Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
45A.030,
45A.077,
45A.085,
45A.090,
45A.180,
45A.183,
45A.190,
45A.435,
45A.550-45A.554,
61.878,
65.025,
65.028
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
45A.035 authorizes the Secretary of the
Finance and Administration Cabinet to promulgate administrative regulations for
the implementation of the Kentucky Model Procurement Code (KRS Chapter 45A).
KRS
45A.077 and
65.028 require the secretary to
promulgate administrative regulations setting forth the criteria to be used in
determining when a public-private partnership is to be used for a particular
project. KRS
45A.085 authorizes the secretary to
promulgate administrative regulations concerning contracts awarded by
competitive negotiation.
KRS
45A.180 requires the secretary to promulgate
administrative regulations for the implementation of as many recognized
alternative methods of management of construction contracting as are determined
to be feasible. This administrative regulation establishes guidelines pursuant
to KRS
45A.077 and
65.028 relating to
public-private partnerships for entities requesting to utilize this procurement
delivery method.
Section 1.
Definitions.
(1) "Cabinet" means the Finance
and Administration Cabinet.
(2)
"Capital project" is defined by
KRS
45.750(1)(f), except that
for purposes of this administrative regulation, capital project shall include
all projects regardless of the size or scope of same.
(3) "Contract" is defined by
KRS
45A.030(8).
(4) "General fund revenues" means the total
combined revenue receipts of the local government or local governments that are
a party to the public-private partnership agreement from the imposition of ad
valorem taxes, occupational license taxes, insurance premium taxes, and
franchise fees.
(5) "Governmental
body" is defined by KRS
45A.030(17).
(6) "Kentucky Local Government Public-Private
Partnership Board" is established and defined by
KRS
65.028(11).
(7) "Local government" is defined by
KRS
65.028(1)(c).
(8) "Private partner" is defined by
KRS
45A.030(21) and
KRS
65.025(1)(g).
(9) "Public-private partnership" is defined
by KRS
45A.030(23).
(10) "Total contractual value" means the
cumulative amount to be paid or reasonably estimated to be paid over the entire
term of the public-private partnership agreement between the local government
or local governments and the private partner or private partners in
consideration of the performance of the private partner or partners.
(11) "Using agency" is defined by
KRS
45A.030(30).
Section 2. Use of a Public-Private
Partnership.
(1) A public-private partnership
may be utilized for construction or financing of a capital project or the
procurement of services if the head of a governmental body or a local
government issues a written determination that due to the nature or
circumstances of a capital project or services, a public-private partnership is
the most advantageous method of awarding and administering a capital project or
other contract.
(2) In determining
if the use of a public-private partnership is the most advantageous method of
awarding and administering a capital project or other contract, the head of a
governmental body or local government, or a person authorized in writing as his
or her designee, shall undertake an analysis of the proposed capital project or
other contract to determine if a public-private partnership is the procurement
method most advantageous to the governmental body or local government that
incorporates the components established in this subsection.
(a) Qualitative considerations. The using
agency or local government shall evaluate the potential public-private
partnership utilizing the following criteria:
1. The ability of the using agency or local
government to allocate and control risks, responsibilities, and rewards between
itself and a private partner in a way that ultimately benefits the using agency
or local government and the citizens it serves;
2. The timeliness of completion and
efficiency of delivery of a capital project or other contract via a
public-private partnership as compared with other project delivery
methods;
3. A determination that
the tangible and intangible benefits to be gained by using a public-private
partnership equals or exceeds the cost of developing and maintaining a
public-private partnership;
4. The
ability and expertise of the using agency or local government to measure and
monitor performance and operational controls;
5. The ability of the using agency or local
government to capture and utilize incentives, efficiencies, and expertise
derived from the involvement of a private partner;
6. If the capital project or other contract
is likely to be developed or entered into in the absence of private sector
involvement;
7. If the public
interest is best served through the use of a public-private partnership;
and
8. The urgency of need for the
capital project or services by the governmental body or local
government.
(b)
Quantitative Analysis. The using agency or local government shall conduct a
quantitative analysis of using a public-private partnership for a given capital
project or other contract. The analysis shall include:
1. Net present value of the cost of the
capital project or other contract over its entire useful life, including, if
applicable:
a. Financing, planning, design,
and construction costs;
b.
Operation and management costs;
c.
Any payments the using agency or local government is required to make to the
private partner; and
d. Maintenance
costs;
2. The allocation
of risks and contingencies between the using agency or local government and the
private partner;
3. Operating cash
flows reasonably expected to provide a return on investment to a private
partner;
4. The net present value
of payment the using agency or local government is likely to receive from the
private partner or third parties over the life of the capital project or other
contract; and
5. The anticipated
value of the capital project or other contract deliverables at the end of the
term of the public-private partnership, if any.
(c) Privatization Analysis. Before award of a
contract for a public-private partnership, the using agency and the cabinet
shall satisfy all of the requirements of
KRS
45A.550-45A.554 and
200 KAR 5:340 related to
privatization of existing governmental services, if applicable.
