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Alternative Methods of Awarding Government Contracts

Low Bidder, Slow Bidder?

Miami-Dade Metromover

The Miami Today recently reported that key renovations and upgrades to several Metromover stations are scheduled to be completed this fall. (The Metromover is an automated “people mover” mass transit system operated by Miami-Dade County that whisks passengers, free of charge, to key locations throughout downtown Miami.) The article quotes Miami-Dade Commissioner Bruno Barreiro, who suggests that delays in the completion of the project were caused, in part, by the fact that the lowest bidder is not necessarily the most efficient or experienced, and may therefore be more susceptible to delays.

Although the County apparently decided to select a contractor to perform the Metromover station upgrades using a straight bid format, in which the lowest bidder prevails, there are many alternative methods of awarding government contracts that can be used to achieve a diversity of goals, including reducing the possibility of delay.

The RFP Process

For example, many government contracts are awarded using an RFP (request for proposals) process. In an RFP, the government will explain its needs and the scope of a project, and proposers will respond with their unique ideas for meeting the government’s requirements. Although price is considered when selecting a contractor, it is not the only consideration, and emphasis may be placed on the experience of the proposer, the technical merits of the proposed solution, or any other factors laid out in the RFP. Compared to a straight bid process, an RFP encourages creative solutions and permits the consideration of important non-price factors, such as the proposer’s plan (and ability) to meet deadlines.

P3: Why They Are Growing In Popularity

The most flexible relationship between the government and a private contractor is a public-private partnership, commonly referred to as a PPP or P3, in which the government and private entity share both the risks and rewards of a project.

In the Metromover station context, an example of a P3 project might involve not only structural improvements to the stations, but also a concession agreement permitting the private entity to develop areas of the stations for retail purposes, with a portion of the revenues to be paid over to the government. With such an arrangement, both the government and the private entity benefit from the prompt completion of the improvements (and thus the commencement of a new revenue stream), and delays are less likely to occur.

The possible iterations of a P3 are endless, and it is in part due to this level of flexibility, which permits a P3 to suit the needs of almost any public development project, that P3s continue to grow in popularity.

The Impact of P3s in South Florida

The value of a public-private partnership is not lost on local governments and agencies in South Florida. For example, in a recent article, Kevin Lynskey, the assistant director for business initiatives at Port Miami, explained that the Port is planning hundreds of millions of dollars in improvements to its cruise ship facilities and will seek funding through P3s.

Government funding is hard to find for projects of such a massive scope, and private developers and financiers will be eager to capitalize on the over four million cruise passengers that travel through the Port each year (more than any other port in the world). The Port is currently relying on a P3 for the massive Port Tunnel project, one of the top urban infrastructure projects in the world.

So long as local governments are resource-rich and cash-poor, fruitful partnerships with private developers that are tailored to the strengths and desires of both partners make too much sense to overlook.

 

For more information on the Miami-Dade County RFP process, read the administrative order.