Things are changing rapidly at the federal level of government from the acceptance of new project delivery models to the consolidation of federal procurement. Here are a few examples and as much as we would all like to proclaim that these actions allow us a glimpse of what to expect, that is simply a stretch too far. We are diligently tracking actions, trends, and guidelines though that may represent future guidelines for the U.S. government marketplace.
The U.S. Department of Transportation (DOT) made a startling announcement recently regarding a $3.89 billion loan commitment that will be made to a project delivered through a public-private partnership (P3) engagement in Atlanta, Georgia.
The large project will expand State Route 400 with express lanes along a 16-mile stretch of highway with funding support that is more complex than the norm. The DOT will source loan funds from the federal Transportation Infrastructure Finance and Innovation Act (TIFIA) program which funds large infrastructure projects. That loan will be consolidated with $75 million in private sector investor funding to support the design, construction, ongoing operations and maintenance for the estimated $11 billion project.
The SR 400 Express Lanes project will involve constructing two new express lanes in each direction from the North Spring MARTA Station to McFarland Parkway. It will also include constructing one express lane in each direction from McGinnis Ferry Road to McFarland Parkway. Project officials anticipate a construction launch in the summer of 2026. A completion date of 2031 is expected. Once completed, the revamped roadway will provide dynamic pricing for tolled lanes, with rates that adjust based on traffic, vehicle speeds and real-time road conditions. When completed, officials expect the dynamic pricing in tandem with the express lane options will provide drivers and transit operators with an alternative option while reducing traffic on general purpose lanes.
The upgraded roadway will also feature a variety of transit infrastructure and public transportation improvements, including more efficient bus rapid transit systems and an integrated connection to the Georgia Express Lanes Network, enhancing mobility throughout northern Atlanta. The express lane project previously benefitted from a $3.4 billion investment from the DOT, which was administered using Private Activity Bonds. DOT officials say that this historic commitment represents the largest loan for a single borrower in TIFIA program history.
By selecting a public private partnership engagement to deliver the project, it enables the Georgia Department of Transportation to construct the highway express lanes while utilizing a $3.8 billion concession fee, charged to the private developer, to fund future road, highway and corridor repairs. The P3 also provides communities with a tangible commitment from the state, local governments and private developers to fund, design and construct the express lane project with less risk of delay and cost overruns.
As the project works through final conceptual design and preliminary engineering, the Georgia Department of Transportation will make necessary right-of-way acquisitions to support the next phases. A private developer will oversee the project’s environmental reevaluations, additional project financing and permitting.
Does this federal loan agreement lead us to believe that the Trump Administration is going to be supportive of road infrastructure that involves private sector investors? Following the nearly $3.9 billion loan and subsequent private contributions, will private sector investment be advocated for large federal funding in the future? It almost indicates that the DOT will encourage private sector investment and P3 delivery models but that is yet to be confirmed.
Here’s another action that makes us wonder if we can expect to see more consolidations such as this.
The U.S Office of Management and Budget (OMB) sent a directive recently that describes how the Administration wants the General Services Administration (GSA) to take over much of the government’s purchasing of what it calls “common goods and services.” The Director of OMB sent the message to follow up on an implementation directive that President Trump initiated in an executive order. He called the directive Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement.
According to the memo, only 20% of approximately $500 billion in purchases that could be classified as “common goods and services” went through the GSA. The objective of the directive is to ensure that going forward these purchases will all flow through the GSA’s contracting vehicles. The GSA’s consolidation guidelines will focus on four requirement factors:
- No variance based on the mission of the agency will be allowed.
- All must involve highly-commercialized products and services with no customization.
- Purchases should be easy to standardize.
- They should allow for economies and efficiencies by reducing variation in offerings and services.
Procurements that are less likely to be consolidated at GSA are ones that differ and those deemed too complex or mission-specific in nature. Procurements not run by GSA will still require ongoing engagement between the buying and program offices. No changes will take place over the next 60 days, but these changes will now require agencies to follow new contracting guidelines.
Existing government-wide contracts will be encouraged. And permission will be required for agencies to use anything other than an existing government contract. To achieve even greater efficiency, GSA contracts and best-in-class contracts are preferred. Agencies will have 60 days to identify opportunities for the new mandatory government-wide contracts. Then, the agencies will be required to get approval if they see a need to use something other than a government-wide contract.
Simply put, the move indicates that the GSA will become the procurement arm for all other agencies’ common purchases. This action will obviously lead to many new rules and procedures. Is there any possibility that the administration will attempt to have other government jurisdictions follow these guidelines? Watch here for more on what to expect in future columns.
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