R -- Financial Advisory Services for TIFIA Loan Projects

MARKET RESEARCHfor Financial Advisors to USDOT Credit Programs: Transportation Infrastructure Finance and Innovation Act (TIFIA) and Title XI Loan Guarantee, Maritime Administration (MARAD) November 16, 2007 Pursuant to 48 C.F.R. Part 10, the Government is conducting market research to: ? Determine if sources exist that are capable of satisfying the Government?s requirements listed below, ? Determine the capabilities of potential contractors, including an estimate of prices, ? Determine the size and status of potential sources, and ? Determine the level of competition (i.e. 8(a), set-aside, dbe contract goal, or full and open) The Federal Highway Administration (FHWA), on behalf of the Department of Transportation (DOT), intends to establish multiple, 5-year Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts for financial analysis expertise to assist DOT with respect to the credit assistance programs described herein. The FHWA seeks to award multiple financial advisory task order contracts to highly qualified firms with financial analysis expertise in the municipal bond, private activity bonds, corporate bonds, and private lender sectors and public-private infrastructure partnerships to assist DOT with applications for credit assistance under the DOT credit programs described herein. Offerors may propose to provide financial advisory services for one or more of the programs. I. BACKGROUND The following Department of Transportation (DOT) programs will be soliciting Financial Advisors: A. Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) Program administered by the TIFIA Joint Program Office. Pursuant to the TIFIA statute (23 U.S.C. 601-609), the Department of Transportation (DOT) is authorized to provide credit assistance to major surface transportation projects, including secured (direct) loans, loan guarantees, and standby lines of credit to borrowers for major surface transportation projects, for up to 33% of eligible project costs. Projects may include highway, transit, rail and intermodal facilities with reasonably anticipated eligible costs greater than $50 million. Extensive information on the TIFIA Credit Program can be found on the Internet at http://tifia.fhwa.dot.gov. B. Maritime Guaranteed Loan (Title XI) Program administered by the Maritime Administration. The Title XI Program provides a full faith and credit guarantee by the U.S. Government of debt obligations issued by (1) U.S. or foreign ship owners for the purpose of financing or refinancing either U.S. flag vessels or eligible export vessels constructed, reconstructed, or reconditioned in U.S. shipyards; and (2) U.S. shipyards for the purpose of financing advanced shipbuilding technology and modern shipbuilding technology (Technology) of a privately owned general shipyard facility located in the United States. Additional information about the Title XI program may be found on the following website: www.marad.dot.gov/titleXI/. II. EXPERTISE REQUIRED A. TIFIA The selected advisors would assist DOT in up to three phases of activity with respect to TIFIA loan transactions: PHASE 1 (Project Evaluation): Each TIFIA applicant is required to provide extensive narrative and financial information, including a working model of the project finance plan. Specific tasks for the financial advisor include: a) Analyzing the plan of finance and the assumptions therein, as well as other financial background material submitted by the TIFIA applicant to identify project risks, including reasonableness of the revenue forecasts and the capability and capacity of the project sponsor to deliver the project on schedule and within budget. b) Assisting DOT in evaluating the creditworthiness of the proposal, including an assessment of the borrower?s ability to meet repayment obligations on its proposed TIFIA credit instrument, based on forecast revenues and expenditures and any other outstanding or proposed financing arrangement of the borrower. PHASE 2 (Project Negotiation): For those projects selected to receive assistance, the financial advisor would support the TIFIA negotiating team (including DOT staff, attorneys and outside counsel) in negotiating the financial terms of the credit agreement. Specific tasks for the financial advisor may include (but not limited to): a) Assist in the negotiation of a credit agreement with the borrower, including attendance at meetings in Washington, D.C. and participation in conference calls involving DOT, its legal and financial advisors, and the borrower, as necessary. (The DOT anticipates that each credit agreement will involve several meetings in Washington among members of the financing team for the project.) b) Perform detailed financial calculations related to the overall financial structure of the transaction and the specific revenues pledged toward TIFIA repayments, such as coverage ratios, debt capacity, alternative repayment structures, sensitivity analysis, and financial tests. c) Provide such calculations in a timely fashion. Provide supporting worksheets and maintain a computer model to conduct analyses. d) Prepare debt service schedules for the TIFIA credit instrument, showing scheduled repayments and debt service coverage by pledged net revenues. Both the evaluation and negotiation phases involve extensive financial analysis, including, but not limited to, the evaluation of proposed credit structures, calculation of debt service coverage ratios, development of alternative TIFIA debt repayment structures, review of feasibility studies and hedging arrangements, evaluation of revenue sharing arrangements, and provision of computer analysis and modeling support. The financial advisor must be able to attend working conferences and meetings at DOT headquarters in Washington, D.C. on short notice. PHASE 3 (Risk Assessment): In addition to the negotiation tasks, the TIFIA Program Office may require a quantitative risk assessment on specific projects with greater levels of complexity or uncertainty in their financial forecast. The tasks for each risk assessment will include, but are not necessarily limited to, the following: a) Reviewing the project