    (A) the procedures and processes that are in effect to provide 
timely information to the project decisionmakers to effectively 
manage the scope, costs, schedules, and quality of, and the Federal 
requirements applicable to, the project; and
    (B) the role of the agency leadership and management team in the 
delivery of the project.
    (3) Financial plan.--A financial plan--
    (A) shall be based on detailed estimates of the cost to complete 
the project;
    (B) shall provide for the annual submission of updates to the 
Secretary that are based on reasonable assumptions, as determined by 
the Secretary, of future increases in the cost to complete the 
project;
    (C) may include a phasing plan that identifies fundable 
incremental improvements or phases that will address the purpose and 
the need of the project in the short term in the event there are 
insufficient financial resources to complete the entire project. If 
a phasing plan is adopted for a project pursuant to this section, 
the project shall be deemed to satisfy the fiscal constraint 
requirements in the statewide and metropolitan planning requirements 
in sections 134 and 135;
    (D) for a project in which the project sponsor intends to carry 
out the project through a public-private partnership agreement, 
shall include a detailed value for money analysis or similar 
comparative analysis for the project; and
    (E) shall assess the appropriateness of a public-private 
partnership to deliver the project.

United States Code, Title 49, Section 116(e)

    (e) Innovative Financing Best Practices.--
    (1) In general.--The Bureau shall work with the modal 
administrations within the Department, eligible entities, and other 
public and private interests to develop and promote best practices 
for innovative financing and public-private partnerships.
    (2) Activities.--The Bureau shall carry out paragraph (1)--
    (A) by making Federal credit assistance programs more accessible 
to eligible recipients;
    (B) by providing advice and expertise to eligible entities that 
seek to leverage public and private funding;
    (C) by sharing innovative financing best practices and case 
studies from eligible entities with other eligible entities that are 
interested in utilizing innovative financing methods; and
    (D) by developing and monitoring--
    (i) best practices with respect to standardized State public-
private partnership authorities and practices, including best 
practices related to--
    (I) accurate and reliable assumptions for analyzing public-
private partnership procurements;
    (II) procedures for the handling of unsolicited bids;
    (III) policies with respect to noncompete clauses; and
    (IV) other significant terms of public-private partnership 
procurements, as determined appropriate by the Bureau;
    (ii) standard contracts for the most common types of public-
private partnerships for transportation facilities; and
    (iii) analytical tools and other techniques to aid eligible 
entities in determining the appropriate project delivery model, 
including a value for money analysis.
    (3) Transparency.--The Bureau shall--
    (A) ensure the transparency of a project receiving credit 
assistance under a program referred to in subsection (d)(1) and 
procured as a public-private partnership by--
    (i) requiring the sponsor of the project to undergo a value for 
money analysis or a comparable analysis prior to deciding to advance 
the project as a public-private partnership;
    (ii) requiring the analysis required under subparagraph (A), and 
other key terms of the relevant public-private partnership 
agreement, to be made publicly available by the project sponsor at 
an appropriate time;
    (iii) not later than 3 years after the date of completion of the 
project, requiring the sponsor of the project to conduct a review 
regarding whether the private partner is meeting the terms of the 
relevant public-private partnership agreement; and
    (iv) providing a publicly available summary of the total level 
of Federal assistance in such project; and
    (B) develop guidance to implement this paragraph that takes into 
consideration variations in State and local laws and requirements 
related to public-private partnerships.
    (4) Support to project sponsors.--At the request of an eligible 
entity, the Bureau shall provide technical assistance to the 
eligible entity regarding proposed public-private partnership 
agreements for transportation facilities, including assistance in 
performing a value for money analysis or comparable analysis.

Duane Callender,
Acting Executive Director, Build America Bureau.
[FR Doc. 2024-26210 Filed 11-12-24; 8:45 am]
BILLING CODE P
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