Anika Guevara is has a B.A., Florida International University (2012); J.D., St. Thomas University School of Law (2015).
Anika Guevara is has a B.A., Florida International University (2012); J.D., St. Thomas University School of Law (2015).
Deteriorating infrastructure conditions in the United States beg for an increase in funding, which, due to the current economic conditions, would be difficult to attain without the help of the private sector.1 Public-Private Partnerships (“PPPs” or “P3s”) are a way for federal, state, and local governments to fund infrastructure projects that they may not otherwise be able to afford.2 However, PPPs are not likely to solve the problem of funding infrastructure on the scale that is needed until there is a statutory definition and regulatory framework for PPPs, clarifying the nature of these agreements and the associated legal ramifications.3 When implementing PPPs, the following questions arise and there are no clear answers: (1) are PPPs subject to procurement laws;4 (2) are PPPs subject to prevailing wage laws;5 (3) are PPPs subject to § 1983 claims;6 and (4) are PPPs subject to bonding requirements.7
To answer these questions, this article explores the deficiencies in governmental regulations regarding PPPs and the associated legal ramifications.8 Part II of this article lays the foundation for understanding PPPs by defining the term and providing a historical overview of their development.9 Part III serves to explain the difference between PPPs and privatization, clarifying a common misconception – PPPs are not a form of privatization.10 Part IV explores the infrastructure crisis facing the United States, explaining why this crisis is the driving factor responsible for the increase in PPPs across the nation.11 Part V examines the various legal issues that arise out of the federal government’s lack of regulation in the area of PPPs,12 including the conflict between PPPs and procurement law,13 the effect of prevailing wage laws and other laws on PPPs,14 and the applicability of bonding requirements.15 Finally, this article provides a solution to the legal issues discussed, recommending that the federal government enact PPP-friendly legislation that defines the term and sets certain parameters in order to serve as a framework for future PPP agreements.16
II. Definition and Development of Public-Private Partnerships (PPPs)
PPPs are contractual agreements between the public and private sectors.17 These agreements allow a governmental agency to contract with a private entity in order to renovate, construct, operate, and/ or manage a public facility.18 Under this broad definition, PPPs appear to encompass a wide range of contractual agreements.19 Contrary to popular belief, however, not all contractual relationships between public and private entities are considered PPPs.20 PPPs differ from ordinary contractual relationships in that all partners are expected to contribute resources to the project, whether it be money, time, or expertise.21 Furthermore, PPPs involve a sharing of the risks; the public sector does not transfer all the risks as is generally done with contractual relationships.
Although their name contains the word “partnership,” PPPs are not the equivalent of commercial partnerships.22 For one, PPPs are contractual agreements that can only be formed between public- and private-sector partners.23 Additionally, with PPPs there is generally no co-ownership; often, the private-sector partner has complete responsibility over the project, and complete access to the revenues, for a certain duration of time before handing the project back over to the public entity.24
Despite the federal government’s failure to provide a statute that fully defines the term “public-private partnership,” some federal departments attempt to provide what seem to be pseudo definitions for the term.25 Most of the time these definitions merely mention the term while not fully defining it.26 Without a consistent federal definition, states are left to create legislation to fully define the term.27 In Florida, for example, the only statutory definition for the term “public-private partnership” is found in the Community Workforce Housing Innovation Pilot Program.28 The Florida Legislature defines the term as any joint venture or contractual agreement between a governmental agency, municipality, city, or otherwise and at least one private organization, such as a non-profit or a corporation.29 Texas, on the other hand, defines the term in its Transportation Code.30 The definition is similar, but the state drastically reduces the availability of PPPs by specifically defining the sections of highway and interstate that can become subject to such a contract.31
Private parties have been involved in governmental infrastructure since the late 1700s.32 After a decline in the late 1800s and early 1900s,33 PPPs have recently resurfaced with great voracity.34 Since 1985, there have been over 375 PPP infrastructure projects in the country.35 At least thirty states now have “PPP enabling legislation for highways, roads, and bridges.”36 Florida, California, and Texas have been at the forefront of the PPP movement, enacting a large percentage of the nation’s total PPPs.37 Those three states, combined with Colorado and Virginia, are home to a majority of the nation’s transportation PPPs.38
The traditional view that public highways were to be built and maintained by the federal government prevented many states from inquiring into the involvement of the private sector.39 Since the enactment of the Federal Aid Highway Act of 1956,40 however, many states began contemplating the idea of involving the private sector in highway construction.41 In recent years, approximately thirteen states have entered into PPPs in furtherance of a variety of transportation projects.42 Because PPPs have proven successful with the transportation departments of various states, the United States Department of Transportation has begun to promote and expand the use of PPPs by forming a Public-Private Partnership Task Force.43 The Task Force is charged with assisting states in implementing PPPs to solve their infrastructure needs.44
