Robinson & Cole s Massachusetts Economic Stimulus Team Robinson & Cole is a full service law firm with eight offices throughout the eastern United States. Anticipating the opportunities the economic stimulus package would bring to clients and the challenges it presents to the Commonwealth the Boston office of Robinson & Cole assembled an interdisciplinary team to review and offer suggestions related to policy and approach in funding and implementing public infrastructure improvements. The team is made up of experienced thought leaders in the substantive areas of land use, real estate development, affordable housing, environmental, public finance, corporate, and health care law. Brian W. Blaesser & Team Leader (617) 557-5970 bblaesser@rc.com Kathleen M. Porter Intellectual Property and Technology Group (617) 557-5989 kporter@rc.com Amanda S. Eckhoff Finance & Real Estate Development Groups (617) 557-5988 aeckhoff@rc.com John T. Ronayne Real Estate Development Group (617) 557-5902 jronayne@rc.com Michael S. Giaimo Managing, Boston Office (617) 557-5959 mgiaimo@rc.com Gregory S. Sampson Environmental & Land Use Groups (617) 557-5949 gsampson@rc.com Thomas J. Holloway Business Transactions Group (617) 557-5943 tholloway@rc.com Kimberly E. Troland Counsel Health Care Group (617) 557-5941 ktroland@rc.com Matthew J. Lawlor Counsel (617) 557-5948 mlawlor@rc.com J. Michael Wirvin Business Transactions Group (617) 557-5957 mwirvin@rc.com Carla M. Moynihan (617) 557-5940 cmoynihan@rc.com James B. Zuckernik Finance & Real Estate Development Groups (617) 557-5929 jzuckernik@rc.com For more information on these materials, please contact Brian Blaesser, Robinson & Cole economic stimulus team leader, at (617) 557-5970 or bblaesser@rc.com. For general firm inquires, please contact Audra Callanan, regional marketing manager at (617) 305-5441 or acallanan@rc.com.
Streamlining Procurement in Massachusetts This paper is the second in a series addressing selected aspects of the and its impact on and implementation in the Commonwealth of Massachusetts. 1 The first paper, entitled Building Infrastructure with the : Massachusetts Is Off on the Right Foot, but There Is Room for Improvement, was released on February 17, 2009. 2 That paper provides much of the background information for the topics discussed below. March 10, 2009 As discussed in Mobilization for Federal Economic Recovery Infrastructure Investments Task Force Reports, 3 the Patrick- Murray administration established a Procurement Task Force in December of last year, along with task forces in areas such as education, private development, transportation, and permitting, to evaluate existing procurement processes and to make recommendations for streamlining procurement in connection with any projects funded through the American Reinvestment and Recovery Act of 2009 (ARRA) signed into law by President Obama on February 17, 2009. The inclusion of a task force dedicated solely to reviewing and recommending changes in public procurement processes underscores the administration s recognition that the excessive time expended on the public sector procurement of design and construction contracts for public improvements, goods, and services is one of the critical factors impacting our capacity to invest the federal funds in capital projects quickly enough to comply with the requirements set forth by ARRA. 4 In addition to the timing concerns raised by the Procurement Task Force, the current public procurement process in Massachusetts has historically been criticized for awarding contracts based solely on the lowest-cost bid, which too often encourages low bids that can t cover a project s true cost, resulting in subsequent claims and delays and, ultimately, cost overruns. The Procurement Task Force recognized that the various awarding authorities responsible for public procurement in Massachusetts each have their own separate processes, which can take anywhere from 14 to 120 days to complete. To meet ARRA s timing objective, the Procurement Task Force realized that these processes should be improved to result in a simpler and more time-sensitive process and recommended actions to expedite and streamline public procurement. These measures include such modifications to the current procurement framework as the following: Reducing contractor bonding requirements Eliminating advertising requirements for local newspapers Reducing advertising time in the Central Register Exploring online bidding and electronic signatures for internal approvals for public agencies where appropriate Using a Condensed Prequalification Process on large projects (those costing $10 million or more) utilizing the certification files of the Division of Capital Asset Management Allowing expanded use of contractor incentives/ disincentives to achieve completion dates The Procurement Task Force s recommendations also include creating an Economic Stimulus Alternate Procurement Board (ESAPB), which would have the power to waive or establish alternate procurement requirements where necessary. Unfortunately, the Procurement Task Force declined to recommend specific modifications to the variety of procedures and methods employed by the different state agencies involved. Instead, it recommended that each individual agency review and outline their processes between bid filing and issuance of the notice to proceed, with the intention of eliminating steps and/or reducing time frames. These recommendations, though worth supporting, may not go far enough, given the extraordinary time pressures imposed by ARRA. The Patrick-Murray administration should take three immediate steps to improve the procurement process for ARRA-funded infrastructure projects. First, the
