House Bill Would Create Federal P3 Center

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DALLAS - States and local governments would get assistance in developing contracts and concession agreements with private investors in transportation infrastructure projects from a new federal P3 procurement center under legislation sponsored by Rep. Sean M. Maloney, D-N.Y.

The proposed center at the Transportation Department that would be created by H.R. 3465, would reduce the public cost of major highway, rail, and bridge projects by increasing private investments in public infrastructure, Maloney said.

"Investing in infrastructure creates tens of thousands of good paying jobs, boosts our economy, and serves commuters and businesses for decades," he said. "This bill helps our country improve our infrastructure faster, more efficiently and at less cost to the taxpayer. It is a win-win, particularly for New Yorkers."

Maloney, a member of the House Transportation and Infrastructure Committee, was part of a special committee panel that last year looked at the federal role in facilitating P3s.

The P3 panel issued a report in September 2014 that recommended the establishment of a procurement center within the Transportation Department to help states and local governments evaluate and implement design-bid-build, design-build, and P3 procurement best practices, including model contracts.

The House P3 panel's report said well-structured P3s can enhance the delivery and management of transportation projects but the financing method is not suitable for every project.

"P3s cannot provide the sole solution to all of the nation's infrastructure needs, but they can offer significant benefits, particularly for high-cost, technically complex projects that otherwise may risk dying on the vine," said Rep. John Duncan, R-Tenn., chairman of the P3 panel.

A report issued earlier this year by the Congressional Budget Office found expenditures totaled $32 billion for the 36 highway and bridge P3s in the United States under way or accomplished within the past 25 years, which is less than 1% of the $4 trillion spent on similar projects by all levels of government over that period. About half of the $32 billion was dedicated within the past five years, the CBO said.

The Transportation Procurement Office provided by his bill would modernize and improve the coordination between governments and the private sector, Maloney said.

"These creative partnerships allow us to make strategic investments in transportation and infrastructure while lowering costs," he said. "This bill will unlock badly needed resources to improve the roads, bridges and rail lines New Yorkers rely on."

A report by New York University's Rudin Center for Transportation Policy and Management said limited use of the design-build practice in New York State has saved $1.7 billion on a replacement of the Tappan Zee Bridge, with completion expected 18 months early.

The report, sponsored by the Association for A Better New York and RBC Capital Markets, said the state has saved more than $100 million through design-build contracts on dozens of road and bridge projects.

A report on state P3 practices by Standard & Poor's released last week said Canada, which has an economy that is just a fraction of the U.S.', has a much robust P3 marketplace.

"Most Canadian governments have adopted legislation that enables P3s and requires authorities to evaluate the cost benefit of P3 versus other funding," the report said. "Such evaluation typically focuses on value for money, but also may consider lifecycle expectations and social acceptability."

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