(d) Local Government Public-Private
Partnerships Subject to Review by the Kentucky Local Government Public-Private
Partnership Board. If the total contractual value of a proposed public-private
partnership between a local government and a private partner equals or exceeds
thirty (30) percent of the general fund revenues received by the local
government in the immediately preceding fiscal year, the local government shall
submit the proposed public-private partnership agreement to the cabinet and the
Department for Local Government for evaluation and presentation to the Kentucky
Local Government Public-Private Partnership Board in accordance with
KRS
65.028(12) or
65.028(16).
Section 3. Submission of Unsolicited
Proposals.
(1) Persons, businesses, or other
entities may submit unsolicited proposals for a capital project or other
contract utilizing a public-private partnership to a governmental body with a
copy to the Secretary of the Finance and Administration Cabinet.
(2) Persons, businesses, or other entities
wishing to submit an unsolicited proposal for a public-private partnership with
a local government shall submit the proposals to the local government with a
copy to the Department for Local Government. If the total contractual value of
the proposed public-private partnership equals or exceeds thirty (30) percent
of the general fund revenues received by the local government in the
immediately preceding fiscal year, the Department for Local Government with the
assistance of the cabinet shall evaluate each proposal and present same to the
Kentucky Local Government Public-Private Partnership Board in accordance with
KRS
65.028(12) or
65.028(16).
(3) Proposals submitted pursuant to
subsection (1) of this section shall be considered in the manner prescribed in
KRS
45A.077(12) and evaluated
pursuant to the criteria set forth in Section 2 of this administrative
regulation.
(4) Proposals submitted
pursuant to subsection (2) of this section shall be considered in the manner
prescribed in KRS
65.028(17) and evaluated
pursuant to the criteria set forth in Section 2 of this administrative
regulation.
(5) A valid unsolicited
proposal shall:
(a) Be independently
originated and developed by the person or persons, business or businesses, or
other entities submitting the proposal;
(b) Be prepared without government
supervision, endorsement, direction or direct government involvement;
and
(c) Include sufficient detail
to permit a determination that government support would be worthwhile and that
the proposal could benefit the using agency or local government's
constituency.
(6) All
unsolicited proposals shall be submitted in a sealed envelope marked
"unsolicited proposal." If an unsolicited proposal contains trade secrets,
financial records, or other information that would be exempt from public
disclosure pursuant to
KRS
61.878 or other applicable law, persons,
businesses, or other entities submitting unsolicited proposals shall:
(a) Include a cover letter with the proposal,
notifying the governmental body or local government that exempt information is
contained in the proposal;
(b) Mark
all portions of the proposal that contain exempt information as "confidential"
or "proprietary"; and
(c) Submit a
second copy of the proposal from which the trade secrets, financial records, or
other information that would be exempt from public disclosure pursuant to
KRS
61.878 or other applicable law have been
redacted.
(7) Except for
each portion of an unsolicited proposal that contains trade secrets, financial
records, or other information that would be exempt from public disclosure
pursuant to KRS
61.878 or other applicable law, all
unsolicited proposals shall be available for public inspection after the latter
of:
(a) The date of the written notification
sent by a governmental body or local government that it has rejected the
unsolicited proposal;
(b) Sixty
(60) days after the end of the notice period provided under
KRS
45A.077(12)(b) 2. or
KRS
65.028(17)(b) 2.;
or
(c) The date of the award of a
contract by a governmental body or local government following an open,
competitive procurement process conducted pursuant to
KRS
45A.077(12)(c) or
KRS
65.028(17)(c).
Section 4. Other considerations.
(1) The using agency and the cabinet or local
government may ascribe relative weight to the criteria established in Section 2
of this administrative regulation, giving due consideration to the size and
nature of the capital project or other contract as well as the previous
experience of the using agency or local government, if any, in utilizing
public-private partnerships under similar circumstances.
(2) All requests for proposals involving the
use of a public-private partnership shall comply with
KRS
45A.077(4) or
65.028(7) as
applicable.
(3) All performance and
payment bonding requirements set forth in
KRS
45A.190,
45A.435, and any other statute
or local ordinance, shall remain in effect for capital projects and other
contracts using the public-private partnership project delivery
method.
Section 5.
Professional Assistance. The using agency and the cabinet are authorized to
retain any professional services deemed necessary by the using agency or the
cabinet to enable an adequate review and evaluation of a public-private
partnership proposal, including those involving local government that shall be
approved by the Kentucky Local Government Public-Private Partnership Board in
accordance with KRS
65.028(12) or
65.028(16), if
the necessary expertise to perform the review or evaluation within the using
agency or the cabinet is inadequate or unavailable. The cost of any
professional service, including the cost of any study performed, shall be borne
by the private partner if possible. If it is deemed necessary by the using
agency or local government for the governmental body to bear a portion of the
cost of the professional services needed to assist with the evaluation set
forth in this administrative regulation, then the cost may be paid by the using
agency or local government.
STATUTORY AUTHORITY:
KRS
45A.035,
45A.077,
45A.085,
45A.180,
45A.183,
65.028