feasibility study, traffic and revenue study, and/or other related documents, as applicable, provided by the project sponsor to the TIFIA JPO and identify key variables. The TIFIA JPO will provide when available the project?s plan of finance, the financial model, the feasibility report and/or traffic and revenue study , the draft TIFIA credit agreement, and the draft senior bond indenture or loan document, as applicable. b) Researching and analyzing regional economic forecasts to assess the reasonableness of key economic assumptions, quantities, values and demographic variables. c) Based on the analysis in the tasks above, developing a structure and logic model to depict the relationships of the underlying variables in the revenue forecasts d) Conducting an independent risk analysis of each key variable identified in the tasks above. e) Building a computer model that will allow the consultant to apply Monte Carlo Simulation, using the probability ranges for each key variable, to assess the impact on the forecast revenues. f) Documenting the findings in a final report that represents the independent risk analysis of revenue and financial forecasts, including an assessment of the likelihood that the project can achieve the financial ratios that TIFIA seeks to establish for the credit instrument. g) Prepare final credit evaluation report, documenting the results of analysis and assessment. The financial advisor may propose alternative approaches or methodologies to conducting the required risk assessment, identifying tasks that supplement or substitute for those described. Expertise in Each Phase Not Required As noted, phases 2 and 3 are optional, depending upon the results of the credit evaluation and the complexity or uncertainty of the financial forecast. In seeking advisors, therefore, the FHWA seeks firms (a) capable of performing each of the three phases, (b) capable of performing phases 1 and 2 only, or (3) capable of performing phase 3 only. In practical terms, the FHWA expects that two financial advisory firms may support a project by performing different tasks (i.e., one firm would perform phases 1 and 2 and the other firm would perform phase number 3. B. MARAD The services to be provided by the contractor may include, but are not necessarily limited to, one or more of the following: ? Evaluate the economic soundness of the project and creditworthiness of the applicant for credit assistance. This evaluation will include analyzing (1) the financial viability of the project, including the plan of finance [capitalization plan] and assumptions therein; (2) the financial condition of the borrower and other relevant parties, (3) the past performance and future ability to meet all repayment obligations, and (4) project risks, including reasonableness of the revenue and expense forecasts, and project schedule and costs. ? Analyze historic financial performance of the borrower, including balance sheets, income statements, cash flows, and footnotes to audited financial statements, to determine strengths, weaknesses, and trends and generate projected financial statements. ? Perform detailed financial calculations and establish ratios related to the overall financial structure of the transaction, previous financial experience, and industry comparisons. These calculations may include measures of profitability, liquidity, and financial strength, such as coverage ratios, debt capacity, alternative repayment structures, sensitivity analysis, stress testing and other financial tests. ? Assess the strengths and weaknesses of the borrower?s management. ? Review and evaluate the feasibility studies for the project, including traffic and revenue studies. ? Evaluate the proposed market for the project, including a review of applicable market studies/surveys, the borrower?s relationship with its major customers and the projected needs met by the project, and the project?s suitability for the intended market. ? Review the proposed ownership structure of the transaction. ? Prepare amortization schedules for the proposed credit facility that also show the debt service coverage. ? At the direction of DOT, assist DOT credit agreement negotiations with the borrower, including performing financial analysis in support of the negotiations and assisting in negotiating the terms of the credit agreement and other documents to be executed by the credit applicant. ? Attend working conferences and meetings at DOT headquarters in Washington, DC, as well as participate in telephone conference calls, as needed. ? Submit a final report to DOT on the financial evaluation of the application, including recommendations (and suggested modifications, if applicable) on the proposed structure of the transaction, potential alternative structures for the financial plan and terms/conditions of the credit instrument. Worksheets, including computer models, supporting the financial analysis must be maintained and available for DOT review. ? Present final results of the financial evaluation in one or more meetings to DOT staff in Washington, DC. ? Provide research and other special technical financial advisory services, as needed, to assist in carrying out DOT credit program requirements. PARTICIPATION IN THE MARKET RESEARCH IN NO WAY INFLUENCES THE COMPETITION FOR THESE SERVICES. THE SOLICITATION WILL BE PUBLISHED IN FedBizOpps.gov. Market Research Please complete the following questionnaire: Place an X beside each requirement your firm would be able to satisfy. 1. Expertise in a. Municipal bonds b. Private Activity Bonds c. Private lenders (including commercial banks) d. Transportation Infrastructure Project Finance TIFIA 2. TIFIA Phase 1 (Project Evaluation) a. Analyzing the plan of finance and the assumptions therein, as well as other financial background material submitted by the TIFIA applicant to identify project risks, including reasonableness of the revenue forecasts and the capability and capacity of the project sponsor to deliver the project on schedule and within budget. b. Assisting DOT in evaluating the creditworthiness of the proposal, including an assessment of the borrower?s ability to meet repayment obligations on its proposed TIFIA credit instrument, based on forecast revenues and expenditures and any other outstanding or proposed financing arrangement of the borrower. 