In a recent New York Times article, the author highlighted an on-going debate regarding the ownership and maintenance of public infrastructure – roads, bridges, tunnels and even airports. Privatizing these key elements doesn't seem to change the profitability of these projects, but it is affecting the players involved. For example, the big names in the most popular bids – Chicago's Midway Airport and Florida's highway known as "Alligator Alley" – are banks, investment firms, and venture capital groups. Instead of federal and state and local governments spending large amounts of money in the midst of mounting deficits, they can privatize the entire process maintaining only oversight capability.
In keeping with this idea, Governors Rendell (PA), Schwartzeneggar (CA) and Mayor Bloomberg (New York City) began Building America's Future, a coalition which promotes awareness of the funding and support of public infrastructure projects. A proposed example from our own DC metro area is the high-occupancy vehicle (HOV) toll lanes which could be funded through a public-private partnership to the tune of $1.9 billion.
Close to Home: Another Example
Let's look at the Dulles Greenway as the most popular example of something like this already in place. Toll Road Investors Partnership II, L.P. (TRIP II) owns the toll road and clears all changes with the State Corporation Commission (SCC). As a sidenote, rate hikes are well on their way to being approved and will increase consistently over the next 3-4 years until the base toll is $4.00 for non-peak travel and $4.80 for rush hour. Because of TRIP II's ownership, related projects for consulting, construction, and improvements are commercial projects rather than public contracts.
Privatizing public infrastructure creates a business opportunity for investors and increasing commercial business for construction/maintenance firms, while limiting the Government's expenses. However even with oversight capability, it becomes harder for the Government to monitor and direct the future of key infrastructure.
Closer Look: Business Opportunities
GovWin is currently tracking public infrastructure protection and consulting projects which materialize throughout Department of Homeland Security (DHS), Army Corps of Engineers (USACE), and others. For instance:
DHS' Office of Infrastructure Protection (IP) recently worked a contract through GSA's MOBIS vehicle for Protective Measures Support Services for professional and technical services including the public infrastructure support activities such as: site visit teams, site and safety assessments, inspections, vulnerability testing and reporting.
DHS has taken the lead on critical infrastructure protection including both the professional assistance and security of these key locations:
One of the top opportunities within FEMA is the Public Assistance and Technical Assistance Contracts (PA TAC). PA TAC will provide consulting support services and assistance for preparing and operating disaster assistance operations specifically focusing on public infrastructure. This $725 million project is anticipated to award multiple contracts in FY09.
DHS IP is also preparing a multiple award contract for the watch desk and monitoring of critical infrastructure. Office of Infrastructure Protection Watch Desk and Operations Support Services contract will provide the planning, analysis, monitoring and surge support for field operations protecting America's key public infrastructure and installations. This $95 million contract is currently in development phases and procurement activity is anticipated in the near future.
The last example of potential work related to the planning, analysis and protection of public infrastructure will be recompeted through the Army Corps of Engineers in 2011:
Consultant Services for A-76 Competition Support provides the USACE consulting services when evaluating and deciding A-76 projects. This $6 million contract expires in 2011 and was previously set-aside for Service-Disabled Veteran-Owned vendors.
What's interesting about the increasing privatization of public infrastructure is the potential impact it could have on contracting around these projects. With the Government's role becoming more oversight than operational, more consulting and evaluation contracts can be expected. However, it remains to be seen how tightening budgets and efficient toll roads will counter the biggest complaint (which I've yet to mention).
And that is – do Americans really want key public infrastructure sold off to private equity groups and companies who sometimes include foreign investors? Either way, the debate has begun.