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Highway Public-Private Partnerships: More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest

GAO-08-44 Published: Feb 08, 2008. Publicly Released: Feb 08, 2008.
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Highlights

The United States is at a critical juncture in addressing the demands on its transportation system, including highway infrastructure. State and local governments are looking for alternatives, including increased private sector participation. GAO was asked to review (1) the benefits, costs, and trade-offs of public-private partnerships; (2) how public officials have identified and acted to protect the public interest in these arrangements; and (3) the federal role in public-private partnerships and potential changes in this role. GAO reviewed federal legislation, interviewed federal, state, and other officials, and reviewed the experience of Australia, Canada, and Spain. GAO's work focused on highway-related public-private partnerships and did not review all forms of public-private partnerships.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
A reexamination of federal transportation programs provides an opportunity to determine how highway public-private partnerships fit in with national programs as well as an opportunity to identify the national interests associated with highway public-private partnerships. In order to balance the potential benefits of highway public-private partnerships with protecting key national interests, Congress may wish to consider directing the Secretary of Transportation to consult with them and other stakeholders to develop and submit objective criteria for identifying national public interests in highway public-private partnerships. In developing these criteria, the Secretary should identify any additional legal authority, guidance, or assessment tools required, as appropriate and needed, to ensure national public interests are protected in future highway public-private partnerships. The criteria should be crafted to allow the department to play a targeted role in ensuring that national interests are considered in highway public-private partnerships, as appropriate.
Closed – Implemented
In 2008, GAO reported that highway public-private partnerships provide advantages for state and local governments, but that potential costs and trade-offs exist. GAO concluded that while the Department of Transportation (DOT) had done much to promote the benefits of public-private partnerships, it had done comparatively little to either help states and localities weigh the potential costs and trade-offs, or to assess how national and public interests might be protected in these arrangements. GAO recommended that Congress direct the Secretary of Transportation to identify national and public interests in highway public-private partnerships and to develop, as appropriate, guidance or assessment tools as needed to assist states and localities weigh potential costs and trade-offs and ensure public interests are protected. On July 6, 2012, President Obama signed into law P.L. 112-141, the Moving Ahead for Progress in the 21st Century Act. The Act directed the Secretary to (a) compile and make available on its website best practices on how states and localities can work with the private sector on transportation projects, (b) provide technical assistance to states and localities regarding proposed public-private partnership agreements, and (c) develop standard public-private partnership transaction model contracts for the most popular types of transportation public-private partnerships. GAO's work helped to bring about congressional action to compel DOT to take steps to better ensure that public interests are protected in public-private partnerships. .

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Transportation To ensure that future highway public-private partnerships meet federal requirements concerning the use of excess revenues for federally eligible transportation purposes, the Secretary of Transportation should direct the Federal Highway Administrator to clarify federal-aid highway regulations on the methodology for determining excess toll revenue, including the reasonable rate of return to private investors in highway public-private partnerships that involve federal investment.
Closed – Not Implemented
According to DOT officials, the Department does not plan to imitate regulatory action to clarify the methodology for determining excess toll revenue, including the reasonable rate of return to private investors.

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Topics

Cost analysisHighway planningInterstate highwaysPerformance measuresPrimary highwaysPublic roads or highwaysRisk managementState highwaysStrategic planningToll roadsTransportationTransportation costsTransportation industryTransportation planningTransportation policies