The State of the P3 Discussion

Subscribe to our Blog


Posted on

The State of the P3 Discussion

By Louis J. Jenny  |  March 17, 2015

In recent weeks, I attended two conferences on public-private partnerships (P3s). The first, sponsored by the National Council on Public-Private Partnerships (NCPPP), focused on federal issues.  The second, held in Dallas, was sponsored by the Association for the Improvement of American Infrastructure (AIAI) and focused on broader issue-areas.  From the many informative sessions I attended, I pulled together a few takeaways.

  1. The need for Centers of Excellence was mentioned often. The concept, as I understand it, being a public sector clearinghouse of information, education, best practices, etc. for public sector officials.  The goal here, among other things, is to fill what is seen as a large gap in understanding of:
    • What P3s are,
    • How and why they succeed (or not),
    • What the reasonable expectations of success are,
    • What good candidates for a P3 look like, and
    • What the appropriate distribution of responsibilities, roles and risk is among the players.In short, the centers would be an unbiased source of information where public officials can educate themselves with objective materials and start the process of considering public-private partnerships.
  1. Similar to above, there is a need to educate the public on P3s. It is well understood among public-private partnership experts – both public sector and private – that there are many negative misconceptions about P3s among the public.  Further, there are high-profile P3s that – rightly or wrongly – are seen as bad deals for the taxpayer, which leads to public opposition.   Also, there are opponents of the very concept of public-private partnerships fanning this public opposition.  All of these factors make it more difficult for public officials to even begin the process of seriously considering P3s.What is needed is a continued effort to counter these public misconceptions, provide solid information and statistics, and take on opponents when necessary.
  1. On the federal level, the federal budgeting rules make a public-private partnership a tough proposition. In short, since 1991 the White House Office of Management and Budget (OMB) has required federal agencies to take into account the full cost of a public-private partnership to the federal agency up front (as opposed to spreading the costs over the life of the project).  There are various reasons for this, but it is based on reasonable concerns about tying the hands of future decision makers.  The effect is to make true public-private partnerships very difficult on the federal level.The smart people in the room believe that there is a way to satisfy OMB’s concerns and open up the federal government to the full benefits of P3s, but it will be a big lift and take a concerted political effort.
  1. Finally, state authorization of P3s is also key. Currently, about half the states either authorize the use of P3s throughout the state or authorize them to some extent.  That number has grown steadily in recent years, but there is a lot of work to do.  Public misconceptions and outright special interest opposition make this a challenge, but as states search for tools to address their infrastructure challenges, there is reason for optimism on this front. In fact, Pennsylvania – a state with limited design-build authority – is turning to P3s as a key component of their Rapid Bridge Replacement project set to repair or replace 558 bridges across the state.(A side note, at one conference a Canadian local official, who uses P3s extensively, said it never occurred to them to ask for authorization, they just started doing them.)

Design-build is an inherent part of public-private partnerships. As past DBIA Board Chairmen Jim Whitaker has described, DBIA’s education tools could provide real value to those involved with P3s for the first time. Because of this, DBIA will be actively engaging on developments in P3 laws, education materials and resources throughout this year and into the future. For more information, keep checking back to DesignBuildDoneRight.com.