In a sign of increased federal interest in using private money to help build infrastructure, a special House panel charged with studying public-private partnerships has recommended government actions that could improve how P3s are used in highway, transit, water and other projects.
In a report released on Sept. 17, the House Transportation and Infrastructure Committee’s P3 panel called for a variety of steps, including creating a U.S. Dept. of Transportation procurement office to develop performance standards for public-private ventures and other project-delivery mechanisms. It also recommended moves to provide more public information about projects that draw on government and private financing.
Rep. John J. Duncan Jr. (R-Tenn.), who chaired the 11-member, bipartisan panel, said at a briefing that in hearings and discussions with government and business officials, lawmakers found “there is a tremendous, growing interest in public-private partnerships.”
The panel’s co-chair, Rep. Michael Capuano (D-Mass.), agreed but noted, “People need to remember that there is no person who came to our panel who said that P3’s could possibly take the place of federal investment.” Capuano added, “We need to put more money on the table to keep our infrastructure up to date and improving.”
Another panel member, Rep. Peter DeFazio (D-Ore.), said financial-industry executives told the lawmakers that only 10% to 12% of U.S infrastructure work could be financed through vehicles like P3s, private-activity bonds and loans from DOT’s Transportation Infrastructure Finance and Innovation Act program.
But Duncan said of such financial tools, “I will be very surprised if they’re not a much bigger percentage 10 [to] 20 years down the road.”
The White House also is focusing on private infrastructure financing. More than 100 government and private-sector executives attended a Sept. 9 Obama administration-organized summit meeting in Washington, D.C., to discuss ways to speed the spread of P3s and other non-traditional ways to pay for projects.
As a follow-up, an interagency working group led by Treasury Secretary Jacob Lew and Transportation Secretary Anthony Foxx will present recommendations to President Obama by Nov. 14 on actions to lower hurdles to P3 use.
The House panel report contains 19 recommendations, in three categories: improving public-sector capacity; breaking down barriers for considering P3s; and ensuring transparency and accountability.
Capacity-expanding recommendations include a new “Transportation Procurement Office” at U.S. DOT that would develop project-delivery performance standards for P3, design-bid-build and design-build contracts and issue best practices to standardize state P3 agencies and their activities.
The report also calls for encouraging states interested in using P3s for the first time to contact other states that have had experience with such contracting.
Recommendations to lower barriers to P3s include directing the Federal Transit Administration to report to Congress on differences between P3s and traditional contracts for new fixed-guideway projects and to see whether FTA’s process for reviewing and approving those “new starts” needs to be changed for P3 procurements.
The lawmakers also say federal budgetary “scoring” rules should be changed so federal leases of commercial real estate can be treated as operating leases and thus enable their costs to be spread over many years.
In its report, the panel notes that “a clear and transparent understanding of the relative costs and benefits of traditional and P3 project procurements to the public sector is a critical element to ensuring accountability.”
To promote more transparency, the panel says DOT should require sponsors of P3 projects that use federal grants, loans or other aid to produce publicly available “value for money” analyses for the projects.
In addition, the report says project sponsors should conduct a review within three years after a P3 project is complete to show whether the private entity is achieving goals set in the original agreement.
Transportation committee Chairman Bill Shuster (R-Pa.) and its top Democrat, Nick Rahall (W.Va.) established the P3 panel in January to look at P3 use in highways, transit, water, and the wide range of other infrastructure that falls under its jurisdiction.
The special panel had no bill-drafting responsibiilty. But Shuster said that Duncan and his panel colleagues have provided "some worthwhile recommendations" for the full transportation committee, whose 2015 agenda includes surface-transportation, aviation and other legislation.
American Society of Civil Engineers President Randy Over said in a statement that P3s "have proven effective in projects across multiple sectors of infrastructure, as evident in the report...." Over also noted the Obama administration summit and said that "bipartisan conversations...are crucial in ensuring we are leveraging all the potential dollars available to modernize our nation's infrastructure."
But he added, "The nation needs a boost in traditional funding, as well."