After the legislature creates a policy framework for PPPs, the authorized executive agency-such as a state or local transportation agency-is generally responsible for implementing the PPP program and/or executing specific projects within the established guidelines. This involves development of a PPP program; project development, evaluation and selection; procurement, including negotiation and bidding; contracting; and contract management and oversight. In those states that require legislative approval of individual projects, legislatures also will be involved to that extent in project selection.

According to the Government Accountability Office, contracts have been the primary means used to protect the public interest in highway PPPs in the United States.114 Legislators generally set guidelines for the contracting process and allowable contract terms, while executive agencies are primarily responsible for crafting specific contracts within those guidelines. Because a PPP contract defines the salient points and contingencies of the agreement, as one analyst has said, "the contract is paramount."115 Critical provisions that protect the public interest in a PPP

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Thoughts from the NCSL Partners Project…

On Governance
"A perspective on governance issues would have eased the way for us in West Virginia when we first began working on our enabling statute back in 2002 (completed in 2008). Whatever PPP tools your enabling statutes may authorize, they must provide for an executive authority to make decisions and take actions, and a framework within which those decisions and actions may occur. The primary objective in creating a governance structure is that the executive authority and, ultimately, the state, achieve what they should, avoid unacceptable situations, and maintain the public trust. To that end, the system of governance should foster transportation program continuity, provide for manageable growth, and maintain system-wide priorities. Most fundamentally, the transportation program should drive PPP projects, not the other way around."

Fred Lewis
Policy Analyst, West Virginia House Finance Committee
Staff Chair, NCSL Partners Project on PPPs

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contract typically include performance standards, toll policies or other payment mechanisms, public sector flexibility to provide transportation services, labor protections, public oversight and monitoring, revenue sharing, risk allocation, default provisions and termination or "buy back" options.116 PPP contracts can be hundreds of pages long and deeply complex. Executive agencies generally need access to experts who are able to contract effectively117 and enough time and money to ensure a robust and careful contracting process.