Tuesday, May 18, 2010

Massachusetts Court Strikes Down Public-Private Partnership

Strapped for cash to fund construction projects, it is becoming increasingly common for public agencies to enter into public-private partnerships to construct public facilities.  Private companies often get tax breaks on the projects.
Student Housing Deal:  In 2008, the University of Massachusetts Lowell made a deal with a private developer to construct university housing that the University would then lease.  However, after a bid protest that argued the University had violated competitive bidding requirements, the project was terminated.  That's when the developer who had been awarded the project, Brasi Development, filed a lawsuit.   

Violation of Competitive Bidding Laws:  On May 10, 2010, the Massachusetts Supreme Judicial Court ruled that the "project was indeed construction of a building by the university in the sense contemplated by the competitive bidding statute," and that the University had violated competitive bidding requirements.  The ruling overturned an earlier ruling by the Superior Court.   

For more information about the case:
Issues Public Agencies Must Address:  Public agencies contemplating public-private partnerships must be aware of competitive bidding requirements, whether there is a legal basis for such projects, and public perceptions about arrangements in which a private developer may profit at the expense of a public agency.  In some areas, labor unions have also raised concerns about whether prevailing wages should be paid to workers employed on public-private partnership projects.

National Council for Public-Private Partnerships:  According to the National Council for Public-Private Partnerships (NCPPP), "a Public-Private Partnership is a contractual agreement between a public agency (federal, state, or local) and a private sector entity.  Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public.  In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility."

Washington State:  In Washington State, the following may be of interest regarding public-private partnerships:
  • HB 1992, which was considered in 2009 and 2010, would have required the payment of prevailing wages on public-private partnerships.  The bill was not approved.
  • RCW 39.04.260 requires payment of prevailing wages on projects constructed by a private contractor when a public agency will rent, lease, or purchase at least 50% of the project.

No comments: