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Previous Section | Table of Contents | Next Section Executive Summary"Partnerships mean all things to all people." - Dr. Richard John, Volpe Center Director Realizing that continued progress in science and technology is essential to the national interest, as well as to other levels of government, academia, and the private sector, public/private partnerships (PPP) are one important way to harness investments in science and technology in order to achieve innovation through collaborative arrangements. Market globalization, increased competition, environmental concerns, and public health imperatives demand continued investment in the development and commercialization of new technology. All transportation programs irrespective of function – ranging from construction, operations, and research and development, to education – carry a number of financial, legal, and institutional risks that are amenable to solutions involving PPPs. Following earlier Volpe Center reports on PPPs, this report delves somewhat deeper into the rationales for partnerships, and their role in promoting innovation in transportation across all modes. It also scrutinizes the very definition of partnerships with an eye toward better accountability of their goals and results. Nearly 5 years ago, former Federal Highway Administration (FHWA) official Steve Lockwood asked, "Public/private partnerships are the answer; what is the question?"1 Judging by the sheer volume and diversity of partnership arrangements, the transportation community now knows a little bit more about the question, yet, ironically, is less sure about the answer. Precisely, what do we mean by the term partnership? In addition to such an embryonic concern, there are many other issues and meta-issues which challenge the formation and successful execution of PPPs. Mapping these issues through references to actual partnerships and presentations given at a May 2001 Symposium, this document offers insights into their roles and interactions. Primary discussion points and subsidiary debate comprised both the stated agenda items and other emergent topics. These included:
Big Picture In simplest terms, PPPs are an approach to problem solving whereby resources or capacities of different organizations are pooled for a common purpose. Variations on this theme are common. In the two previous Volpe Center reports and in the recent national symposium, the range of such partnerships was shown to be broad, often defying attempts to neatly categorize them. In many ways, PPPs and their embedded goals are the natural outgrowth of three trends established in the late 20th century: explosive development of technologies, democratization of information, and devolution of government. Still, persuasive evidence exists that partnerships, in all their configurations, are effective instruments for the times in which we live, and the complex issues that we face. Although much of what determines a successful partnership is simply the execution of good business practices, good management, and reliable resources, PPPs as an entity still possess a number of characteristics unique to their members and to their individual goals. To accurately measure the success of partnering arrangements, one must also weigh the ability of the partnership to conquer institutional and financial barriers along the way toward achieving common goals of the project. Outwardly, prospects appear hopeful for continued growth and value of PPPs. Favorable factors include tightening fiscal environments, increasingly complex administrative processes, and more trusting relationships among potential partners. Paradigms On May 15-16, 2001, the Volpe Center hosted a National Symposium on PPPs in transportation — a midstream assessment of transportation partnerships. Sessions covered the rationale for partnerships, details on successful ongoing initiatives, discussion of institutional barriers, and analysis of future opportunities. Speakers also imparted guidance and insight into PPPs and their benefits to transportation and other sectors. Somewhere between the first day’s presentations and the concluding session on Day 2, it became evident to attendees that partnerships, however elusive they are to classify, are anything but an undifferentiated mass of projects. Sparking lively debate about paradigms, models, and practices, the discussion stimulated the audience to think in terms of the philosophical and conceptual underpinnings of PPPs. An initial roundtable discussion set the tone by posing a series of questions designed to elicit discussion and to navigate the spectrum of PPPs as gleaned from speaker presentations. One panelist spoke of the need to develop a new paradigm or a model program for PPPs. Others offered their thoughts on PPPs from the perspectives of a private sector firm, a national nonpartisan organization, and a Federal agency. Expressing general agreement on the difficulty of defining a PPP, panelists emphasized the need to think of different classes of partnerships. Each should serve specific functions, developing common goals, working through obstacles from well designed plans of action, and possessing the commitment and vision to last the duration of the project. What Works? Reflecting the enormous impact of weather events on transportation, weather-related projects have recently emerged as some of the more successful examples of PPPs. Participants learned about experiences of the Foretell and the Advanced Transportation Weather Information System (ATWIS) partnerships2", two of the leading collaborations for traveler information systems that have capitalized on recent advances in weather forecasting and technology, combining it with a growing market for accurate and highly localized road weather information. Similarly, aviation weather programs, publicly entrenched for a longer time, have also benefited from partnerships such as the Integrated Terminal Weather System (ITWS). These innovative partnerships and others like them promise to increase the safety and efficiency of traffic on U.S. highways, intercity rail, urban transit systems, coastal shipping routes, airways, and pipeline networks. Even within the meteorological arena, the once clear public/private boundaries have become more indistinct. Partnerships have become a necessary method for achieving mutual objectives. The profusion and miniaturization of technology has enabled private participation on a scale almost unimaginable in the past. Weather data now collected and controlled by the Federal Government have social implications for basic research, preventing loss of life and injuries, property damage, and enhancing economic efficiency. With its growing consumption of these data, the transportation community has a personal stake in the outcomes of ongoing policy debates. Barriers Typical barriers to PPPs include consensus building, overcoming financial and institutional obstacles, and negotiating differences in culture. The moderator offered several recommendations to ensure that fiduciary interests of the public