III. Differences between Public-Private Partnerships and Privatization
PPPs and privatization have one thing in common – the involvement of the private sector in public infrastructure.45 Privatization refers to the transfer of ownership, specifically ownership in government owned or operated infrastructure,46 from a public entity to a private entity47. Such occurred in 1998 when the federal government sold its naval petroleum reserve to a private company, deciding they no longer needed to be in the oil business.48 Privatization removes governmental control; the government ceases to own and oversee the privatized enterprise.49 Consequently, privatizing a public sector brings great risk both legally and financially, especially for the private party.50 Preventative maintenance, wear and tear control, and compliance costs are examples of financial risks and obligations transferred to the private entity whenever a service or project is privatized.51
PPPs differ in the amount of control and ownership that is turned over to the private sector.52 With PPPs, ownership remains with the public agency but they contract out control of the enterprise for a certain duration of time.53 For example, the City of Indianapolis purchased a water company and contracted out the management, maintenance, and customer service to a private company.54 If the private partner does not abide by the contractual agreement, it can be rescinded.55 Additionally, the structure of PPP contracts can allow the public entity to stay more involved with the enterprise, unlike with privatization.56
PPPs present a novel solution to the current infrastructure crisis the United States faces today without privatizing the public asset or enterprise.57 PPPs provide numerous benefits.58 First, they allow for rapid completion of infrastructure projects.59 Second, PPPs’ track record of on-time and on-budget completion is unparalleled.60 Third, PPPs transfer some of the projects’ financial risks to the private sector.61 Fourth PPPs can lower the costs of infrastructure.62 Fifth, the contractual nature of PPPs allows for the implementation of certain satisfaction standards, thus, ensuring higher customer and consumer satisfaction.63 Sixth, PPPs allow the public sector to better and more quickly achieve the social value and benefits they are seeking.64 Although PPPs are not the sole solution to the infrastructure crisis, when combined with government funds, these partnerships become the key to financing many infrastructure projects.65
The country’s current economic conditions have led to an increasing gap between the funds available and the amounts needed to build and maintain infrastructure.66 PPPs have been successful in many states and have facilitated the construction of projects, which wouldn’t have been built as quickly, or at all, without additional funds from the private sector.67 Thus, PPPs are an innovative solution to build, maintain, and improve certain aspects of infrastructure such as transportation, bridges, and mass transit.68
IV. Infrastructure in the United States
Infrastructure refers to the permanent facilities on which commerce moves and people travel; some examples of infrastructure are public roads, bridges, airports, seaports, and public waterways.69 It has become extremely difficult to bridge the gap between the infrastructure needs in the United States and the money that the government has available and is willing to allocate for updating, fixing, and renovating infrastructure.70 The United States is in desperate need of money in order to meet the pressing needs for infrastructure maintenance and development.71 PPPs might be the solution to the infrastructure problem, but the United States has not been as quick to adopt them as other countries.72
PPPs have excelled globally.73 The European Union, Canada, South America, Australia, and Asia are examples of this global trend.74 In the past twenty years, more than 1,300 partnerships were formed and are now valued at approximately $250 billion.75 The United States is falling behind in the implementation of PPPs.76 Many countries, particularly countries in the European Union,77 have enacted statutory frameworks that regulate and define PPPs.78 The United Kingdom, for example, has experienced great infrastructure improvements after enacting PPP-friendly legislation.79
Overall, “America’s Infrastructure G.P.A.” is currently a D+.80 If the United States wants to fix its infrastructure crisis, then it needs to spend approximately $3.6 trillion by the year 2020,81 a goal that increasingly appears impossible to achieve. There are approximately 4.07 million miles of road in the United States, and only half of these roadways are paved.82 Currently, about 1/3rd of these roads are in poor or mediocre condition, costing U.S. motorists an average of $320 per year on operating costs and repairs.83 The roads’ poor condition not only causes increased costs for motorists but also poses serious safety concerns – the poor road conditions cause one-third of all traffic accidents in the United States.84 Similarly, mass transit, or public transit, is in desperate need of upgrading.85 “[D]eficient and deteriorating transit systems cost the U.S. economy $90 billion in 2010.”86