Streamlining Procurement in Massachusetts (continued) administration should establish a blueprint for a unified procurement approach and make sure that each agency streamlines and aligns its processes with that unified approach. This alignment of processes should take place prior to the initiation of any procurement activities for ARRA projects and without relying on the ESAPB. Second, while the majority of the procedural changes can occur at the agency level without statutory authority, the administration should include any changes needed to streamline and align the procurement process in any legislation proposed to establish the ESAPB. Finally, all agencies involved in procurement should be directed to review their procurement procedures in comparison to the most expeditious ones (i.e., 14 days) in the state and to start over from there, adding only those steps necessary to ensure protection of the public interest. The foregoing recommendations may be sufficient to address bottlenecks for purely public infrastructure projects such as roads and bridges; however, these recommendations do not address the critical issues likely to arise in the context of public infrastructure that will support private development. As detailed in the Private Development Task Force s section of the Mobilization Report, public investments that support private development provide both a direct economic stimulus and an indirect multiplier effect. These projects, 26 of which were included by the Private Development Task Force as part of the shovel-ready list in the Mobilization Report, have the advantage of leveraging significant private investment with public funds while still conforming to the Governor s Guiding Principles for infrastructure investments outlined in the report. In most public-private development projects, the private developer is expected to build the required infrastructure and ultimately dedicate it to public ownership and use upon completion. Given the interrelationship of public and private development components, this only makes sense. The developer is the entity in the best and most efficient position to build out the entire project. If, however, that infrastructure is publicly funded, as will be the case with the ARRA-funded public-private projects, the state s public procurement requirements will apply to the entire project, including its design, unless the work can be easily compartmentalized. In many cases, it cannot. In certain of those cases, which are likely candidates for ARRA funding, the public infrastructure components may have already been fully designed by the private developer s own design team and a contractor selected. Compliance with the standard public procurement process will require rebidding and redesigning the entire project. Given ARRA s time constraints and simple common sense under the circumstances, it is clear that a workable solution needs to be found for these projects. Fortunately, the Commonwealth has already established such a solution in the context of public-private projects through the recently revised Infrastructure Investment Incentive Act, 5 commonly referred to as I-Cubed. I-Cubed has been authorized to provide up to $250 million in infrastructure grants to public-private development projects throughout the Commonwealth on a competitive basis. Among other things, I-Cubed establishes a model for public-private partnerships, including stakeholders at the state and local levels as well as private developers. I-Cubed also permits a flexible project delivery approach in which the private developer is responsible for selecting a qualified contractor or contractors for the construction of public infrastructure improvements necessary for the broader project. 6 Although the developer s effort in this regard is exempted from procurement laws and regulations usually applicable to public infrastructure, the developer is still required to use a competitive procurement process subject to review by the state to ensure timely and quality construction and cost-effectiveness. 7 An open and fair process must be the cornerstone of government approval and management of projects seeking funds under ARRA; however, given the compressed timetable and use-it-or-lose-it nature of the funds, the Patrick-Murray administration needs to work with the Legislature to exempt public-private projects receiving ARRA funds from the state s public procurement requirements in a manner similar to what has been achieved for I-Cubed. At the same time, workable review and evaluation criteria need to be established to
Streamlining Procurement in Massachusetts (continued) confirm that a developer s designer and contractor selection has been sufficiently competitive and offers the best price along with appropriate cost and accountability controls. The Commonwealth has recognized that procurement as usual is not sufficient to capitalize on ARRA. The recommendations of the Procurement Task Force may be sufficient for most projects funded through ARRA, but more far-reaching actions appear necessary for public-private projects to play their appropriate role in leveraging ARRA s funds into sustainable economic growth. 1 The is part of the American Recovery and Reinvestment Act of 2009 (ARRA), signed into law by President Obama on February 17, 2009. 2 The first paper is available on page five of this booklet and by visiting www.rc.com. 3 The full report and accompanying shovel-ready project list is available on the Massachusetts Recovery and Reinvestment Plan Web site at http://www.mass.gov/recovery. 4 The Commonwealth s statutory requirements for public procurement of improvements, goods, and services are found in various chapters of the General Laws, including G.L. c. 7, 38A½ to 38O; G.L. c. 30, 39M; G.L. c. 30B, 1 to 19; and G.L. c. 149, 44A to 44M. 5 Chapter 293 of the Acts of 2006, 5-12, as amended by Chapter 129 of the Acts of 2008, with regulations promulgated at 801 CMR 51. 6 See 801 CMR 51.03(2)(e). 7 Id. see also 801 CMR 51.17(13).
