Public-private "partnerships" aren't partnerships but contractual relationships

I've written about this before, but it always bears repeating, especially as situations come up that illustrate the problems with so-called "public private partnerships," where governments contract with the private sector for financing, construction, and service operation.

To me, a "partnership" allows for flexibility and "continuous process improvement" oriented to achieving better outcomes.

On the other hand, a contract specifies the requirements and outcomes very specifically with no opportunities for change.

There are many examples of where the public benefit and opportunity is short-changed, because cities (1) sign exclusive contracts; (2) which often don't include provisions for revision based on changes in technology or circumstances; (3) often sign contracts that favor the for profit "partner" because as the counter party, for profits usually have more experience, expertise, and significantly greater resources, especially legal resources.

I have also discussed how shifting management of public spaces to allied nonprofits like business improvement districts has the potential to diminish democracy because typically the corporate structures of the nonprofit management entities don't include independent citizen representatives ("Testimony on adding residential buildings as paying members of business improvement districts in Downtown DC").

In response to the Sheffield situation discussed below, George Monbiot, writing in the Guardian ("Look to Sheffield: this is how state and corporate power subverts democracy") makes the point that contracting with third parties creates significant problems for democracy:

... in place of the old bureaucracy, it has created a state-corporate system more oppressive and intrusive than anything governments produced in the social democratic era. The hybrid nature of this system, protected from challenge by commercial confidentiality, property rights and civil law, places it beyond the reach of democracy.

The intermingling of state and corporate power allows corporations to harness the resources and protection of the state, and the state to hide behind its corporate partners. A classic example is the private finance initiative: a programme developed in the UK by the Conservatives but greatly expanded by Tony Blair and Gordon Brown. Under PFI, private companies finance and deliver public goods that governments would otherwise have provided.

We were told it would produce better services at lower cost, but the contracts have repeatedly put corporate demands ahead of public need. The debts afflicting hospitals and other parts of the public sector, as they are forced to keep paying for services they neither want nor need, were both foreseeable and foreseen.

I have also written about how private entities managing seemingly public spaces often need to engage in public planning processes when instituting changes, but typically they do not do so, such as in Reston, Virginia and Boston Properties' debacle in introducing paid parking ("Reston Town Center parking issue as a planning failure by the private sector").

Besides the obvious failures of Chicago in negotiating parking structure and parking meter operation ("Chicago's ongoing debacles: parking and governance") and DC's bus shelter contract--which wasn't terrible but in retrospect has a number of gaps--here are some current examples:

1.  Purple Line Light Rail, Suburban Maryland.  The design-build-operate contract between the State of Maryland and the Purple Line Partners consortium is very specific.  PLP is committed to only doing what's in the contract.  So projects that can better leverage the new transit infrastructure for other improvements across the transit network along with increasing and receiving more quickly economic development benefits are off the table.


Before and after:  Withens Avenue, Hillsborough neighborhood of Sheffield.  Photo: Sheffield Tree Action Groups.

2.  Sheffield, UK Public Space Maintenance Contract will result in the loss of thousands of trees.  In Sheffield, the local government signed a contract with Amey, a unit of the Spanish infrastructure firm Ferrovial, to maintain streets and public spaces.

In an extremely conservative evaluation of the risks present in the public space, conducted after the contract was signed, the firm determined that more than 6,000 trees needed to come down "because various individual trees contribute to unsafe conditions."  They've been taking them down, despite the reality that they aren't threats to public safety and despite the value of trees not only as an element of public space, but as a positive contributor to public health in terms of air quality effects.

According to Monbiot:

But, the council tells me, “alternative engineering solutions … are not funded within the contract”. So they cannot be applied, regardless of any cost savings, and regardless of common sense. The terms of the contract were locked in for 25 years in 2012, and cannot be changed. It specifies that the trees must be felled, so down they must come.

Nor can there be meaningful engagement with local people – that, too, would stand outside the terms of the contract. The council has claimed that the issue is too big and too contentious for a public consultation to handle. In a democratic system, big and contentious are generally considered to be reasons for consultation.

