P3 Projects
Maryland Extends Purple Line Contractor Search
Maryland transportation officials have extended the process of selecting a new design-build contractor for the $2-billion Purple Line light rail project, pushing the deadline for having a new team in place to February 2022.
The move, approved Sept. 15 by Maryland’s Board of Public Works, provides prospective bidders additional time to complete due diligence activities on the half-finished project, which was already more than two years behind schedule when the previous Fluor Corp.-led team withdrew last fall under a $250-million settlement with the state.
Since then, the Maryland Dept. of Transportation has overseen a scaled-back construction effort while its private concessionaire partner, Purple Line Transit Partners (PLTP), has led the search for a replacement contractor.
State Transportation Secretary Gregory Slater told the board that the re-solicitation process, originally scheduled to wrap up this month, was extended to allow proposer teams more time to familiarize themselves with the remaining work, and how it will tie into construction already completed.
Selected in March from five prospective bidders, the candidates invited to submit formal proposals to PLTP are Nanuet, NY-based Halmar International; a joint venture of Dragados USA Inc. and OHL USA bidding as Maryland Transit Solutions; and a joint venture of Tutor Perini and Lunda Construction Co.
Based on one-on-one discussions with the pre-qualified bidders and responding to approximately 500 questions, Slater said, “it was very clear to us, and in what they communicated to us, that more time in due diligence will get us a better value on the bid at the end.”
Under the revised schedule, bids for the project are due by Sept. 30. MDOT anticipates a new contractor will be selected by the end of the year, along with updated project schedule and cost information. Commercial and financial close for the project’s revised public-private partnership is due by Feb. 17, 2022.
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Because the extended re-solicitation schedule spans trigger dates for some of the project’s financing components, the board approved advancing PLTP up to $375 million. PLTP plans to use the funds to pay off an initial round of public activity bonds issued in 2016 to get construction underway.
Slater explained that the move eliminates potential bondholder actions that could interfere with selection of a new contractor.
The executive stressed that the bond payment funds, which will be drawn from the state’s transportation trust fund, are not an added cost to the Purple Line, but rather pay for completed work now rather than over the course of PLTP’s 30-year operations and maintenance concession. He also noted that increased vehicle sales fees and fuel tax revenue over the past nine months have helped the trust fund rebound from early-year lows, and that no other currently planned transportation projects will be affected.
“It helps us mitigate risk by separating the work and financing activities completed today versus the ones moving forward,” Slater said of the bond payout, “and it saves the state more than $100 million in interest over the 30-year concession.”
The changes to Purple Line’s contractor selection process and financing structure will also have no effect on the timing or amount of MDOT’s remaining $150-million settlement payment to Fluor, due in December.
