Unlocking billions of dollars of infrastructure funding capacity

The Washington Times ^ | September 13, 2017 | Charles "Skip" Stitt

[Tolerance Sucks Rocks]

The nation’s approach to managing public infrastructure is often inefficient. Best practices, such as life-cycle asset management and preventive maintenance, are rarely a priority. We can, however, unlock billions of dollars of infrastructure funding capacity now trapped in existing assets by improving how we build, operate and finance infrastructure.

While experts discuss the size and urgency of our infrastructure needs, the debates focus on how to pay for new infrastructure.

The Trump administration has identified public-private partnerships (P3) as a primary strategy. A majority of states and D.C. have statutes allowing P3s. Other countries have also adopted P3s as a strategy to develop and replace infrastructure. When implemented properly, the P3 model lowers construction costs, accelerates project delivery, efficiently transfers risk and minimizes life-cycle costs.

Many government officials have experience deploying P3 strategies to lower the cost of existing government operations — and then using those savings to fund new infrastructure. Savings are possible because a large, highly focused manager of roads, airports, harbors, utilities and parking systems has more access to capital, technology and best practices than many public agencies. Using the P3 process for existing government operations can create annually recurring savings to fund new infrastructure projects. These savings streams can support significant new infrastructure when leveraged.

Producing future infrastructure funding streams from P3-generated operating expense savings offers additional benefits. Well-managed P3 projects can deliver improved levels of service and ensure that assets are maintained more effectively. Given the enormous pension liabilities governments face, operating savings are a source of infrastructure funding we cannot ignore.

[babble-on]

In other words, let me get my hands on some government assets so me and my friends can get super rich and by the time people figure out that an unaccountable private company has screwed everything up we’ll long have been off to Costa Rica.

Public Private Partnerships, or what they used to call “graft.”

[topher]

Stop funding stupid sports with taxpayer dollars such as NFL and others — would also increase available funds...

[Rockingham]

So often that is the case. Public officials tend to get sold on the idea that a project gets done but they do not have to raise capital for it. Public-private contracts tend to be complicated and to have key aspects that are poorly understood by public officials and their staffs. The usual arrangement provides private investment capital but commonly dilutes public control, skims off guaranteed debt payments and profits for decades, and eventually saddles the public with large deferred maintenance and capital costs for an essential public facility. Traditional public bond financing is usually a better choice.

[Starboard]

Great comment!

You are absolutely right that such contracts tend to be complicated and to have key aspects that are poorly understood by public officials and their staffs.

In general, governments at all levels do not always understand the terms and conditions of the contracts they enter into with private contractors. The contractors have plenty of opportunity to shape the contract prior to award and they know how to “grow” the contract into even more work.

The government usually goes along with it because they don’t want to get into a work halting fiasco or worse, termination of the contract and the resulting need to go through the solicitation process again. So they usually cave to contractor.

[Colorado Doug]

Great way to add a new tax and rent back to us what we already paid for. On the bright side, at least some cronies get rich.

[BroJoeK]

Worth noting that our highways & bridges are in better condition today than they were, say, ten years ago.
But also more heavily used and it's surprising how quickly a once nice stretch of road can get worn down & beaten up.
So maintenance never ends.

Should also say: because of increased traffic, at least half, maybe 3/4, of Interstate grade highways need expansion & upgrades -- from four lanes to six, or six lanes to eight, eliminate those *+#* *^#*! clover-leafs, etc.

Point is: for all the work that has been, and is being, done vastly more needs to be planned.

Cloverleafs may be fine for little-used rural interchanges, but major urban highways need flyovers:

[Opinionated Blowhard]

“Unlocking” is the liberal way of saying soak the taxpayer.

[Tolerance Sucks Rocks]

eliminate those *+#* *^#*! clover-leafs

☑

[bert]

——Best practices, such as life-cycle asset management and preventive maintenance, are rarely a priority.——

In Tennessee, such management is in effect for interstate hiways. The money collected as taxes is actually spent on the roads and bridges.