Economic Stimulus Practice LAND USE AND REAL ESTATE DEVELOPMENT Our firm offers a skilled group of lawyers dedicated to the practice of land use, real estate development, and construction law. We assist a wide array of clients, including multinational corporate, real estate users; institutional, public, and private lenders; special trade groups; state agencies; bonding authorities; and schools to commercial and residential developers; health care institutions; hotel chains; manufacturers; and syndicators. Our lawyers work closely with a variety of third parties from regulatory agencies and legislative bodies to local attorneys, surveyors, planning, environmental, and land use consultants, and other real estate professionals to facilitate the successful acquisition, development, financing, marketing, and completion of clients projects. Our group assists clients with matters relating these areas: Commercial leasing Contracts and project delivery Conveyancing Development permitting Financing Green development and dispute resolution Public/Private development Comprehensive planning Subdivision and zoning CORPORATE Our collaborative work environment positions every client to benefit from a comprehensive service approach. Our corporate law group provides a wide range of services, including the following: Business transactions Government relations and lobbying Insurance and risk management Intellectual property and technology Labor and employment Tax and tax exemption PUBLIC FINANCE Robinson & Cole s public finance lawyers provide legal representation for tax-exempt and taxable financings as bond counsel for over 60 cities, towns, and other municipal entities throughout the Northeast, ranging from small towns functioning under the New England town manager form of government to active, large capital budget issues. Our group assists clients with matters related to these areas: General obligation bond practice Revenue bonds for capital projects including cultural facilities, economic development projects, and housing projects ENVIRONMENTAL Our Environmental Group is made up of lawyers and analysts, many with technical backgrounds and regulatory experience as well as degrees in environmental studies, geology, biology, water resources planning, and engineering. We assist clients with matters relating to: Environmental permitting and regulatory counseling Environmental due diligence Environmental litigation HEALTH LAW Our team focuses on health law, supported by lawyers from the firm s corporate, finance, tax, taxexempt organizations, emerging technologies, intellectual property, litigation, immigration, labor and employment, benefits, and real property practice groups. Service areas provided include the following: Antitrust counseling Compliance plans Fraud and abuse counseling Health Insurance Portability and Accountability Act (HIPAA) Regulatory compliance Affordable Housing Antitrust and Trade Regulation Appellate Banking and Financial Services Business Bankruptcy Construction Corporate Employee Benefits, Compensation and ERISA Employment Counseling and Training Employment Emerging Companies, Private Equity and Venture Capital Energy and Communications Our Practices Environmental Estate Planning and Probate Government Relations Health Law Immigration Insurance and Reinsurance Intellectual Property and Technology International Labor Relations Land Use Products Liability Public Finance Real Estate Development Securities Tax-Exempt Organizations Tax Planning and Representation RC.COM BOSTON HARTFORD STAMFORD NEW YORK WHITE PLAINS NEW LONDON ALBANY SARASOTA