On Wednesday, Richard Fierce, senior vice president at Fluor, testified in front of the House Transportation & Infrastructure Committee’s Panel on Public-Private Partnerships (P3 Panel). The purpose of the hearing was to provide an overview on the use of public-private partnerships in highway and transit projects. Other members on the panel included representatives from the Texas Department of Transportation, the Denver Regional Transportation Department, and the Congressional Budget Office. All of the witnesses, including Mr. Fierce, agreed that the only solution to addressing our infrastructure funding gap is to provide address the pending Highway Trust Fund solvency and provide a long-term sustainable revenue source as part of reauthorizing MAP-21.
AGC’s testimony provided the panel with some basic knowledge on P3s, along with the benefits and challenges of using P3s on transportation projects. The specific views shared with panel include:
- P3s or any other type of innovative financing tool must be viewed as just that – a financing tool.
- Projects need to be technically feasible, publicly supported and financeable. Any P3 project requires a reliable revenue stream for the project to be viable.
- P3s are not a panacea. Private finance may help close a funding gap, and P3 project delivery is likely to deliver more projects for a given dollar of revenue, but P3s do not eliminate all risks or possibilities for conflict or claims. The same challenges that face a publicly funded project can also occur on a P3. Efficient allocation of risk is important to creating P3 value.
- Good state-enabling legislation, expertise among state administrators, federal administrators (including advisors), and a track record of success will help build support for P3 development.
- Congress should look to facilitate the use of P3 model contract documents similar to what is being developed by FHWA as directed by MAP-21 for collecting and disseminating best practices.