3. TIFIA Phase 2 (Project Negotiation) a. Assist in the negotiation of a credit agreement with the borrower, including attendance at meetings in Washington, D.C. and participation in conference calls involving DOT, its legal and financial advisors, and the borrower, as necessary. (The DOT anticipates that each credit agreement will involve several meetings in Washington among members of the financing team for the project.) b. Perform detailed financial calculations related to the overall financial structure of the transaction and the specific revenues pledged toward TIFIA repayments, such as coverage ratios, debt capacity, alternative repayment structures, sensitivity analysis, and financial tests. c. Provide such calculations in a timely fashion. Provide supporting worksheets and maintain a computer model to conduct analyses. d. Prepare debt service schedules for the TIFIA credit instrument, showing scheduled repayments and debt service coverage by pledged net revenues. 4. TIFIA Phase 3 ? (Risk Assessment) a. Reviewing the project feasibility study, traffic and revenue study, and/or other related documents, as applicable, provided by the project sponsor to the TIFIA JPO and identify key variables. The TIFIA JPO will provide when available the project?s plan of finance, the financial model, the feasibility report and/or traffic and revenue study , the draft TIFIA credit agreement, and the draft senior bond indenture or loan document, as applicable. b. Researching and analyzing regional economic forecasts to assess the reasonableness of key economic assumptions, quantities, values and demographic variables. c. Based on the analysis in the tasks above, developing a structure and logic model to depict the relationships of the underlying variables in the revenue forecasts d. Conducting an independent risk analysis of each key variable identified in the tasks above. e. Building a computer model that will allow the consultant to apply Monte Carlo Simulation, using the probability ranges for each key variable, to assess the impact on the forecast revenues. f. Documenting the findings in a final report that represents the independent risk analysis of revenue and financial forecasts, including an assessment of the likelihood that the project can achieve the financial ratios that TIFIA seeks to establish for the credit instrument. 5. Ability to attend working conferences and meetings at DOT headquarters in Washington, D.C. on short notice as well as participate in telephone conference calls on short notice. MARAD 6. Evaluate the economic soundness of the project and creditworthiness of the applicant for credit assistance. This evaluation will include analyzing (1) the financial viability of the project, including the plan of finance [capitalization plan] and assumptions therein; (2) the financial condition of the borrower and other relevant parties, (3) the past performance and future ability to meet all repayment obligations, and (4) project risks, including reasonableness of the revenue and expense forecasts, and project schedule and costs. 7. Analyze historic financial performance of the borrower, including balance sheets, income statements, cash flows, and footnotes to audited financial statements, to determine strengths, weaknesses, and trends and generate projected financial statements. 8. Perform detailed financial calculations and establish ratios related to the overall financial structure of the transaction, previous financial experience, and industry comparisons. These calculations may include measures of profitability, liquidity, and financial strength, such as coverage ratios, debt capacity, alternative repayment structures, sensitivity analysis, stress testing and other financial tests. 9. Assess the strengths and weaknesses of the borrower?s management. 10. Review and evaluate the feasibility studies for the project, including traffic and revenue studies. 11. Evaluate the proposed market for the project, including a review of applicable market studies/surveys, the borrower?s relationship with its major customers and the projected needs met by the project, and the project?s suitability for the intended market. 12. Review the proposed ownership structure of the transaction. 13. Prepare amortization schedules for the proposed credit facility that also show the debt service coverage. 14. At the direction of DOT, assist DOT credit agreement negotiations with the borrower, including performing financial analysis in support of the negotiations and assisting in negotiating the terms of the credit agreement and other documents to be executed by the credit applicant. 15. Submit a final report to DOT on the financial evaluation of the application, including recommendations (and suggested modifications, if applicable) on the proposed structure of the transaction, potential alternative structures for the financial plan and terms/conditions of the credit instrument. Worksheets, including computer models, supporting the financial analysis must be maintained and available for DOT review. 16. Present final results of the financial evaluation in one or more meetings to DOT staff in Washington, DC. 17. Provide research and other special technical financial advisory services, as needed, to assist in carrying out DOT credit program requirements. 18. Would your firm be able to support the delivery of: More than 10 tasks orders per year 5? 10 task orders per year? Less than 5 task orders per year? 19. Based on your firm?s experience please provide rough estimates for the following services: ITEM UNIT PRICE Item 1: Partner rate Hourly $ Item 2: Senior Professionals rate Hourly $ Item 3: Junior Professionals rate Hourly $ Item 4: Support Personnel Hourly $ 20. Is your firm: A small business? A small disadvantage business? A woman-owned business? A HubZone business? An 8 (a) business? A SDB business? Other Please return the completed form no later than noon, December 3, 2007 to contact@example.gov or fax (+1 (555) 000-0000). Thank you for participating in DOT?s market research.