Corps of Engineers explores public-private partnerships
July 10, 2014
WASHINGTON (Army News Service, July 10, 2014) -- The U.S. Army Corps of Engineers is exploring the possibility of partnering with the private sector for projects involving America's waterways and ports.
Jim Hannon, chief of Operations and Regulatory Division, U.S. Army Corps of Engineers, or USACE, spoke on Capitol Hill Thursday at a House Transportation and Infrastructure Committee roundtable. The panel examined the potential for public-private partnerships, also known as P3s.
P3 agreements are still in the "early stages of thinking," Hannon said.
"We've begun to really do the evaluation analysis of different ways and means and opportunities, but we haven't really found all the answers yet," he said. "This is really new for the Corps of Engineers as the way that we would enter into an arrangement, a partnership to execute this type of work."
Previously authorized projects are "prime candidates" for these partnerships, Hannon said.
The U.S. Army Corps of Engineers, he said, is comparing the traditional delivery model of projects to the different types that could be used with public-private partnerships.
There are still many areas that need further exploration, he noted, such as how the federal investment share of the project would be accounted for in the budgeting process.
The corps has learned very quickly that a partnership is a "business deal" in which investors rightfully want their payback over the years, just as an underwriter for a home loan expects it, he said.
"Certainly what we've seen as we've worked with states on toll roads, for example, that payback typically comes from a toll," he said. "For us, the Corps of Engineers, we would need the authorities to charge fees to retain to pay back the investor."
The corps would also have to work out the details of the project from its start to finish and the years beyond.
"We are looking at the different types of delivery models from a design-build-operate-maintain [model] that's done entirely private," he said, "or different models might be a design-build from the private perspective (and) operate-maintain through the traditional federal government."
"These are just some of the areas that we're continuing to evaluate, as well as the type of governance that would be set up to be able to manage one of these P3-type contracts."
There are benefits to having private investors, he noted. Projects could be delivered at a faster rate than just through federal dollars, and investors and communities could find beneficial uses from the partnerships.
For example, private investors have talked about using dredged material to make bricks that could be sold, he said. Farmers and other businesses and private citizens could all benefit from the improvements in the waterways and ports.
"One of the other things that we're really looking into and reaching out to private investors is to get a better understanding of what they expect when they're going to enter into one of these types of agreements," he said.
In a media roundtable last month, Lt. Gen. Thomas P. Bostick, the Army's chief of engineers and USACE commanding general, said the nation's aging infrastructure is in need of repair and that funding will have to come from outside the federal government.
"Our infrastructure is slipping," he said. "The federal government can't do this on its own. At this financial pace, there's only so much that can be done."
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