Similarly, obsolete and dysfunctional bridges account for one-third of the nation’s bridge total, adding to the current infrastructure crisis facing the U.S.87 The average age of a bridge in the United States is 42 years old, leading to 1 in 9 being classified as structurally- deficient.88 Although the condition of the nation’s bridges may not be as dire as that of the roads or public transit systems, the current funding that the states receive from the federal government is not sufficient to repair or replace the nation’s largest bridges, which carry most of the traffic.89 The United States is currently spending $12.8 billion per year on bridge maintenance and improvements while $20.5 billion is needed.90 Meanwhile, “[a]t the state level, 22 states have a higher percentage of structurally deficient bridges than the national average, while five states have more than 20% of their bridges defined as structurally deficient.”91
Not only are roads, bridges, and mass transit slowly deteriorating, the railroad system has also felt the ripple effects of inadequate infrastructure funding.92 Due to an increase in both energy efficient freight service and city-to-city passenger travel, federal and local governments have increased the amount of funding available to railroads.93 However, despite the federal government’s efforts to fund railroads, a gap between the amount given and the amount needed remains.94 If the condition of the nation’s infrastructure system continues to deteriorate, the strain placed on the national economy will continue to increase.95
An example of a state that currently has average-rated infrastructure that is predicted to decline in the coming years without proper investment is Florida. Florida’s infrastructure condition is not far above the national average with a “report card grade” of C-.96 Transit is one of the better infrastructure components of the state, and it is likely to see improvement as the economy improves.97 Additionally, Florida’s roads and highways are in slightly above-average condition,98 but the current funding is not sufficient to meet long-term transportation needs.99 Similarly, the condition of the state’s bridges is currently above average; however, their condition is predicted to decline to average within the next few years.100 Many of Florida’s other infrastructure areas received grades ranging from mediocre to poor.101
In order to compensate for the lack of funding from the federal government, states have turned to unorthodox methods in order to bridge the gap between the funding received and the funding needed to operate and maintain their infrastructure.102 While several state legislatures have increased vehicle, sales, and gas taxes, others have turned to PPPs as a source of funding for infrastructure projects.103 Currently, according to the Transportation Funding and Finance Legislation Database,104 there are thirty-five bills that have been enacted in sixteen states allowing various types of PPP agreements.105 Instead of providing a uniform method for the enactment of PPP agreements, the bills enacted by said states are fragmented bits of what has the potential to be a full statutory section on its own, much like the UCC.106 While uniform and comprehensive legislation would provide a stable, clear governing body of law, the bills passed by these states are under- encompassing, to say the least.107 The Alabama bill, for example, allows the public and private sector to enter into agreements for constructing public improvements, but it does not specify the type of agreement or the method of operation.108 Similarly, the Indiana bill only addresses PPPs in regards to public mass transportation.109 While the thirty-five bills that were passed indicate a positive trend, the work is far from complete as fragmentation in legislation continues.110
V. Legal Issues with Public-Private Partnerships
The United States’ law governing PPPs is extremely fragmented, with departmental-specific definitions and regulations existing in various federal agencies.111 As a result, some states, including Florida, Virginia, and Maryland, have begun enacting, or have enacted, PPP- friendly legislation.112 The importance of PPP legislation lies in the creation of a set of rules by which public and private partners may reach an agreement that is equally beneficial, taking into account all relevant legal and financial matters.113 Enacting a federal statute that fully defines and regulates PPPs could serve as guidance to the states, helping them determine how they should deal with the legal issues that arise out of PPP contracting.114 The fragmented system currently in place has created confusion in the area of procurement law,115 but it has also increased litigation116 involving prevailing wage law117 and constitutional law.118
A. Procurement Contract Law
There is a misconception that all PPPs are free from the constraints of procurement law.119 That, however, is not always the case.120 United States procurement law is heavy-handed when it comes to the issuance of government contracts.121 Although federal procurement law does not directly affect state contract law,122 PPP construction projects have been challenged for failing to comply with stringent procurement procedures.123 Private companies, when entering into contracts with other private companies, are not obliged to comply with the rigorous competitive bidding processes required by federal procurement law.124 On the other hand, public entities are severely restricted by procurement laws and stringent contract bidding procedures.125 Thus, when the contract is one between a public and private entity, that contract is generally subject to procurement law and contract bidding.126
Procurement laws, however, usually only apply to projects that are government funded, making it unlikely that privately funded PPPs would be subject to procurement law.127 Unfortunately, the determination is generally not that easy.128 The first step in determining whether procurement laws apply to any given PPP is to figure out if the project in question involves the construction of a facility for public purposes and whether it was built with government/ public funds.129
