According to a recently released study by the Bay Area Council Economic Institute, a public-private partnership (P3) may be the most effective method to deliver a proposed expansion of the San Francisco Veterans Administration Medical Center (SFVAMC) – but there are some barriers that need clearing.
The SFVAMC is a leading Veterans Administration (VA) medical center, having the largest research program in the national VA system, and providing one-third of the clinical education and curriculum for medical students and residents from the medical school at the University of California, San Francisco (UCSF). The SFVAMC has outgrown its existing, 80-year facility near the Golden Gate Bridge, and is considering building a new state-of-the art building in the city’s Mission Bay district, where it would relocate research and hospital operations and form part of UCSF’s growing health sciences complex there.
Based on current delays in federal appropriations, the much-needed expansion project faces an estimated wait time of 10 to 15 years if delivered through conventional federal procurement methods. In contrast, the Economic Institute’s study finds that there is an immediate opportunity for the VA to pilot a P3 to design, build, finance, operate, and maintain the expansion project. If structured properly as a P3, the project can attract private capital and could result in a significantly accelerated delivery schedule. When compared to conventional procurement methods, the study concludes that a P3 could achieve capital cost savings of at least 20 %, and life-cycle cost savings (including operations and maintenance) of 10-30 %.
Moving forward with the P3 alternative, however, will require changes in federal procurement laws. For starters the Economic Institute recommends passing enabling legislation to allow the VA to enter into long-term space lease agreements and lease-leaseback transactions. For now, the VA is in dialog with US congressional leaders, as well as UCSF and prospective private partners, to move the project to the next step.
Nossaman LLP’s 30-plus infrastructure attorneys offer clients, colleagues, strategic partners, and industry media a wealth of practical experience, insider insight, and thoughtful analysis here on Infra Insight. We blog about what we know best, from industry-leading procurements to local and national policy developments that affect the market and our clients.
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