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City Releases P3 Bid Information
HONOLULU— Today the City and County of Honolulu released the amounts of the two bids received in the recent Public Private Partnership solicitation, which was cancelled on November 25, 2020. The proposal documents for the P3 procurement will soon be available for review, provided by HART, with some proprietary information redacted.
The P3 procurement began with the issuance of a Request for Proposal (RFP) on September 28, 2018. Two proposals were received from Priority Listed Offerors (PLOs) on July 23, 2020. After much consideration, the P3 solicitation was cancelled on November 25, 2020.
The PLOs were provided with “affordability” amounts for both the Design and Construction and the Operations and Maintenance components of the Project. Two affordability thresholds were provided: an Affordability Target and an Affordability Limit. The RFP stated that a PLO’s proposal may be rejected if it exceeded any of the Affordability Limits.
A summary of the pricing proposals follows:
Design & Construction:
The Design and Construction (D&C) affordability limit started with a base capital budget of approximately $1.4 billion, excluding estimated financing costs. The affordability amounts provided to the PLOs were determined in 2018; however, subsequently, the affordability that can be certified by HART has decreased significantly, due in part to the impact from COVID-19 on future funding estimates.
The D&C affordability amounts and the price proposals were stated in the form of “Annual Availability Payments” and require that a factor of 15.65 be applied in order to determine the total actual cost.
Design and Construction Pricing (inclusive of financing costs) were:
Annual Affordability Payments
As illustrated above, both of the D&C price proposals received from the PLOs exceeded the Affordability Limit by more than $1 billion, or approximately 60%. Additionally, the two price proposals were within 2% of each other.
Operations and Maintenance:
The Operations and Maintenance (O&M) affordability amounts were based on independently-developed O&M cost estimates, which assumed a P3 scenario and, therefore, included estimated costs of the P3 developer. Estimated costs for a non-P3 scenario would differ from these amounts. The O&M affordability was stated as a Net Present Value (NPV) of the O&M costs over the proposed 30-year term of the O&M period.
Operation and Maintenance Pricing (stated as a NPV amount over 30 years):
As shown above, one of the O&M price proposals exceeded the Affordability Limit by approximately $278 million, or approximately 11%, and the other proposal was below the Affordability Target by approximately $83 million, or approximately 4%. The lower bid is comparable to the City’s O&M cost estimate for a non-P3 operating scenario.
Revenue Service Date
The Revenue Service Date (RSD) is essentially the completion date of the design and construction of the Project. The required RSD in the initial RFP was December 31, 2025. The RFP was later amended to change the required RSD to September 2026. Both proposals committed to a September 2026 RSD. However, the dates proposed by the PLOs were based on estimated completion dates for the City Center Utility Relocation project that were provided by HART several months before the proposals were due. Subsequently, these dates were extended by a range of 1 to 4 years, which will have a direct impact on the overall project schedule.
Priority Listed Offerors (PLOs)
As was recently reported in the media, the PLOs who submitted proposals for the P3 were:
City Center Connection Group (“C3G” and “PLO A”), which consisted of Dragados, ACS Infrastructure Development, John Hancock, Hawaiian Dredging Construction Company, Obayashi Design Group, Hatch Construction Management, Rizzani De Eccher USA, DTL, The Wilhelm Group, Soteria Co., IBI Group, Dan Brown and Associates, Systra International Bridge Technologies, WCIT Architecture, Walker Consultants, Minatoishi Architects, KSF Inc., Wilson Okamoto Corp., Apex Design, LKG-CMC Consultants, Inc. and Zephyr UAS, Inc.
Imua Transit Honolulu (“ITH” and “PLO B”), which consisted of Plenary, Tutor Perini Corporation, Parsons Construction Group, Granite Construction Company, Traylor Brothers Inc., First Transit Inc. and Sumitomo Corporation of Americas.
We appreciate the significant interest shown in the rail project by these organizations. We hope there is continued interest from each of them for further discussion and involvement in the project as alternative plans are developed.
Attached to this release is a redacted copy of the letter from the City’s Chief Procurement officer to the Executive Director and CEO of HART, recommending cancellation of the P3, and explaining the information contained in this release in greater detail.
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