Such contracts need opt-out clauses and opportunities for public consultation. And I think, at least in the US system, because of the way the tree cutting is nonsensical, it would be challengeable in the US Courts.

Trolley buses are significantly quieter than diesel and hybrid diesel buses.  In some cities, like San Francisco, trolley buses enable service over steep grades that traditional engine-powered buses can't climb.

3.   Wellington, New Zealand to dump electric trolley bus system.  I wouldn't know about this except for e-correspondence with Nigel, who lives in New Zealand. 

There the problem derived from splitting up responsibility for the system into three separate tranches: bus service; electricity generation; and catenary infrastructure--putting the responsibility for maintaining the catenary on the local government, separating this from the revenue stream deriving from transit service.

Now that the catenary needs to be upgraded, the local government doesn't want to spend the money, despite sustainability concerns, they respond that they can use electric buses instead.

-- "Wellington's trolley buses take last ride after Transport Minister says he won't save them

An interactive kiosk that Civiq installed in the lobby of Miami-Dade’s County Hall, home to the busiest Metrorail station in the county. Miami Herald photo.

4.  Conflict between bus shelter operator Outfront Media and kiosk operator Civiq in Miami over installing kiosks next to bus shelters, competing for advertising. Bus shelter operation is the means for advertising companies to "deliver" eyeballs to advertisers by utilizing shelter walls for advertising display. 

Typically the contracts between a local government or transit agency provide "free" bus shelters in return for the ability to place advertising within the shelters.  Usually the contracts require exclusivity for the bus shelter/street furniture provider--in some contracts the company only provides bus shelters Clear Channel/Adshel), while other firms (such as Cemusa and JCDecauz) may provide bike shelters, news-stands, kiosks, and even bicycle sharing systems as part of a broader array of street furniture offerings.

Also some companies, to induce cities to sign contracts to allow for digital advertising, which allows for "putting more ads in the same amount of physical space," offered much higher revenue splits than were typical of analog-based advertising contracts ("Electronic billboards attractive to cities," San Diego Union-Tribune).

In Miami, Outfront Media (they also have the contract for advertising within the WMATA transit system) has the bus shelter contract, which until now, included the exclusive ability to put advertising in the public space--that is, property controlled by local government.  Civiq, one of a number of companies developing digital kiosks, got a contract to put kiosks at bus shelters.  The kiosks will provide information on transit schedules, local attractions, and include Wi-Fi points, paid for by sales of advertising.

Outfront says you choose: either the bus shelters stay and the kiosks go or vice versa ("Stay dry or stay online? At bus stops, it’s free Wi-Fi versus shelters," Miami Herald).

(Note that likely a similar conflict could occur in DC, if the smart kiosk operator  manages to get design approvals for their project, "Washington D.C. digital kiosks and sensors to harvest wealth of urban data," Architects Newspaper.)

Interestingly, the conflict also crosses jurisdictions, the City of Miami and Miami-Dade County for one. The Civiq contract is with the county.  The company needs to negotiate separate agreements with each city. (In the DC metropolitan area, each jurisdiction is separately responsible for bus shelters.)

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Separately, there is interesting coverage about failures in the development of the tram system in Edinburgh, Scotland. 

Former city councilor Gordon Mackensie testified that (1) city governments and councilors often lack the expertise to properly handle, construct, and oversee such projects; (2) when problems occur, political parties can be more focused on using failures to criticize and demean the party in power (e.g., "John Carson and Gordon Mackenzie: Is it time to Ditch the trams?," Scotsman, 2011), rather than focus on achieving the best possible public outcome.

The Edinburgh Tram system was delivered five years late, over budget, and with a shorter route than planned.

Mackenzie suggests that in Scotland (as in Ireland) perhaps a national authority should be responsible for handling such projects ("Tram inquiry: Council shouldn't have led such a complex project," Edinburgh Evening News).  That even a city government as large as Edinburgh didn't have enough countervailing power to be able to function as an equal party vis a vis the construction company building the system.

In the US context, I've suggested that perhaps metropolitan-scale authorities should take on such projects, although we have had plenty of contract management failures at all levels of government--local; regional; state; multi-state; and national--across the country.