September 17, 2019

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Insourcing for P3s

We have previously discussed how leveraging private-sector expertise and financing through a P3 can bring many benefits to the public, including faster delivery of new infrastructure, higher-quality maintenance and operations, and lower lifecycle costs.  However, in order to take full advantage of the P3 model, a government must ensure that it has the right internal resources to design and manage the project.  A P3 is not a substitute for poor planning, and the best P3s are the product of thoughtful and thorough preparation with the right combination of subject-matter experts.  Typically, a government will engage three types of consultants to plan and execute a P3 project: a legal advisor (to navigate regulatory hurdles and negotiate the critical project documents, which require a different risk allocation than typical public construction contracts), a technical advisor (to determine the technical criteria and design requirements for the project based on the particular asset class), and a financial advisor (to help negotiate business terms and ensure that the project yields the best value to the public).  Due to the unique legal, technical, and financial challenges of a P3 (which, by its nature, will include novel approaches in each category), outside expertise in each of these areas is critical to achieve success.   In fact, in all of the major local P3 projects throughout the nation that have successfully moved forward (including the UC Merced campus expansion, the Los Angeles APM, and the Long Beach Courthouse) the local government utilized experienced P3 consultants in all three areas.

However, in addition to the right mix of outside expertise, a government also needs its own experienced staff to help effectively launch and deliver a P3 project.    Although the consultants bring the specialized expertise required to launch and deliver a P3 project, the government also needs strong internal leadership to ensure that the project meets the needs of the public.  The U.S. Department of Transportation has a helpful P3 guide that discusses the different roles that should be played by outside advisors and internal staff, as well as the unique skillsets required.  Staffing a P3 project with experienced internal staff also sends a strong signal to the industry that the government is serious about delivering the project, which should encourage additional competition and ultimately lower the cost to the public.  Recently, Chicago Mayor Lori Lightfoot appointed an internal Deputy Mayor of Infrastructure, Anne Sheahan, to help shepherd the city’s upcoming infrastructure initiatives.  We hope that other jurisdictions will similarly prioritize infrastructure (which is truly in a state of crisis and staff the appropriate internal and external resources to make best use of the P3 model.

© 2019 Bilzin Sumberg Baena Price & Axelrod LLP

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About this Author

Albert Dotson, Bilzin Sumberg Law Firm, Real Estate and Land Development Attorney
Partner

Nationally recognized for his work on public-private partnerships (P3), Al's experience includes rail and transit facilities, airports, marinas, sports stadiums, convention centers, healthcare/life sciences facilities, educational institutions, water and sewer facilities, and parking structures.

Al is recognized throughout Florida for his work representing local, national, and international clients in responding to government contract solicitations and defending against, or prosecuting quasi-judicial and judicial bid protests.

305-350-2411
Associate

Eric Singer is an Associate in the Government Relations & Land Development Group. His practice focuses on government procurement contracts and the development approval process, including planning and zoning applications, government approvals and permits. Eric also represents clients in quasi-judicial matters and has handled land use cases in state and federal courts at the trial and appellate levels.

305-350-2354
Associate

Andrej Micovic is an Associate in Bilzin Sumberg's Land Development & Government Relations Group. He focuses his practice in the areas of government procurement and complex government transactions, including public-private partnership (P3) finance and general project finance. Andrej has substantial experience in the development, procurement, financing, construction, and purchase and sale of infrastructure and energy projects, in the United States and throughout Latin America, representing sponsors, issuers, borrowers, underwriters, lenders, purchasers, and sellers.

Andrej's...

305-350-2361