City of Ottawa P3 Policy - The Canadian Council for Public-Private ...

City of Ottawa P3 Policy - The Canadian Council for Public-Private ...

City of Ottawa P3 Policy - The Canadian Council for Public-Private ...


You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013216 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013<strong>Public</strong>-<strong>Private</strong> Partnerships <strong>Policy</strong>Document 1Approved By: <strong>City</strong> <strong>Council</strong>Category: FinanceApproval Date: xxxEffective Date: xxx<strong>Policy</strong> Statement<strong>The</strong> <strong>City</strong> <strong>of</strong> <strong>Ottawa</strong> shall use a consistent governance model and selectioncriteria when evaluating and implementing a public-private partnership (<strong>P3</strong>)approach as an alternative means <strong>of</strong> procuring and financing <strong>City</strong> projects <strong>for</strong>infrastructure and or service requirements.Purpose<strong>The</strong> purpose <strong>of</strong> this <strong>Policy</strong> is to outline the <strong>City</strong>’s approach to evaluating andpursuing a potential <strong>P3</strong> option <strong>for</strong> the implementation <strong>of</strong> a <strong>City</strong> project.ApplicationThis <strong>Policy</strong> applies to all <strong>City</strong> <strong>of</strong> <strong>Ottawa</strong> employees except <strong>Ottawa</strong> PoliceServices, <strong>City</strong> <strong>of</strong> <strong>Ottawa</strong> Library Services Board and elected <strong>of</strong>ficials.<strong>Policy</strong> RequirementsObjectives <strong>of</strong> the <strong>P3</strong> Option<strong>The</strong> primary objectives in delivering a <strong>City</strong> project using a <strong>P3</strong> model are:• To find innovative ways <strong>of</strong> effectively and efficiently addressing the priorityinfrastructure and service needs <strong>of</strong> the <strong>City</strong>;• To maximize Value <strong>for</strong> Money to the <strong>City</strong> by engaging private sectorexpertise and financing;• To pursue partnerships in which project risks related to financing, design,construction, and operations are appropriately allocated between publicand private sector partners.<strong>The</strong> <strong>City</strong> shall consider a project <strong>for</strong> a potential public-private partnership if any <strong>of</strong>the following conditions are met:• <strong>The</strong> infrastructure/service requirement has been identified as a priority;

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013217 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013• <strong>The</strong> infrastructure/service requirement is included in the Term <strong>of</strong> <strong>Council</strong>priorities; Development Charges Background Study; Term <strong>of</strong> <strong>Council</strong>Capital Forecast; current approved budget; or long term capital plan;• Project risks related to financing, design, construction and operations canbe shared and allocated appropriately between the <strong>City</strong> and a privatepartner;• <strong>The</strong> <strong>City</strong> has the resources and expertise available to undertake theplanning, design and procurement processes.Phases <strong>of</strong> a <strong>P3</strong> projectWhere a potential <strong>P3</strong> project has been identified, the following project phasesshall be followed:• <strong>P3</strong> Project Assessment• Project Initiation• Procurement• Implementation• Contract Management and On-Going Monitoring<strong>P3</strong> Project Assessment<strong>The</strong> department shall assess the feasibility <strong>of</strong> using a <strong>P3</strong> approach to deliver a<strong>City</strong> project using a three-step decision making process: an initial screening, astrategic assessment and a business case analysis <strong>of</strong> the <strong>City</strong>’s financial risk.Projects with potential <strong>for</strong> a <strong>P3</strong> approach, but presenting exceptions to the <strong>P3</strong>Project Assessment criteria, should be escalated to <strong>City</strong> <strong>Council</strong> <strong>for</strong>consideration, with the exceptions highlighted and the department’s rationale <strong>for</strong>recommending the project under a <strong>P3</strong> delivery model.Initial Screening<strong>The</strong> initial screening <strong>of</strong> a project’s potential <strong>for</strong> a <strong>P3</strong> approach shall assess thecharacteristics <strong>of</strong> the infrastructure/service requirement and its risks; theopportunities <strong>for</strong> partnering with a private sector partner in a competitive market;the availability and expertise <strong>of</strong> <strong>City</strong> resources to undertake the planning, designand procurement processes.Strategic AssessmentProjects deemed suitable <strong>for</strong> a <strong>P3</strong> approach under the initial screening shallundergo a more detailed strategic assessment <strong>of</strong> the potential risks and rewards