The fragmentation of PPP regulation has led to various interpretations by the courts in determining whether the infrastructure in question is or was constructed for a public purpose and with public funds.130 Some courts have turned to the body of the contract agreement in order to determine if it was a public work built with public funds.131 Other courts look solely to the source of funding and whether funding comes from governmental or nongovernmental sources.132 Agency is another way in which the private partner may be subject to procurement laws.133 If a court finds that the private entity is an agent of the public entity, the private entity will be subject to procurement laws.134 Finally, the courts of various jurisdictions have said that delegation of projects from the public partner to the private partner does not avoid procurement and competition procedures.135
Due to the complexity of procurement laws and the wide variety of PPP models, it is difficult to apply the existing procurement regulations to modern and emerging PPPs.136 The enactment of a universal regulatory body would do away with the fragmentation of PPP interpretation amongst the different states and agencies.137 Such regulatory body would make PPP contract law more predictable and easier to follow.138
B. Prevailing Wage Laws
The confusion surrounding PPPs has also left private partners wondering whether they are subject to prevailing wage laws.139 The Davis Bacon Act140 requires employers to pay their employees prevailing wages, as established by the Secretary of Labor, when engaged in construction, alteration, repair, and maintenance of public buildings or public works.141 Although the Davis Bacon Act applies to works in which the federal government is a party,142 all states have adopted prevailing wage laws of their own.143 Therefore, given the pseudo-governmental nature of PPPs, courts are forced to determine whether PPPs are subject to prevailing wage laws, and if so, whether federal or state prevailing wage laws apply.144 The second issue is easier to re- solve. If a public federal entity and a private entity form a PPP, that particular PPP is subject to federal prevailing wage laws.145 Similarly, when a public state entity and a private entity form a PPP, said PPP will be subject to state prevailing wage laws.146
Determining whether any prevailing wage law even applies can be more difficult. When deciding if and which prevailing wage laws apply, beyond looking at whether the PPP involves a state or federal public entity, the court must look at the nature of the project to determine whether it is “public” or “private” in nature.147 Many states have specified that the partnerships must serve a “public purpose” or be for a “public use” for a PPP to even exist.148 The federal government has enacted similar requirements.149 Absent a clear and specific regulatory definition for PPPs, courts have established three factors to help identify which projects are public, and thus, subject to prevailing wage laws.150 First, courts look at the nature of the entity awarding the contract.151 Second, courts look at the source of funding.152 Third, courts examine the nature of the use.153 Together these factors may help a court determine what is public use or purpose.154
In addition to the three factors that courts commonly use, the “end use” or “end purpose of the project” test is often applied in determining whether a project serves a public purpose.155 Generally, when a contractual agreement exists between public and private entities and the end use of the infrastructure, property, or services is for commercial purposes, the courts have not found a public purpose.156 Alternatively, if the end use of a project is public in nature, the court is likely to find that it serves a public purpose and is therefore subject to prevailing wage laws.157
C. Constitutional Issues
Another legal issue that arises with PPPs is whether the private partner can be subject to § 1983 claims. Title 42 U.S.C. § 1983 provides a cause of action against a state actor depriving individuals of rights guaranteed by the Constitution.158 Generally, to prevail on such a claim against a private entity in a PPP, the challenging party must prove that the private entity acted in place of the government.159 In other words, the conduct of the private entity will be considered government action if the depravation of the constitutional right can be fairly attributed to the state.160
Another way to find a private partner satisfied § 1983’s state action requirement is if the private entity exercises powers traditionally and exclusively reserved to the states.161 However, it is important to note that very few actions have been traditionally and exclusively reserved to the states.162 One such area is the implementation and regulation of elections,163 another example is the use of eminent domain.164
A good example of the aforementioned analysis occurred in Stark v. Seattle Seahawks, in which the private partner was sued pursuant to a § 1983 action for the alleged violation of the plaintiffs’ constitutional rights.165 Here, the plaintiffs challenge the pat-down searches required by the National Football League (“NFL”) as a condition to enter the stadiums.166 The plaintiffs claim that such pat-downs are a “violation of the Fourth Amendment, pursuant to 42 U.S.C. § 1983, and Art. 1, § 7 of the Washington State Constitution.”167 To examine this issue, the court first looked at the relationship between the private party (Football Northwest) and the public party (Stadium Authority).168 In order for a private party to be subject to the § 1983 action, the challenging party must prove that the act attributed to the private party is governmental in nature.169 Thus, the private party and the public party must be engaging in joint activity.170