In other states, the politicians misappropriate the funds for welfare projects that produce votes

[Rockingham]

Quite true. There are lots of ways to steal from government, but public contracting is one of the best. Even with modern bidding rules, the process is often a kabuki dance of prescribed moves that assures a bid award to a politically favored firm, followed by change orders and extra charges that fatten up the contract. Even with the best of intentions, part-time, politically compromised public officials backed by callow public administration school graduates are commonly unable and unwilling to recognize and combat the manipulations of experienced contractors.

Some years ago, a friend of mine ran for county commission and sharply criticised the bidding and award of a lavish and unnecessary architectural contract to a local firm for work on a new county jail. My friend nearly won the election, but voting irregularities in several precincts and in absentee ballots cost him the election. And his home was burned down while he and his family were at the courthouse waiting on the election returns. The fire was arson, arranged by the local sheriff who got a large slice of the graft on the jail contract, according to a private investigator who checked into the matter.

Washington D.C. is not the only swamp. There are local versions is virtually every state capital, county seat, legislature, courthouse, and city hall.

[Starboard]

Washington D.C. is not the only swamp. There are local versions...

*************

Certainly true. But the trough of money that flows through Washington is mind boggling. $474 billion (FY 2016) to be exact.

Contracting is a lucrative business and is one of the reasons why the DC metro area is so affluent. Maryland and Virginia are the #1 and #8 wealthiest states in the country.

https://www.usnews.com/news/best-states/slideshows/the-10-wealthiest-states-in-america?slide=4

[Rockingham]

Agreed. Nevertheless, as vast as the federal government is, at the local and state levels the astonishing rate of growth of government has also amplified and compounded the temptations and rewards of corruption. Moreover, at the state and local levels, public scrutiny and understanding are often weak and the specialized investigative and prosecution resources needed in public corruption cases tend to be inadequate or lacking. For antelope and crooks alike, avoiding a large herd can be a better strategy in that it also avoids the largest concentration of hunters.

[Starboard]

Moreover, at the state and local levels, public scrutiny and understanding are often weak and the specialized investigative and prosecution resources needed in public corruption cases tend to be inadequate or lacking.

***************

At the federal level, adequate resources are there for the proper scrutiny and/or prosecution of contracting “irregularities” but these enforcement capabilities are rarely used to crack down on unscrupulous behavior. Sure, every now and then there’s a high profile case exposing corruption, but for every one of those cases there is a multitude of other ones that escape attention and/or corrective actions.

Contracting offices in the federal government are often hesitant to confront contractors. They just don’t want to open the can of worms or get political blow back. The project offices often turn a blind eye toward questionable things because they just want the work done quietly, even if they contractor is ripping them off or not fully adhering to the terms of the contract. The project offices also fear having their own dirty laundry aired out.

Its interesting that problems exist at both the federal and state/local levels and go unaddressed, but for different reasons.

[Rockingham]

You have offered a distressing view of federal contract officials as often afraid to do their jobs honestly. Some federal agencies — Transportation, NASA, and the DoD, especially — seem to be at the particular mercy of contractor politics. Many NASA and DoD programs seem to be conceived mostly as hi-tech make work. For example, we built the Shuttle as a way to build the Space Station, which in turn provided the Shuttle with something to do.

[Starboard]

If you look at the egregious fraud in Medicare and Medicaid that has been tolerated for decades, with very little done about it, you get a glimpse into the widespread reluctance to investigate and prosecute obvious wrongdoing. Sad that so few are held accountable.

[Rockingham]

Quite so. I suspect that LBJ and the Democrats designed Medicare and Medicaid to be vulnerable to fraud through their “pay and chase” bill payment system. Adopted over much opposition from doctors, LBJ and crew no doubt knew that such loose accounting would help generate the lure of extra cash and campaign contributions to cement those programs into place. In addition, the details of the reimbursement rules for Medicare and Medicaid contain unusual generosity for various special interests, often inserted at the behest of a single key member of Congress.