Top Ten Facts About PPP
1. Public-private partnerships are just what the name implies.
Governments often struggle to provide services to their communities because of the lack of expertise or available current technologies, and limited budgets. The public-private “partnership” is a contractual arrangement between government entities and private companies for the delivery of services or facilities. Public-private partnerships are increasing because they provide an effective tool for meeting public needs, improving the quality of services, and increasing cost effectiveness.
2. Public-private partnerships are more common than you may think.
Public-Private Partnerships have been in use in the United States for over 200 years. This contractual arrangement is often used for water/wastewater, transportation, urban development, and delivery of social services, to name only a few areas of application. Today, the average American city works with private partners to perform 23 out of 65 basic municipal services.
3. They are an essential tool in challenging economic times.
Even in the best of times, governments are challenged to keep pace with the demands of their constituencies. During periods of slow growth, government revenues are just not enough to meet spending demands, oftentimes necessitating painful spending cuts or tax increases. Partnerships can ease this burden by providing a continued or improved level of service, at reduced costs. And equally important, partnerships can also provide the capital needed for construction of major facilities. By developing partnerships with private-sector entities, governments can maintain quality services despite budget limitations.
4. Successful partnerships can lead to happy employees.
In many partnerships today, public employees are retained by the private-sector contractor, typically with equal or improved benefits. One of the greatest benefits for governmental employees is a wider range of opportunities for career growth. Private companies spend two to three times more on training and personnel development than their public-sector counterparts. This focus on employee development leads to greater personnel efficiency while maximizing job satisfaction.
5. Successful partnerships can lead to better public safety.
From Los Angeles to the District of Columbia, local governments have formed creative partnerships with private companies to enhance the safety of its streets and its citizens. By turning over the operation of parking meters or the processing of crime reports to private-sector partners, police officers can spend more time on the streets doing the jobs for which they are trained.
6. Partnerships give many children better educational opportunities.
In Washington, D.C., a public-private partnership was instrumental in building the first new school building in the District of Columbia in over 20 years. By working with a private real estate development company, the D.C. school system was able to build a state-of-the-art facility with a modern computer lab, gym and library. Today, school districts in several states are forming partnerships with private entities to build new schools. This is essential at a time when, according to the National Clearinghouse for Educational Facilities, student population increases far exceed the adequacy of current school buildings to accommodate them.
7. Drivers appreciate public-private partnerships.
These are not easy times for America’s roads and highways. Increasing numbers of vehicles mean more roadway wear and tear and greater traffic congestion. In California, Virginia and Washington, for example, private-sector companies are working with governments to build toll roads, making it possible to finance construction and upkeep without having to impose general tax increases. In jurisdictions nationwide, governments and private contractors are working together to build new roads and expand existing ones to ease traffic congestion.
8. Clean, safe water through public-private partnerships.
The stringent health and environmental standards of the Safe Drinking Water Act and Clean Water Act have caused problems for some local governments without the budget flexibility to make major capital improvements in water and wastewater facilities. Public-private partnerships have enabled the construction of state-of-the-art water management facilities, while using efficient operations to hold down costs to ratepayers and provide a way of meeting those “un-funded mandates” from the federal government.
9. Partnerships make the information revolution accessible to more Americans.
This is the age of information technologies, but there can be a hefty cost to get a system operating. Through public-private partnerships, many governments are now able to fully participate in “E-government” with their constituents, as well as effectively coordinate government activities and budgets. Better service, improved tools and cost savings are exactly what public-private partnerships are all about.
10. Governments themselves are the biggest supporters of public-private partnerships.
While there can be substantial misperceptions about the value of partnerships, a look at who endorses them should clarify the picture. Federal agencies, such as the Environmental Protection Agency, the Department of Defense, and the Veterans Administration, all use partnerships. The number of state and local governments using this tool is even greater. For example, the U.S. Conference of Mayors is enthusiastically working with private-sector providers to discuss ways to make partnerships more effective. Numerous surveys indicate why: governments traditionally realize cost savings of 20 to 50 percent when the private-sector is involved in providing services.
Questions and Answers About Public-Private Partnerships
Q: Why should governments turn to the private-sector to help perform services they have traditionally handled themselves?
A: Simply stated, public-private partnerships are just more effective. Creative government leaders understand that partnering with private contractors can improve operations and services without increasing taxes. Private companies have access to better rates and the latest technologies, and have the expertise to successfully meet environmental compliance regulations, while skillfully managing government projects. Public-private partnerships mean improved operations and services for tax payers at no extra cost.
Q: When services are contracted out to private companies, doesn’t that mean that public employees lose jobs?
A: This is definitely not the case. 2001 Department of Labor report found that virtually all affected public employees were either hired by the private contractors or transferred to other government positions. In fact, many private companies (like ESG) not only hire these existing employees as their own, but they actually offer their new employees great resources, opportunities for training, professional acknowledgement, and professional growth and advancement opportunities.
Q: When the private sector is involved, doesn’t that mean that citizens will eventually have to pay more for services?
A: Citizens actually will pay less for services, and even more interestingly, with a public-private partnership, extra major projects can often be undertaken at little or no cost to the public. For example, in the public-private partnership that rebuilt Washington, D.C.’s landmark Union Station, multi-million dollar improvements were completed without using a dime of taxpayer money. In part, the private contractor is recouping costs from rents paid by retail shops in the facility. In cases where there have been rate or tax increases, these resulted from upgrading or expanding systems under the terms of the contract signed between the public and private partners, so tax payers receive much more for their service dollars.
Q: Don’t private companies take short cuts in providing services in order to increase profits?
A: Governments are increasing their partnerships with private contractors because their constituencies can then benefit from high quality of services without experiencing an increase in taxes. Private-sector partners are more able to practice cost efficiencies to hold down expenditures, while taking advantage of additional revenue streams, than governments alone. Private companies are able to provide better services for less.
Q: Aren’t private companies less accountable than governments to the public?
A: Actually, the opposite is true. Private companies involved in public-private partnerships are much more accountable because they not only answer to the governments that hire them, but also to various regulators, to the Securities and Exchange Commission, to Congressional oversight committees, etc. Plus, their actions are scrutinized by the media. Private companies work extra hard to make sure the public is happy with their services, and because of this, are often much more accountable than governments acting alone.
Q: Isn’t there a danger of corruption when private companies are involved in providing public services?
A: The only way private companies can achieve long-term success in partnering with governments is to insist on quality, value and dependability in the services that they provide. Private companies are held to very high standards when complying with regulatory requirements, so regulatory bodies tend to enforce regulations more tightly with private contractors than they do with government agencies. As a result, both private companies and government officials are scrutinized and held accountable, which minimizes the opportunities for corruption.
Q: Will the need for public-private partnerships increase, or will we see fewer of them as the economy improves and governments become less revenue-strapped?
A: First, public infrastructure and service needs far exceed the capability of government budgets to meet them. In education, for example, the American Society of Civil Engineers reported that 75 percent of America’s school buildings are inadequate to meet student needs. To close this gap would require a capital investment of $3,800 for every student in the United States. Even in better times, school districts won’t have the funding to meet this need. This is true in virtually every area of public life, from highways to waterworks. Public-private partnerships enhance government resources and capability to address pressing public needs.
Second, public-private partnerships aren’t just about budgetary issues. Governments are turning to partnerships because they see that merging the resources of the public- and private-sectors makes possible improved quality of services provided to citizens. The U.S. military, for example, has developed partnerships to build housing for enlisted personnel, resulting in higher-quality living quarters without a large impact on the defense budget.