With its emphasis on consumption rather than production, the Great Recession un-veiled an American economy dangerously out-of-whack. During the sluggish recovery that has followed, national, state, and metropolitan public and private sector leaders continue to push for investments in infrastructure to put Americans back to work and rebalance the economy.
Despite the attention, infrastructure has proven to be a challenging and complex solution to implement given current fiscal austerity and restraint. Declining resources and an apparent political unwillingness to raise additional public revenue or target infrastructure spending to put the economy back on solid footing means the enthusiasm to invest in U.S. infrastructure is not matched by the same level of investment activity.
One approach frequently offered to potentially break the logjam is to use contractual agreements between governments at all levels and the private sector to design, build, operate, maintain and/or finance infrastructure. Whether repairing, upgrading, or augmenting an existing asset or building new, the intent is to leverage private sector financial resources and expertise, improve project delivery and to better share responsibilities and costs between the public and private sector.1 The evidence from other countries-some with less friendly business environments than in the United States-shows that these arrangements, if designed and implemented correctly, do have the potential to improve on infra-structure delivery.2
However, these public/private partnerships (PPPs) are complicated contracts that often differ significantly from project to project and from place to place. As the challenges to infrastructure development throughout the United States become more complex, there is a constant concern in the United States that public entities are ill-equipped to consider such deals and fully protect the public interest.3 From poor procurement incentives to lack of coordination, expertise, and information to potentially high transaction costs, PPPs remain the next great idea to our infrastructure woes always on the horizon.
To address these concerns, countries around the world have created public/private partnerships (PPP) units. A PPP Unit is an entity designed to fulfill functions such as quality control, policy formulation and coordination, technical advice, standardization and dissemination, and/or promotion of PPPs.
This study analyzes the particular potential of this institutional solution for the infrastructure PPP market in the United States. For a better understanding of the role of a PPP unit, the paper starts by explaining the concept and characteristics of an infrastructure PPP, focusing mainly on transportation, and analyzing the PPP activity in the United States to date. It then discusses the notion of a PPP unit, based on international experience. After turning back to the United States to analyze existing PPP legislation and potential PPP units at the state level, it concludes with a range of implications for policymakers at all levels to consider.