There are two ways in which the courts have imputed state action due to joint activity.171 The first is when there is concerted or conspiratorial activity between a state and private actor, and the second is when there is a symbiotic relationship between the actors.172 To determine whether a symbiotic relationship exists, the court looks at the intertwined nature of the relationship between the public entity and the private entity.173 The government must have inserted itself into a position of interdependence with the private entity.174 In Stark, after examining the contractual relationship between the parties, the court determined that despite the beneficial nature of the relationship between the public entity and the private entity, it fell short of a symbiotic relationship.175 As a result, the private entity was not a state actor and was not subject to the § 1983 claim.176
The nature of the contractual agreement will determine whether a private actor is subject to a § 1983 claim.177 The determination of whether the agreement creates an interdependent relationship between the parties, to the point that it becomes difficult to distinguish between the public and private entity, is crucial.178 The enactment of a general statutory definition for PPPs will do away with much litigation, such as the kind that took place in Stark v. Seattle Seahawks.179
D. Bond and Lien Rights
The lack of a statutory definition for PPPs also affects the remedies available to contractors in the event of default.180 Bonds and liens are remedies that may be available to contractors in order to secure payment.181 Generally, unpaid contractors may assert a construction lien on a property in order to secure payment.182 However, due to governmental immunity, this remedy is not available for public works.183 Therefore, in order to determine which remedies are available to the injured party it is crucial to determine whether a project is public or private, but more importantly, if it is considered “public works” for the purposes of bond rights and remedies.184
In an attempt to secure payment and protect unpaid public workers and subcontractors, Congress enacted the Miller Act in 1935,185 which was later amended in 1959,186 1994,187 1999188 and 2002.189 Most states have mirrored the Miller Act by enacting similar statutory performance and payment bond requirements, which are often called “Little Miller Acts.”190 The purpose of the Miller Act and the Little Miller Acts is to secure payment for unpaid workers working on government projects by establishing separate funds for these payments.191 Under the Miller Act, and its state counterparts, the contractor issues two sureties, one for guarantee of performance (performance bond) and one for guarantee of payment (payment bond).192 A performance bond is the contractor’s guarantee of the timely completion of a construction project in the event of default.193 Conversely, a payment bond is a surety given to subcontractors as a guarantee that they will receive payment in the event that the general contractor defaults.194 When entering into a contract, public entities are required to verify the existence and rating of the bonds, failure to do so could render the public entity or individual government officers liable.195 Thus, in the event that one of the parties fails to comply with the sureties, the injured party may seek remedy under the Miller Act.196
Little question remains as to the applicability of the Miller Act when the federal government owns or finances a building, or contracts to construct or repair a government building.197 However, due to the recent resurgence of PPPs, the question of whether a project is a “public work” within the requirement of the Miller Act has become harder to answer.198 In order for a contract to be subject to the Miller Act, a public work must be undergoing construction, alteration, or repair.199 In several cases, the federal courts have discussed which projects are considered “public works” under the Miller Act.200 Generally, the courts have found that contracts for the sale and disposal of government property do not constitute “public works” for the purposes of the Miller Act.201 On the other hand, the courts have found that a project for the recovery of a sunken ship is considered “public work” within the meaning of the Miller Act.202
Statutory absence in respect to PPPs has made it extremely difficult for courts to determine whether something is public or private.203 Thus, in an attempt to solve the “public works” dilemma, the Supreme Court of the United States has provided some guidance.204 In United States ex rel. Noland Co. v. Irwin, the Supreme Court concluded that the actual language found in the Miller Act provided little guidance as to what was considered public works for the purposes of the Act.205 As a result, the Miller Act was expanded through common law to mirror the language of the National Industrial Recovery Act, which, in the Court’s opinion, did not leave room for speculation as to what constitutes public work.206 Thus, the Court concluded that public works were defined as “projects of the character heretofore constructed or carried on . . . with public aid to serve the interests of the general public.”207
In general, PPPs makes it challenging to accurately apply current laws and regulations on bonds.208 The Miller Act and the Little Miller Acts are important when determining the remedies available to injured parties.209 If a project is a PPP and it involves “public works” then the parties may seek compensation pursuant to the Miller Act or the Little Miller Act of the pertinent State.210 Again, statutory regulation and a standard definition of PPPs will do away with some of the confusion regarding procurement remedies, such as those provided by the Miller Act.211
