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What's New: Public-Private Partnerships (P3s)

U.S. House Transportation Committee Panel on P3s Releases its Report

Thursday, September 18, 2014  

The Special Panel on Public-Private Partnerships of the U.S. House Transportation and Infrastructure Committee has released its report on its findings and recommendations for public-private partnerships (P3s) in the United States. The panel was formed at the start of 2014 to examine the state of P3s and to make recommendations on how to balance the needs and interests of the public and private sectors in implementing P3s as an infrastructure financing tool. The report and the recommendations made are aimed at overall policy issues in the use of P3s rather than the details of how P3s should be conducted. As such, the report is silent on bonding of the design and construction portions of P3s.

In today’s press conference, the Republican and Democratic leadership on the Panel noted the consensus contained in the report. Like it or not, the use of P3s are growing worldwide and are needed in the US. As a result of seven policy roundtables and two hearings, the Panel concluded that the benefits of P3s can be best seen in projects that are high cost and technically complex. Four P3s cited as especially persuasive to the Panel: 1) Florida Port of Miami Tunnel project; 2) Virginia DOT project to expand the Capitol Beltway; 3) Denver commuter/light rail project; and the 4) Port of Baltimore Project, a long term dredging and maintenance project.

The report makes numerous recommendations to: 1) grow private investment in infrastructure; 2) break down the barriers to P3s; and 3) guarantee transparency and accountability. Of interest in the recommendations to improve public sector investment, the US DOT would be directed to establish a Transportation Procurement Office (Office) to work with the modal agencies (surface transportation, aviation, water systems and treatment and ports), and states and other grant recipients on implementing P3 procurement best practices, including P3 model contracts. The Office would issue best practices to standardize state P3 practices—including issues such as fair and balanced assumptions in the evaluations, consistency on unsolicited bids, non-compete clauses and other major elements. The Office and its efforts seem to be limited to P3 transportation projects.

The report also recommends that states interested in enacting P3 enabling legislation should coordinate with other states regarding “lessons learned” and consider establishing standalone P3 offices that go beyond transportation projects and develop regional partnerships for common infrastructure interests. It stops short of a federal model P3 law for the states.

As P3s have begun to be used for public infrastructure, the existing federal rules for scoring projects deter the use of lower-cost, long term leases and discounted purchase options. The Panel recommended both that the scoring rules should be reviewed and modified and that the General Services Administration should work within the limits of current scoring rules to develop office space on federal property. A common theme from the private sector in the Panel’s proceedings throughout the year is that P3s won’t be used in to any extent in the U.S. unless the scoring rules are changed.

Another key item that both parties understand is that while there is private investment in P3s, the costs of P3s ultimately are borne by the public. There is no free lunch, and the report says just that. Several Panel members noted the significant federal funding that has been involved in any federal P3 project to date, whether by grants, low cost government loans or loan guarantees or from public activity bonds. That funding is not necessarily bad but it does make transparency and accountability crucial in any P3 project.


View PDF version and Panel Report (or visit Government Relations / Public-Private-Partnerships (P3s) - Public)


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