As New York and New Jersey continue to hash out funding for the Tappan Zee replacement, New York State Comptroller Thomas DiNapoli has issued a report exploring public-private partnerships as a way to finance the state’s infrastructure deficit. According to DiNapoli’s calculations, New York is on the hook for nearly $250 billion in rail and road improvements, and the best way to find the dollars for these upgrades may involve these controversial P3 partnerships.
The report itself is fairly technical and breaks very little new ground. In it, DiNapoli lays out the oversight challenges and economic hurdles P3 plans face, and he urges the state to ensure that any such partnerships “achieve the correct balance between public and private interests.” It seems though all but inevitable that P3s will have to enter the picture to help bridge the infrastructure deficit. I’ve long believed that adopt-a-station plans would help improve the cleanliness of New York City subway stations, but it will be a challenge to realize agreements that please the private investors and the public interest when the pricetag is a $16 billion one for a new bridge. Still, the report is worth a read. [Office of the Comptroller]
7 comments
How would the private investors get a return on their money? That’s what any private company, investor, or institution is going to want to know. Basically, there’s no chance of attracting major private investment in projects that can only lose money.
NY needs to find cheaper contractors to do the work for infastructure projects and should even threaten to use Chinese contractors, if necessary. If the costs of these projects don’t go way down, they simply will not happen because the state cannot raise taxes by 175% or create $20 tolls.
The problem is, in NY State, lowest bidder wins by law. All the GCs get together and make 1 bid under a “partnership”. If some fool tries to outbid the “partnership” the partnership will lowball it and make it up in cost overruns. If there is only 1 bid, well, thats not a competition. Somewhere, either MTA IG or Walder said in a report, the MTA is afraid of bidding, since there is only 1 bid ever, and if no bids come in on the contract at all, the MTA is in trouble and is then at the mercy of the 1 and only contractor. How about, if 3 bids don’t come in, nobody wins. Either the govt has to make the terms better for private industry, or its not getting done at all. There isn’t a construction labor shortage. Who built all the mcmansions and condo towers in the last decades real estate boom? Why is none of that labor force bidding on govt contracts? Its the govts fault.
Design-Build is one idea thrown around constantly, which is illegal in NY State. Perhaps its time for the govt to be its own contractor with its own construction equipment and labor force (un-pensioned, un-unionized of course, no 100K paychecks for manual labor), but thats doubtful if it cant get its current labor forces under control from pension and union negotiated benefits.
Lowest bidder? Lowest responsive bidder is more like it.
From NYS Office of the State Comptroller
http://www.osc.state.ny.us/agencies/gbull/g221.htm:
“ Section 163 of the State Finance Law (SFL) requires that contracts for services and commodities be awarded on the basis of lowest price or best value “to a responsive and responsible offerer.” Section 163 (9) f of the SFL requires that prior to making an award of a contract, each contracting agency shall make a determination of responsibility of the proposed contractor. ”
As with partnerships, or JVs, they are allowed, but not bid collusion. That will get you a visit form the State Prosecutor, maybe a perp walk, and your face splashed on the front page of the local tabloids with cheeky headlines.
Trying to get other GC’s in as subs will not go unnoticed. The bids are supposed to be vetted. If they (NYS DOT, NYC DOT, MTA, etc.) can’t spot the irregularities, something is wrong, or fishy, with the contracts department.
Example: With the PA, they have a “best buy” selection process, where they select for the best value. They are supposed to vet all the subs, and the cost & schedule of the work. Anything that pops out warrants scrutiny.
The construction firms are scrambling around for work. Companies that used to turn their head at govt projects are going after SCA and DASNY work. The contracts are going, and completing, for much less than just a few years ago.
lowest responsible and responsive bidder
There are times firms bid on a project to just to get their name out there and to gauge company prospects of getting such work.
And what exactly is the difference between bid collusion and a partnership? One being a secret, the other being open?
Although there are laws that attempt to get a “responsive” contractor, it is really up to the MTA to checkup on the bidder. A while back there was a SAS article on a report that many MTA sub/contractors were later turned out to be either ill-equipped, not-experienced, or lacked the funds to complete a job on time and within budget. MTA should have a system set up like the city’s contractor database or use a better background checking process.
Well on the other side of the pond, PPP did not work well for London’s transport system, as Transport for London earlier this year bought out the last private company that was to perform maintenance work for the London Underground. Under a conservative mayor too.
http://business.timesonline.co.....118759.ece