The present-day infrastructure conditions of the United States depict a very dark and gloomy picture.212 As a result, the current dynamics of the modern economy call for the implementation of PPPs, an innovative method to advance, restore, revamp, construct, and finance infrastructure projects.213 The unavoidable truth is that the U.S. needs to invest a significantly large amount of money in order to improve the country’s infrastructure.214 The government, however, does not have the economic means to do so.215 Thus, many states, local governments, and federal agencies have found that by entering into PPP agreements they can fund projects which would have otherwise never been completed due to a lack of funds.216
The key to developing said framework is to provide a standard definition for the term “Public-Private Partnership,”217 that lays down a proper foundation on which to build. This definition should be drawn from general terms in the area of contracts and business associations.218 To date, the term “partnership” is defined as: “A voluntary association of two or more persons who jointly own and carry on a business for profit.”219 Similarly, “public” is defined as “of, relating to, or involving an entire community, state, or country[; or] open or available for all to use, share, or enjoy,”220 and “private” is defined as: “of, relating to, or involving an individual, as opposed to the public or the government.”221 Drawing from the aforementioned discussions and definitions, PPPs would ideally be defined as: A contractual agreement, typically done by the association of two parties, of which at least one is a public party and one is a private party, formed in furtherance of achieving a public purpose that is owned by government and privately operated.222
The implementation of this definition alone does not solve the problems presented by the lack of regulatory legislation of PPPs, but it’s a start. From there, legislation must be drafted to encompass the issues raised in this article; particularly, this legislation should discuss and address the procurement requirements of PPPs,223 impact on prevailing wage laws,224 constitutional issues dealing with governmental immunity,225 and bond and lien rights,226 amongst any other contractual issues. The creation of said legislation would be the necessary stepping stone to advance PPPs, which would, in turn, lead to the resolution of the infrastructure crisis. As such, the ideal legislation would incorporate some version of the aforementioned definition, provide guidelines and factors in order to help determine what consists of a public purpose, as well as provide specifics regarding the dynamics of a privately operated, government owned entity.227 Such framework has the potential to drastically alleviate the infrastructure crisis the United States faces today.228 The implementation of such framework would reduce litigation and would facilitate the formation of PPPs,229 which would, in turn, lead to the rebirth of America’s infrastructure.
- See Robert W. Burchell, Matthew S. Crosby & Mark Russo, Infrastructure Need in the United States 2010–2030: What is the Level of Need–How Will It Be Paid For?, 43 URB. LAW 41, 41 (2010) (citing to DELOITTE RESEARCH: CLOSING AMERICA’S INFRASTRUCTURE GAP: THE ROLE OF PUBLIC-PRIVATE PARTNERSHIPS 1 (2007), available at http://worldbank.mrooms.net/file.php/251/docs/optional_readings/Closing_America_s_Infrastructure_Gap.pdf). According to Deloitte, the ability of government to properly maintain infrastructure, in order to meet the rates of the rapidly increasing population in certain states, is virtually nonexistent. DELOITTE RESEARCH, supra.
- See DELOITTE RESEARCH, supra note 1, at 1.
- See infra notes 12–19 and accompanying text.
- See infra Part V.A.
- See infra Part V.B.
- See infra Part V.C.
- See infra Part V.D.
- See generally U.S. GEN. ACCTG. OFF., GAO/GGD-99-71, PUBLIC-PRIVATE PARTNERSHIPS: TERMS RELATED TO BUILDING FACILITY PARTNERSHIPS 13–14 (1999), available at http://www.gao.gov/archive/1999/gg99071.pdf (defining the term PPP as a contractual arrangement formed between public and private-sector partners that typically involve a government agency contracting with a private partner to renovate, construct, operate, maintain, and/or manage a facility or system that provides a public service in whole or in part). This is one of the only sources in which you will find the federal government trying to provide a definition for PPPs. See id.
- See infra Part II.
- See infra Part III.
- See infra Part IV.
- See infra Part V.
- See infra Part V.A.
- See infra Part V.B–C.
- See infra Part V.D.
- See infra Part VI.
- U.S. GEN. ACCTG. OFF., supra note 8, at 13–14. According to the federal government, public-private partnerships may also be referred to as public-private ventures. Id.
- See id. at 3–4. There are three types of public-private partnerships. Id. The first is the Build-Own-Operate (BOO), in which the private partner builds and operates a public facility while retaining ownership. Id. The second is the Build-Operate-Transfer (BOT) or the Build-Transfer-Operate (BTO), in which the private partner builds the facility to the specifications of the public partner and operates the facility even after transfer. Id. However, after the term of the partnerships is over, the government assumes the management and operation of the facility. Id. The third, and last, type of public-private partnership is the Buy-Build-Operate (BBO), in which the government sells the asset to the private partner, and the private partner builds, manages, and operates the facility. Id.
- Wendell C. Lawther, Privatization of Transportation Systems, in HANDBOOK OF TRANSPORTATION POLICY AND ADMINISTRATION 371–72 ( Jeremy F. Plant, Van R. Johnston and Cristina E. Ciocirlan ed., 2007) (expressing the disapproval of other authors’ misconception –– not all relationships between the public and private sector are PPPs).
- Id. at 372.
- See LaSalle Partners v. United States, 48 Fed. Cl. 797, 810 (Fed. Cl. 2001) (holding that a public-private partnership is quite different from a commercial partnership agreement). See generally Coca-Cola Bottling Co. of Elizabethtown, Inc. v. Coca-Cola Co., 696 F. Supp. 57, 74 (D. Del. 1988) (listing the essential characteristics which generally are used to support the conclusion that a partnership exists). The first essential characteristic is the intention of the parties. LaSalle Partners, 48 Fed. Cl. at 810. The second essential characteristic is the co-ownership of the business property. Id. The third essential characteristic is the sharing of the profits as well as the losses. Id. The fourth essential characteristic is the “existence of evidence that each alleged partner participated in the management of the business or had some right to control the function or conduct of the business.” Id.
- LaSalle Partners, 48 Fed. Cl. at 809-10.
- Id. at 810.
- See National Affordable Housing Act, 42 U.S.C. § 12751 (1990) (stating that all participating jurisdictions have to make all reasonable efforts to increase the participation of the private sector); see also Moving Ahead for Progress in the 21st Century Act, 49 U.S.C. § 5315 (2012) (stating that the transportation department must “better coordinate” public- and private-sector transportation services, etc.).
- See National Affordable Housing Act § 12751; see also NAT’L CONFERENCE OF STATE LEGISLATURES (NCSL) FOUNDATION FOR STATE LEGISLATURES, NCSL FOUNDATION PARTNERSHIP: PUBLIC-PRIVATE PARTNERSHIPS (P3S OR PPPS) FOR TRANSPORTATION MEETING SUMMARY 15 (2009), available at http://www.ncsl.org/documents/transportation/PPPmeetingsum09.pdf (stating that PPPs have characteristics which are innate to them). However, this statute does not provide a clear definition of the term. National Affordable Housing Act § 12751.
- See, e.g., CONN. GEN. STAT. § 4–255 (2011) (defining PPP as “between a state agency and a private entity contracting” to maintain a state facility, where the revenue from the facility will fund the cost to develop and maintain it); TEX. TRANSP. CODE ANN. § 223.201 (2013) (stating that an agency may use a PPP in order to use both public and private money to finance a function described in the section); P.R. LAWS ANN. tit. 27, § 2601 (2009) (defining PPP as “any agreement between a government entity and one or more persons, subject to the public policy set forth in this chapter. . .”).
- FLA. STAT. § 420.5095 (2011).
- TEX. TRANSP. CODE ANN. § 223.201 (2013).
- U.S. DEP’T OF TRANSP., REPORT TO CONGRESS ON PUBLIC-PRIVATE PARTNERSHIPS 15 (2004), available at http://www.fhwa.dot.gov/reports/pppdec2004/pppdec2004.pdf. The first turnpike was chartered in 1792 in Pennsylvania. Id. As a result of the highway-building boom in the late 18th century and early 19th century, approximately fifty construction companies were incorporated in Connecticut and sixty-seven in New York. Id. This trend was occurring throughout the United States. Id.
- Id. The involvement of the private sector declined during this period due to federal government funding for the construction of roads. Id. Furthermore, the enactment of the Federal Aid Highway Act of 1916 institutionalized state transportation, which continued to receive funds from the federal government. Id.
- See generally EMILIA ISTRATE&ROBERT PUENTES, BROOKINGS-ROCKEFELLER, MOVING FORWARD ON PUBLIC PRIVATE PARTNERSHIPS: U.S. AND INTERNATIONAL EXPERIENCE WITH PPP UNITS (2011), available at http://www.brookings.edu/~/media/research/files/papers/2011/12/08%20transportation%20istrate%20puentes/1208_transportation_istrate_puentes.pdf (providing statistics depicting the increase in the use of PPPs in the United States).
- Id. at 3.
- Id. at 12.
- Id. at 4.
- U.S. DEP’T OF TRANSP., supra note 32, at 16. However, the States soon realized that by charging motorists tolls, they could expedite the construction of necessary highways. Id.
