Assigned to TAT                                                                                                                     FOR COMMITTEE

 


 

 

 


ARIZONA STATE SENATE

Fifty-Fifth Legislature, First Regular Session

 

FACT SHEET FOR H.B. 2876

 

government contracts; public-private partnerships

Purpose

            Requires public-private partnership agreements with the Arizona Department of Transportation (ADOT) to provide for recovery of damages for an unreasonable delay of a project by ADOT. Modifies the stipulated fee that an agent must award an unsuccessful offeror for a design-build construction service proposal.

Background

            In any public-private partnership or other agreement for any eligible facility, ADOT may include provisions that, among other specifications: 1) authorize either ADOT or the private partner to establish and collect user charges, tolls, fares, rents or other similar charges; 2) address how the partners will share management of project risks; 3) specify how the partners will share project development costs; 4) allocate financial responsibility for cost overruns; and 5) address acquisition of rights-of-way. Agreements must also contain provisions that includes property tax exemptions, provisions relating to injunctive relief and concession agreements (A.R.S. § 28-7705).

            Statute outlines an alternative process to professional service negotiations by which an agent may award a single contract for design-build construction services or job-order-contracting services. For design-build construction services only, an agent is required to award a stipulated fee equal to a percentage of the agent's final project budget to each final list offeror who provides a responsive yet unsuccessful proposal. The stipulated fee percentage is prescribed in the request for proposals, and cannot be less than two-tenths of a percent of the final project budget for design and construction (A.R.S. § 34-603).

            There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1.   Requires a public-private partnership agreement to contain a provision that provides for negotiations to allow the private partner to recover all damages incurred for a delay that:

a)   ADOT is responsible for;

b)   is unreasonable under the circumstances, and

c)   was not within the contemplation of the parties to the contract.

2.   Specifies that a provision to provide for the recovery of damages does not void any other provision in the contract that:

a)   requires notice of claims or delays;

b)   provides for arbitration or any other procedure or settlement; or

c)   provides for liquidated damages.

3.   Requires a public-private partnership agreement to contain provisions that requires ADOT to pay the private partner reasonable compensation for all work performed by the private partner to relocate or adjust utility facilities that are:

a)   located either within or outside the project right-of-way; and

b)   required to be relocated or adjusted in order to construct the work contracted by the private partner.

4.   States that any provision in the public-private partnership agreement that imposes the risk of utility relocation or adjustment expenses on the private partner is void.

5.   Requires an agent to award a stipulated fee of at least an unspecified percentage, rather than not less than two-tenths of a percent, of the project's final budget to each final list offeror who provides a responsive yet unsuccessful proposal.

6.   Makes technical changes.

7.   Becomes effective on the general effective date.

House Action

TRANS           2/17/21      DP     12-0-0-0

3rd Read          2/24/21                 56-3-1

Prepared by Senate Research

March 11, 2021

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