The FHWA published its final Core Toll Concessions P3 Model Contract Guide (“Guide”) on September 10, 2014 as part of its mandate under MAP-21 to develop “standard public-private partnership transaction model contracts for the most popular types of public-private partnerships.” The Guide serves as an educational tool to assist states, public transportation agencies, and other public officials in developing their own public-private partnership agreements.
The FHWA determined an educational approach is preferred to prescriptive requirements based on feedback received during a “listening session” in January with industry representatives. Prior to publication of the final Guide, the FHWA also considered written comments received after publication of the draft Core Toll Concession Model Contract Guide in February of this year.
The Guide covers many of the most important (and most commonly misunderstood) contract provisions in the toll concession P3 model. It includes an explanation of tolling regulations and the risks of user demand for the project. The Guide also explains benefit-sharing contract provisions, which are common in toll concession projects and generally require the Developer to share certain financial benefits with the project owner during the term of the contract.
Because project risks are apportioned differently in a public-private partnership model than in more traditional contract models, the Guide explains how the P3 model may impact supervening events, such as force majeure events or other delay events. The Guide also details many of the risks associated with potential changes in the equity interests of a contract bidder’s team.
The FHWA plans to publish an Addendum to the Guide that will address in less detail secondary contract provisions such as performance standards, contract duration, Federal requirements, and performance security.
The FHWA will also publish for public comment additional draft guides for other contract models in coming months and will publish an Availability Payments Model P-3 Contracts Guide in 2014.