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Public-Private Partnerships (P3s) Program

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What are Public-Private Partnerships (P3s)?

Under traditional procurement, private contractors construct projects based on a public design with public financing and turn them over to the public sector upon completion for operations and maintenance. Under P3 models, the private sector may also participate in design, finance, operations, maintenance and toll revenue collection. "Availability payments" are a type of long-term lease in which the private sector designs, builds, finances and operates a facility over a specified term, in exchange for an annual payment. Under a toll concession, the private concessionaire receives the right to collect toll revenues from the facility instead of collecting a specified payment.

FHWA's P3 Objectives

FHWA, through its Center for Innovative Finance Support (formerly Innovative Program Delivery), seeks to provide technical support for the consideration and use of public-private partnerships (P3s) as a mechanism for procurement and financing of highway projects. The Center for Innovative Finance Support seeks to develop an understanding of P3s by key stakeholder groups, transportation leaders and elected officials and encourage consideration of P3s (where appropriate). The Center for Innovative Finance Support also seeks to improve the capacity of P3 units (or other teams) within State governments to support the consideration and use of P3 procurement.

Program Needs

Building the organizational capacity needed to develop P3s while protecting the public interest presents a major challenge to transportation agencies. Agencies will need to acquire or develop new policy, legal, technical, financial and managerial skills and establish processes and structures, such as specialized P3 units, that allow them to apply those skills in a multidisciplinary way.

To design partnerships that are both in the public interest and attractive to private investors, public agencies will need to gain a better understanding of private sector interests as well as public concerns. Managing the organizational changes needed to develop, implement and monitor P3s will require agencies to involve and educate agency staff and external project stakeholders to build committed leadership at multiple levels.

The Center for Innovative Finance Support's Role

The Center for Innovative Finance Support assist States in developing new P3 knowledge, skills, and abilities that vary by phase of project development, including policy, legal, technical, financial and managerial capabilities. The Center for Innovative Finance Support supports research and development of tools to facilitate consideration and implementation of P3s; assists in building the capacity of practitioner communities; develops and implements Federal policy on P3s; and collaborates with State and local partners to communicate the various aspects of P3s to elected officials, transportation leaders and the public.

The target audience for the Center for Innovative Finance Support assistance varies by project phase, as follows:

• Legislative, executive and policy staff who need capacity to establish a statutory and policy framework in the early phase;
• Transportation planners and project development professionals who need capacity to identify and evaluate potential P3 projects in the planning and project development phases;
• Major project engineers, finance specialists and legal professionals who need capacity to conduct procurement; and
• Construction, operations and maintenance engineers who need capacity for performance monitoring and oversight.

To achieve its objectives, the Center for Innovative Finance Support:

• Conducts research on key P3 questions;
• Develops appropriate P3 tools and guides to assist each target audience;
• Conducts training, education and other capacity building, including dissemination of information through various electronic and other media:
• Develops and implements Federal P3-related policies, including Special Experimental Programs (SEP); and
• Exercises stewardship to ensure that applicable Federal laws, regulations and policy are effectively implemented.

The Center for Innovative Finance Support's draft Program Plan and Road Map for Performance Years 2013-2017 which outlines the Center for Innovative Finance Support's planned collaborative efforts for research, tool development, capacity building, policy development and stewardship is available on the Center for Innovative Finance Support's website at: http://www.fhwa.dot.gov/ipd/p3/

Current Center for Innovative Finance Support Activities

A key current activity in the research area is the development of comparative case studies of representative projects that highlight maturing or evolving P3 policies and practices. Current activities in tool development include development of an analytical toolkit to assist in understanding how to compare a P3 procurement option with the traditional approach. Supporting guides and a training program are also being developed.

The Center for Innovative Finance Support periodically conducts P3 webinars, both introductory and advanced. Recordings and transcripts of past webinars are available to FHWA staff on the Center for Innovative Finance Support Academy (formerly the Innovative Program Delivery Academy) Staffnet website at: http://staffnet.fhwa.dot.gov/ipd/academy.htm The Center for Innovative Finance Support also provides a variety of P3 resources on its website at: http://www.fhwa.dot.gov/ipd/p3/

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