A year ago, I predicted that Public-Private Partnerships (PPPs) would emerge as a going concern in U.S. procurement, as states and the federal government sought to shore up infrastructure deficiencies across the country.
PPPs, or P3s as they are sometimes known, are an alternative procurement method focused on delivering public sector services in a cost-effective manner, through a combination of government incentives, innovative private sector financing, and streamlined project delivery.
Public-Private Partnerships differ from traditional U.S. public procurements in several key aspects, including financing, operation, and procurement. PPPs are organizational structures by which the private sector finances, builds, rehabilitates, maintains, and/or operates specific public sector activities in exchange for a contractually specified stream of future returns.
PPPs can include, for instance, private sector-financed development and operation of infrastructure, whereby a private company builds and operates infrastructure and/or provides services in exchange for commuter fees (such as toll revenue) or a significant share of the revenue stream; or, alternatively, a partnership for private sector-financed rehabilitation and operation of a hospital, prison, airport or energy facility, which is then operated by the private entity and “leased” to the appropriate federal, state or local government authority for a negotiated fee.
So why are PPPs relevant? In this section of The Forum we will be discussing PPPs and their emergence as a potential solution to the looming American infrastructure crisis.