This report intended to accomplish three goals: (1) examine the value of public-private partnerships as they are used to build large, capital-intensive transportation projects, (2) uncover some of the impediments in current law, regulations, and practice that discourage the formation of public-private partnerships; and (3) compile a list of recommendations from States, trade associations, private law firms, consultants, designers, and contractors regarding the changes that should be made to encourage the formation of public-private partnerships.
Although not extensive, virtually all of the literature on the use of public-private partnerships to provide transportation infrastructure finds that they are effective in building projects quicker and at a lower cost. The ability of public-private partnerships to encourage innovation and produce improved quality is less well studied, but preliminary indications are that those benefits accrue to these types of projects as well.
Public-private partnerships have been viewed as a more effective way to build a project and have typically been used on a project by project basis. However, several States have used these partnerships in a variety of innovative ways. Virginia, Florida, Texas, and the District of Columbia have used public-private partnerships to better manage maintenance on whole sections of their highway systems. States also have used these partnerships to manage a number of projects, e.g., Louisiana's TIMED effort and South Carolina's "27 in 7" program.
Public-private partnerships, however, do have their disadvantages. States not accustomed to this method of procurement can find it difficult to oversee these types of projects. Although public-private partnerships can be used to reduce the amount of staff time required to monitor the cost, quality, and timeliness of a project, the different nature of this type of procurement usually results in staff spending considerable time developing new systems. In addition, concerns have been raised that public-private partnerships weaken some of the safeguards found in more traditional financing and procurement methods.
Current transportation law, regulations, and practice are designed to protect the integrity of the design-bid-build method of procurement. This traditional method separates the design and construction of facilities into two separate and distinct steps. While effective for traditional procurement, the current system of regulation and oversight creates a number of unintended problems for States interested in exploring more innovative ways to improve and expand transportation infrastructure. The report details a number of these problems but does not represent that this is an exhaustive list.
Additional challenges are raised when a project receives Federal funding and becomes a Federal project. Although the Administration does not recommend any changes to these laws aside from those noted in the U.S. DOT Recommendations Chapter (Chapter VI), those exploring public-private partnerships should be aware of this dynamic.
The previous two chapters on Comments and U.S. DOT Recommendations suggest a number of areas that can be explored to improve opportunities for public-private partnerships. As is mentioned above, many of the comments included in the report do not reflect the position of the Administration but are included to be responsive to the request for comments from States and localities.
In exploring the value of public-private partnerships, the impediments to their formation, and the suggested changes, it is hoped that this report will respond to the questions raised in the House Report and serve as a resource document for States and others interested in exploring the benefits of public-private partnerships.
We look forward to continuing to work with Congress on the issue of the use of public-private partnerships in highway and transit projects.