On September 17, the House Transportation & Infrastructure Committee’s Panel on Public-Private Partnerships (P3s) released its report and recommendations. The group, empaneled in February of this year, was tasked with examining “issues regarding public-private partnerships across all aspects of the Committee’s jurisdiction.” The panel held two hearings and seven roundtable discussions in addition to other meetings and briefings. The report recognizes that the nation’s infrastructure needs are extraordinary and P3s in certain situations can provide innovative solutions, and in some ways, incentives for projects to be delivered on-time and on-budget.
Under three broad areas, the panel makes a series of recommendations:
Improving Public Sector Capacity:
The panel recommends directing the U.S. Department of Transportation (USDOT) to create a “Transportation Procurement Office” to work with federal funding recipients to implement best practices for design-bid-build, design-build, and P3 procurements, including P3 model contracts. The Transportation Procurement Office would also develop and institute project delivery performance standards for the same three types of procurements. It would also “issue best practices on standardizing state P3 authorities and practices.” The report also recommends directing USDOT to require State Departments of Transportation (State DOTs) to submit annual reports on project procurement performance as measured against the Transportation Procurement Office’s standards. USDOT should also “encourage the simplification and standardization of P3 contracts,” act as a clearinghouse for “lessons learned,” and encourage inter-state coordination in creating legislation to authorize P3 procurements so that states successfully using P3s can share their expertise.
In background notes on these recommendations, the panel observes that because State DOTs currently contract for most design work and project construction, they are already engaging in P3s. But missing in these current contract structures are the incentives for on-time and on-budget performance.
Breaking Down Barriers to Consideration:
The panel supports a continuation of the Transportation Infrastructure Finance and Innovation Act (TIFIA) program and encourages “Congress to review Private Activity Bond (PAB) eligibility to support infrastructure P3s across the jurisdiction of the Committee.” It also makes specific recommendations to USDOT and other federal agencies to encourage the use of P3s, such as clarifying the “statutory authority to allow states to use federal-aid highway funds to ensure robust competition in P3 procurements.” It encourages federal agencies currently implementing TIFIA to share lessons learned as the federal government begins to implement the new Water Infrastructure Finance and Innovation Act (WIFIA). Additionally, it recommends changes in budgetary scoring rules and fully utilizing existing lease authorities as they relate to property leases.
Ensuring Transparency and Accountability:
The panel makes several recommendations that would provide additional information to the public about components of P3s that use federal grants, loans and tax incentives. The Panel recommends that USDOT be directed to require P3 project sponsors using federal funds to make publicly available a Value for Money (VfM) analysis before advancing the project via a P3 procurement. The panel also recommends directing agencies to provide a “detailed summary” of federal investment in the project at the time federal funds are committed. The report suggests that key terms and conditions of P3s using federal funds be made available to the public “at an appropriate time in the decision-making process.” Further, the panel recommends requiring public project sponsors to conduct a review of P3 projects that utilized federal funds within three years of construction completion or revenue service and make publicly available information about whether the private partners are living up to the goals of the agreement.
In background notes on these recommendations, the panel observes that VfM analyses currently vary in “quality and content” and are not always publicly available. The panel also heard concerns that the public should be made aware of all factors involved in the P3 delivery method to make a fully informed decision about an agreement that could last for 30 years or more.