sector are maintained in dealings with companies operating with dissimilar motivations. Suggesting a streamlined approach to launching and financing, the moderator became the first of several panelists to recommend the use of "other transactions," an innovative finance technique that relaxes the Federal Acquisition Regulations (FAR) procedures. In discussions of partnering relationships and ethical considerations, and presentations on consensus building and the profit needs of private firms, all panelists emphasized the need for due diligence and issue resolution prior to project initiation. One speaker, particularly citing the critical importance of developing a PPP business plan or master plan, later echoed many of these same points. To stimulate job creation and growth in the tax base, an economic development partner should work in cooperation with local government and industry officials. Several themes, including the importance of transportation to economic development partnerships, the importance of relationship building, and the need for master planning, emerged during this phase of the symposium. Challenges and Opportunities Challenges inherent in most partnership arrangements also present innovative opportunities that might otherwise go unfilled. Panelists in the final session offered examples of such opportunities, which together give an encouraging picture of the PPP environment going forward. One speaker provided strong evidence of how PPPs can address options for economic development under military base closures. Speaking for the commercial meteorology sector, another panelist discussed emergent opportunities for the management and response to specific regional weather problems such as winter storms in the Northeast United States. A third speaker articulated efficient, new methods of air passenger travel that capitalize on high technology, high bandwidth applications in general aviation aircraft. Conclusions Appealing to participants to summarize what they heard, the final session sought to answer some of the questions posed in the introductory roundtable table discussion. It revisited the principal themes underlying the symposium, drawing liberally on new evidence and ideas that surfaced during the proceedings. Evidenced by presentations, it is apparent that PPPs are working reasonably well, although standards for success may not apply across the board. Many questions remain. Should PPPs be spoken about as a single entity? How many classes of partnerships, or definitions, can be identified? How PPPs can be improved in general, or those PPPs specific to transportation? Should a model program(s) be developed? How can the more widespread use of innovative finance programs such as "other transactions" be promoted? Aside from recommendations to persevere and work hard – the one thread common to all PPPs – how may successful tactics employed by one jurisdiction or consortium be transferred to another? In view of the many species and subspecies of partnerships, is it even productive to generalize? Should there be a better definition of PPPs? The answer is evidently yes, but the details are not so obvious. Should there be a model program for PPPs, or should more space for PPP innovation be allocated? Should the principles stemming from the original concept of business partnerships be more rigidly adhered to as outlined by one of the speakers? The nomenclature of partnerships may now distort legitimate attempts to understand and evaluate project goals and project outcomes. Are many arrangements that are now labeled partnerships simply a convenient but cynical public relations spin? The term "partnership" often proves elusive in its definition. Financial arrangements, a critical part of many conventional partnerships, are not always explicit and may not even be a factor in others. Language in some types of partnerships reads more like a treaty than a delineation of terms for sharing resources and realizing joint objectives. One speaker remarked, "I am struck by the awesome variety of partnerships, struck by the need for some of them for a model." Another reflected that realistically there probably can be no "one size fits all" model for PPPs. Some legislative programs, such as TIFIA,3 exist to resolve a set of programs that cannot be funded by normal mechanisms. Perhaps there is no single model, but rather a variety of programs where ingenuity can overcome formidable barriers. Maybe there is not a single generic model, but a set of generic models. Regarding partnership policy and the implementation of policy, a speaker theorized that there probably is not going to be one piece of legislation that will make all PPPs happen. There is a need to tailor each PPP to its own individual situation. Most participants agreed that the major drivers of partnerships are failures in existing markets, but the lessons of past partnerships, while instructive, are limited in what they can teach us. As one speaker speculated, "When we talk about PPPs, we get into new legal and ethical frontiers that we have yet to dream about." Innovative finance mechanisms, such as Other Transactions,4 are examples of this type of frontier. Requiring attention on a case-by-case basis, issues pertaining to finance, law, and institutional arrangements, are often obstacles to progress and success. To lessen their effects, several speakers advocated the construction of a solid business plan or master plan. Although it is important that a PPP be flexible, it is equally essential that it be airtight. It is critically important that stakeholders in a partnership do as much work as possible ahead of time. To quote an especially germane remark by Volpe Center Director, Dr. Richard John, "You can’t just wave a wand and say we have a PPP and all the problems will go away… Actually all the problems are just beginning." His observation underscores a requirement of successful PPPs – the incredible amount of preparation work that is necessary. To engineer success, stakeholders and technical experts need to keep working very hard at the grass roots level. Based on the insights gained at the Volpe symposium, a variety of areas appear to be productive areas for further research activity. These include following up on ideas such as the optimum PPP model(s), respective roles and risk/reward horizons of members, programmatic innovations and financing options, planning needs and evaluation methods, and ethical considerations in the deployment of PPPs. More complete knowledge of the costs/benefits and risks/rewards of PPPs also will be useful input for the government to increase benefits and decrease risks within the parameters of a healthy public policy. Innovative finance techniques will help to carve new space in which PPPs can flourish. There are also legislative approaches to producing an environment favorable for development. These include, for example, the Interpersonnel Exchange Act, and other types of legislation that could help to create and foster future partnerships. |
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 U.S. Department of Transportation |