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013218 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013available to the <strong>City</strong> and a private sector partner. Projects which demonstratethat risk can be appropriately allocated between the <strong>City</strong> and a private sectorpartner shall undergo a detailed business case analysis.Business Case Analysis<strong>The</strong> business case analysis shall develop a <strong>Public</strong> Sector Comparator (PSC), adetailed cost breakdown <strong>of</strong> the implementation and operation <strong>of</strong> a project over itsexpected duration under a traditional project model delivered by the <strong>City</strong>. <strong>The</strong>PSC shall be used to determine the <strong>City</strong>’s potential financial risk from procuringthe project using a <strong>P3</strong> approach delivered by a private sector partner. During theprocurement process, the PSC shall be compared against the <strong>P3</strong> project cost todetermine whether positive Value <strong>for</strong> Money, or a net benefit to the <strong>City</strong>, isrealized by implementing a project using a <strong>P3</strong> delivery model.Project InitiationA Project Director, appointed by the department, shall assemble a team <strong>of</strong>subject matter experts (SMEs) to plan the procurement strategy, the design andconstruction implementation, transition to operational state and contractmanagement stages. For specific projects, the <strong>City</strong> Manager may assign the leadroles to <strong>of</strong>fices other than the department, as warranted. <strong>The</strong> department shallsubmit the recommendation <strong>for</strong> the purchasing strategy and the selected <strong>P3</strong>delivery model to <strong>City</strong> <strong>Council</strong> <strong>for</strong> consideration.Procurement<strong>The</strong> procurement process <strong>for</strong> all <strong>P3</strong> projects shall be undertaken using an open,fair and transparent process, in accordance with the <strong>City</strong>’s Purchasing By-law.An independent Fairness Commissioner may be retained to oversee and monitorthe fairness <strong>of</strong> the process. <strong>The</strong> department shall submit the selection <strong>of</strong> thepreferred partner, and recommendation to finalize the business agreement to<strong>City</strong> <strong>Council</strong> <strong>for</strong> consideration.Implementation<strong>The</strong> <strong>City</strong> and <strong>P3</strong> partner shall participate in a design review process and changeapproval process to ensure that the design and construction phase <strong>of</strong> the projectcomplies with the contract specifications. During the construction phase, theconstruction budget and build milestones shall be monitored <strong>for</strong> deviations fromthe contract, and reported to <strong>Council</strong>, as required. A transition plan shall bedeveloped to monitor and report on activities required to bring the project to itsoperational state.

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013219 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013Contract Management and On-Going Monitoring<strong>The</strong> <strong>P3</strong> Agreement shall define the roles, responsibilities and accountabilities <strong>of</strong>the <strong>City</strong> and <strong>P3</strong> Partner <strong>for</strong> the term <strong>of</strong> the contract. Annual reports shall update<strong>Council</strong> on the <strong>P3</strong> partner’s financial and service level per<strong>for</strong>mance. <strong>The</strong> <strong>P3</strong>Agreement shall stipulate that the <strong>P3</strong> partner shall be responsible <strong>for</strong> reportingannual budgets i.e., <strong>for</strong> project management, preventive maintenance, etc., andthe reporting <strong>of</strong> key per<strong>for</strong>mance indicators.Responsibilities<strong>City</strong> <strong>Council</strong> shall approve the authority to deliver a project using a <strong>P3</strong>approach, selection <strong>of</strong> the <strong>P3</strong> delivery model, the procurement strategy, selection<strong>of</strong> the preferred partner, and authorization to finalize a business agreement.<strong>The</strong> department shall act as the administrative authority <strong>for</strong> the <strong>P3</strong> project andshall select and lead a team <strong>of</strong> staff subject matter experts (SME’s) through thefollowing:• Stages <strong>of</strong> assessment• Negotiation <strong>of</strong> legal agreements• Implementation and project delivery• Monitoring <strong>of</strong> technical provisions <strong>of</strong> the contract• Reporting on the private partner’s financial and service level per<strong>for</strong>mance• Conducting compliance audits• Issuing non-per<strong>for</strong>mance notices• Seeking remediation <strong>of</strong> non-per<strong>for</strong>mance issues.Supply Branch shall ensure that the spirit and guiding principles <strong>of</strong> the <strong>P3</strong> <strong>Policy</strong>are adhered to throughout the process; lead the procurement process inaccordance with the Purchasing By-law; and coordinate the submission <strong>of</strong> anannual report on the <strong>P3</strong> partner’s financial and service level per<strong>for</strong>mance to <strong>City</strong><strong>Council</strong>.Legal Services or, alternatively, external legal counsel retained by the <strong>City</strong> Clerkand Solicitor to act on behalf <strong>of</strong> the <strong>City</strong>, shall review and approve all contractualdocuments that comprise the <strong>P3</strong> Agreement.Monitoring/ContraventionsGeneral Managers/Directors shall oversee the assessment <strong>of</strong> <strong>P3</strong> opportunities,selection <strong>of</strong> <strong>P3</strong> delivery model, implementation and monitoring <strong>of</strong> the <strong>P3</strong>

