When you hear the phrase “public-private partnership” what’s apt to come to mind is a contentious public debate about a toll road to be operated on behalf of a state government or toll authority by a global infrastructure firm. Or perhaps the notorious parking meter privatization deal foisted upon Chicagoans by then-Mayor Richard M. Daley. But despite some occasional misfires, these types of deals, which seek to embrace private capital and private profit for the public good, continue growing in scope.
Also known as P3s, they were the topic of a recent panel discussion in Seattle during the American Society for Public Administration’s annual conference. And a Microsoft job training program for military personnel was front and center.
While still on active duty, soldiers at Joint Base Lewis-McChord can start transitioning into high-demand private sector jobs. The Microsoft Software and Systems Academy
gives military members the option of enrolling in software development, cloud administration and database administration courses while wrapping up their service.
Microsoft worked with schools already on base to start the program, updating their curriculum to align more closely with what today’s tech employers look for, said the company’s senior military engagement manager Joe Wallis.
He said the Department of Defense, which pays veterans’ unemployment benefits, supported the project, and employed graduates are earning an average salary of $70,000.
Microsoft hires about 25 percent of the course graduates, Wallis said, but other tech companies do as well. The program is slated to expand to a dozen more bases within the next couple years.
At the conference, Professor Justin Marlowe of the University of Washington’s Evans School of Public Policy and Governance talked about learning from today’s second- and third-generation public-private partnerships.
Doing What Each Does Best
He said P3s are about letting government and the private sector do what each does best. He described models where projects and assets like land are publicly owned, but private contractors are responsible for design, construction and maintenance. Rather than focusing on the asset itself, the public sector owner can focus on desired outcomes.
Marlowe told Lens that Washington has a rich history of public-private partnerships, citing the Seattle Parks system and McCaw Hall.
But some think Washington could do more.
Rep. Hans Zeiger (R-25) sponsored two P3 bills in the recent regular session, neither of which passed. One would have created a pay-for-success program to reduce juvenile delinquent recidivism. Pay-for-success programs, also called social impact bonds, are a P3 where government doesn’t pay for a service unless the private sector partner achieves certain outcomes. Marlowe said 17 other states have the programs.
“The kind of philanthropy, (and) investor class we have in our state would be a natural fit for a pay-for-success program,” Zeiger said, in an interview with Lens.
Another bill Zeiger introduced aimed to encourage public-private partnerships to take on non-toll transportation projects. Zeiger said he had small projects in mind, like adding coffee stands to park-and-ride stations or restaurants at ferry terminals. With declining gas tax revenues, he said, the state ought to take a look at alternate ways to fund transportation.
“Private finance hasn’t got a lot of attention, and it needs to,” Zeiger said.
P3 Opportunities Are ‘Fast And Furious’
“There’s a whole new world of opportunity that’s really fast and furious,” said conference panelist Rob Carty of public-private partnerships. Carty is director of career services and next-generation initiatives at the International City/Council Management Association. He presented research done on behalf of the city of Edmonton, Alberta, as they took their P3s from a “scattered to strategic” approach.
Fairfax County, Virginia was one of the few examples Edmonton found of similarly-sized public entities that had a program specifically for partnerships, rather than a mixture of P3s across different departments.
The county’s Office of Public Private Partnerships evaluates proposals for their benefit to the public and the private sectors based on priorities addressed, mutual benefits, and potential to leverage new sources, expand capacity or reduce costs.
“(People say) business just wants to make money. Well yeah, that’s what business does. The partnership has to be mutually beneficial,” said the office’s executive director and panel moderator Patricia Stevens. She said it was important to have a clear idea of the public value of each project.
One challenge of coordinating P3s was obtaining and tracking data after the programs got started, she said, as organizations might forget to communicate updates.
“You can either keep doing the work or you can chase down the results,” Stevens said.
Another challenge panelists mentioned was that projects the city owned, such as bridges and roads, could last many decades beyond the private partner’s contract for them.
“How do you honor the life-cycle of the assets and make the right decision for the life of the asset and not the contract?” Asked Scott Haskins, senior Vice President and Director of Strategic Consulting at the engineering company CH2M.
Seattle Public Utilities P3s A Boon For Taxpayers
Haskins previously worked for Seattle Public Utilities, and described the Tolt and Cedar Water Treatment Facilities projects as pioneering examples of a design-build-operate P3.
“It was turned over to the marketplace to innovate,” Haskins said. There were about a hundred criteria for contractors to meet regarding outcomes such as water quality, which were set above the required standards at the time. Ten years later, he said, rate-payers have saved about $100 million.