Concerns of foreign control of public assets are based on the impression that allowing a foreign firm to control our nation's roadways may lead to national security and/or trade agreement issues. This concern has two potential components: foreign government control versus foreign private firm control. In PPPs, foreign control concerns are mostly related to the latter, although the former could be a factor when disagreements over PPPs may affect trade agreements with foreign governments.
Some commentators frown upon allowing foreign companies to operate, maintain, or control U.S. infrastructure (Dobbs 2007). In Tennessee, for example, the senate passed a bill (in March 2008) to limit contracting with foreign concessionaires. This type of restriction, however, may violate bilateral trade agreements, such as those between the United States and Australia.
Because toll roads were developed and operated almost exclusively by government and quasi-government toll authorities for the last century, non-U.S. companies are now best positioned to finance and operate private toll roads in the United States (Gilroy 2007). For example, Spain has a long history of toll concessions, with enabling legislation dating back to the 1950s, and Spanish companies have a strong presence in toll road concessions in other countries (Izquierdo and Vasallo 2004). Cintra, a Spanish concessionaire, is an equity partner in the Chicago Skyway, Indiana Toll Road, Trans Texas Corridor 35, and SH-130 in Texas, and also led the consortium for the Highway 407 Express Toll Route (ETR) in Toronto, Canada.
Another reason foreign companies have flocked to the United States is that they are attracted by the stability of the U.S. government and its legal system that enforces contracts (Buxbaum and Ortiz 2007). Private investors are hesitant to participate when the public partner has poor credit quality or political, legal, economic, and commercial circumstances that are unstable (Zhang 2005). As the United States market has matured, joint ventures between U.S. and non-U.S. companies (e.g., Fluor/Transurban, Zachry/Cintra, Kiewit/ Macquarie, and JP Morgan/Cintra), and U.S. financial institutions have created multi-billion-dollar infrastructure investment funds (Samuel 2007).
Despite increased United States participation in concessions, other concerns remain, particularly related to whether local contractors and smaller firms will have an opportunity to participate. The question is whether a private concessionaire will use local contractors for construction work and/or have open bids for other tasks that might be contracted out, similar to current public sector practice. In Indiana, construction unions were demanding that the concessionaire sign a labor agreement to give 95% of the contracted work to trade unions, based on their estimated share of contracts before the Indiana Toll Road lease ("Unions Want Indiana Toll Road Jobs" 2007). The concessionaire indicated that no such deal would be signed. The concession agreement, however, requires that at least 90% of the concessionaire expenses be awarded to companies in Indiana, and it also sets goals for minority business enterprise and women business enterprise participation ("ITR Concession Company Contracting Goals Are Being Met" 2007).
Organizations related to the construction industry, such as the National Asphalt Pavement Association, the Associated General Contractors of America, and the American Road & Transportation Builders Association, have stated their support for PPPs as one tool to pay for infrastructure, among other funding and financing options.
Foreign control of domestic assets was an important concern for 75% of the state DOTs that were surveyed (33 states). The Canadian respondents, however, were less concerned, with 60% (three provinces) reporting that this was not important. Of all the concerns evaluated in the survey, this is one of few that received the highest response of "not important."
On the other hand, the opportunity for local contractors and consultants to participate in PPPs was considered an important concern by most states, with only two negative responses. The latter came from states that are not considering PPPs.