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013220 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013Agreement and administration <strong>of</strong> <strong>P3</strong> contracts to ensure compliance with this<strong>Policy</strong>.Supply Branch shall lead the procurement process, in accordance with thePurchasing By-law and coordinate the submission <strong>of</strong> a report on contractualper<strong>for</strong>mance on an annual basis, to ensure <strong>Policy</strong> compliance.An independent Fairness Commissioner, when appointed, will monitor and reporton the integrity <strong>of</strong> the competitive process to ensure compliance with thePurchasing By-law.Failure to comply with this <strong>Policy</strong> could expose the <strong>City</strong> to financial loss,negatively affect the <strong>City</strong>’s credit rating and borrowing capacity, and limit the<strong>City</strong>’s capacity to deliver services to the public in terms <strong>of</strong> quality, af<strong>for</strong>dability,public access, health and safety, user rights, security, privacy and public input.ReferencesAccessibility Design Guidelines – BuildingsAccessibility <strong>Policy</strong>Bilingualism <strong>Policy</strong>Green Building <strong>Policy</strong> <strong>for</strong> the Construction <strong>of</strong> Corporate Building – Corporate<strong>Policy</strong><strong>Ottawa</strong> Option <strong>Policy</strong>Sponsorship and Advertising <strong>Policy</strong>Sustainable Purchasing GuidelineTangible Capital Asset <strong>Policy</strong>Legislative and Administrative AuthoritiesMunicipal Act, 2001Municipal Conflict <strong>of</strong> Interest Act, 1990Municipal Freedom <strong>of</strong> In<strong>for</strong>mation and Protection <strong>of</strong> Privacy ActParks and Facilities By-law No. 2004 – 276Purchasing By-law – July 2011Definition(s)Department: <strong>The</strong> department assigned the lead roles <strong>for</strong> evaluating andimplementing a <strong>P3</strong> approach as an alternative means <strong>of</strong> procuring and financing<strong>City</strong> projects <strong>for</strong> infrastructure and or service requirements. For specific projects,the <strong>City</strong> Manager may assign the lead roles to <strong>of</strong>fices other than the sponsor orclient department <strong>for</strong> the infrastructure/service requirement, as warranted.

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013221 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013<strong>Public</strong>-<strong>Private</strong> Partnership (<strong>P3</strong>): A contractual agreement between a publicauthority and a private entity <strong>for</strong> the provision <strong>of</strong> infrastructure and/or services inwhich:i. <strong>The</strong> private sector participant assumes the responsibility <strong>for</strong> financingpart or all <strong>of</strong> the project; and/orii. <strong>The</strong> <strong>City</strong> seeks to transfer risks that it would normally assume, basedon the private sector participant’s ability to better manage those risks;and/oriii. <strong>The</strong> arrangement extends beyond the initial capital construction <strong>of</strong> theproject.<strong>Public</strong> Sector Comparator (PSC): <strong>The</strong> hypothetical, risk-adjusted net presentvalue cost <strong>of</strong> a project as if it were to be delivered by the public sector. Itincludes an estimate <strong>of</strong> the total cost <strong>of</strong> the project over its life including costs <strong>of</strong>design, construction, maintenance and facilities management services andadjustments <strong>for</strong> risk, insurance, and taxation. <strong>The</strong> traditional PSC model is basedon construction that is done on a Design Bid Build (DBB) basis, which is thetraditional method <strong>of</strong> procurement <strong>of</strong> the public sector <strong>for</strong> this type <strong>of</strong> project.Value <strong>for</strong> Money (VFM): An analysis in the context <strong>of</strong> a <strong>P3</strong> project, refers to theprocess <strong>of</strong> developing and comparing the total project costs, expressed in dollarsmeasured at the same point in time, related to the estimated costs to the publicsector <strong>of</strong> delivering a project using traditional procurement processes (underwhich total estimated costs are known as the public sector comparator(PSC),and the estimated costs to the public sector <strong>of</strong> delivering the same project to theidentical specifications using the <strong>P3</strong> approach. <strong>The</strong> difference between the PSCand the total estimated costs using the <strong>P3</strong> approach is referred to as the VFM. Ifthe total estimated cost <strong>of</strong> using the <strong>P3</strong> approach is less than the public sectorcomparator, there is positive value <strong>for</strong> money by procuring a project using a <strong>P3</strong>approach.Keyword SearchFairness commissioner<strong>P3</strong><strong>Public</strong> sector comparatorValue <strong>for</strong> money

FINANCE AND ECONOMICDEVELOPMENT COMMITTEEREPORT 3110 APRIL 2013222 COMITÉ DES FINANCES ET DUDÉVELOPPEMENT ÉCONOMIQUERAPPORT 31LE 10 AVRIL 2013EnquiriesFor more in<strong>for</strong>mation on this <strong>Policy</strong>, contact:ManagerStrategic Sourcing and Supply Chain ManagementSupply BranchFinance Department<strong>City</strong> Manager’s OfficeTel: 613-580-2424, ext. 25165Appendices• <strong>Public</strong> <strong>Private</strong> Partnership - Procedures• <strong>P3</strong> Business Case Template

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!