Pennsylvania recently joined the ranks of more than 30 other states when Gov. Tom Corbett signed legislation permitting public-private partnerships (P3s) for transportation projects. 74 Pa. C.S. §§ 9101-9124. The Public and Private Partnerships for Transportation Act allows PennDOT and other public transportation entities to partner with private companies to finance, deliver, operate and maintain transportation-related projects. P3s may receive all or a portion of the revenue generated (such as via tolls or user fees) in exchange for providing services or facilities. The law applies to the construction of new transportation facilities and the improvement of existing facilities.
Under the law, the state would, for instance, retain ownership of a busy roadway while a private firm in a P3 would build new express lanes along that roadway. Following construction, the private firm would receive a return through tolling drivers who use the express lanes.
The law created an independent Public-Private Transportation Partnership Board, which will review and approve P3 projects. Private investors can pitch their ideas to the board, which recently approved guidelines for considering both solicited and unsolicited proposals. If the board determines that a state operation would be administered more efficiently by a private company, the private company will be authorized to submit a proposal and enter into a contract to either completely or partially take over that operation for a defined period of time.
Proposals for P3s will be evaluated on the basis of pre-established criteria with assigned weights, including: cost; financial commitment; innovative financing; technical, scientific, or socioeconomic merit; public reputation, qualifications, and financial capacity of the private entity; ability of the project to improve economic growth, improve public safety, reduce congestion, increase capacity or rehabilitate, reconstruct or expand an existing transportation facility; and other factors deemed appropriate by the public entity.
For unsolicited proposals, private entities are encouraged to request one-on-one meetings with PennDOT’s P3 office and/or a public transportation entity to discuss potential proposals before submission. As part of such one-on-one meetings, the P3 office and/or public entity may provide informal feedback. A formal review of an unsolicited proposal will only be undertaken once a private firm makes a formal submission.
An unsolicited proposal must contain information that is sufficient for the P3 office and/or public entity to evaluate the merits of the proposed project. Such information includes the capability of the private entity to deliver the project, the financial viability of the project and the benefits to the Commonwealth of Pennsylvania and the public entity of a P3 delivery method over a conventional method. The board’s implementation manual identifies 11 additional categories of information that all unsolicited proposals must contain.
Importantly for private firms, the board and the P3 office have established May and October as the only two months the state will receive unsolicited proposals.
The board has already approved projects allowing PennDOT to solicit private-sector proposals to manage and operate PennDOT’s transportation and traffic information system, 511PA, as well as the Pennsylvania Turnpike’s Roadway Information Program (TRIP). In addition, Pennsylvania reportedly will seek sponsorship proposals for the state’s welcome centers and rest areas, along with a solicitation process for the state’s highway sponsorship program. PennDOT also recently published a request for design and miscellaneous environmental and engineering services, including project management services.
The law provides unique opportunities for private companies in various industries, including construction and communications. P3s should stimulate private investment in public highways, bridges and other facilities, where governments confront funding restraints. Private firms should appreciate that interest in P3 programs is high and that competition for projects is likely to be intense.
Please contact us with any P3 questions, including those that concern arranging one-on-one meetings with a public entity or PennDOT’s P3 office, and preparing both solicited and unsolicited proposals.