- Andrew Glass, Federal-Aid Highway Act, June 26, 1956, POLITICO, (June 26, 2012, 4:25 AM), http://www.politico.com/news/stories/0612/77803.html. Enacted during the Eisenhower administration, the Federal Aid Highway Act allocated $24. 8 billion (equivalent to $164 billion in today’s dollars) to build 41,000 miles of interstate highways. Id.
- U.S. DEP’T OF TRANSP., supra note 32, at 17. After the enactment of this Act, the law has changed because the states decide many, if not most, of the transportation and infrastructure issues. Id. The law requires any state receiving aid from the federal government to fund infrastructure projects to refrain from charging toll fees. Id. Thus, the involvement of private parties is limited. Id. at 16. Despite the limitation set forth by the federal government, private entities have participated in the construction and maintenance of public highways. Id. at 17.
- EDUARDO ENGEL, RONALD FISCHER & ALEXANDER GALETOVIC, Public-Private Partnerships to Revamp U.S. Infrastructure, THE HAMILTON PROJECT 11 (2011), available at http://www.ncppp.org/wp-content/uploads/2013/03/PS-Feb2011-HamiltonProject.pdf. The States that have entered into PPP agreements are: Texas, Colorado, Florida, Virginia, Indiana, Illinois, California, Nevada, Massachusetts, Alabama, South Carolina, New York, and New Jersey. Id. Many of those projects are still under construction. Id. Additionally, many of these projects were awarded to a private entity via competitive bidding as a result of PPP state regulations. Id.
- U.S. DEP’T OF TRANSP., supra note 32, at 33–34. The taskforce seeks the expansion and analysis of the three different approaches to PPPs; the three different approaches are (1) private contracting, (2) joint development, and (3) turnkey procurement. Id. at 34-38.
- Id. at 33-34.
- See generally CA. DEBT & INV. ADVISORY COMM’N, Privatization vs. Public-Private Partnerships: A Comparative Analysis, ISSUE BRIEF 4, 12-21 (2007), available at http://treasurer.ca.gov/cdiac/publications/privatization.pdf (explaining the difference between PPPs and Privatization).But see Graeme A. Hodge & Carsten Greve, Public-Private Partnerships: An International Performance Review., 67 PUB. ADMIN. REV. 545, 547–48 (2007), available at http://www.jstor.org/stable/pdfplus/4624596.pdf?acceptTC=true (describing how the legislature intentionally refrains from using the word or term “privatization” in order to get votes from those who do not support privatization).
- See CA. DEBT & INV. ADVISORY COMM’N, supra note 45, at 5.
- BLACK’S LAW DICTIONARY 1316 (9th ed. 2009).
- See CA. DEBT & INV. ADVISORY COMM’N, supra note 45, at 7.
- See generally Office of Mgmt. & Budget, Exec. Office of the President, Performance of Commercial Activities, NO. A-76 (2003), available at http://www.whitehouse.gov/sites/default/files/omb/assets/about_omb/a76_incl_tech_correction.pdf. See generally CA. DEBT & INV. ADVISORY COMM’N, supra note 45, at 11–19. In a PPP arrangement, the government retains control of the enterprise in order to ensure that it is meeting the public’s needs. CA. DEBT & INV. ADVISORY COMM’N, supra note 45, at 13. If at any time the private entity is not living up to the expectations of its public partner, the public entity may retake control of the enterprise. Id.
- See CA. DEBT & INV. ADVISORY COMM’N., supra note 45, at 11–19. Risk refers to the financial and legal obligations that both partners undertake as a result of the contractual agreement. Id. at 18. While risk is allocated between both partners in a PPP agreement, the private entity bears all the risk when an enterprise is privatized. Id. One of the risks of privatization is that the public agency loses control of the asset or enterprise, which may lead to the deterioration of said asset and enterprise. Id. at 6. The potential loss of public employment is another risk associated with privatization. Id. at 7.
- Id. at 19.
- Id. at 12-13.
- Id. at 13.
- Id. at 13-14.
- Lawther, supra note 20, at 372-73 (listing the benefits of PPPs); CA. DEBT & INV. ADVISORY COMM’N., supra note 45, at 8 (defining PPPs as partnerships in which there is “cooperation between the public and private sectors in one or more areas of the design, development, construction, operation, ownership or financing of infrastructure assets, or in the provision of services”). Essentially, a PPP is a contractual agreement between a public and private partner in which the roles, duties, and responsibilities of each party is spelled out. See CA. DEBT & INV. ADVISORY COMM’N, supra note 45, at 8. In a PPP agreement the public sector retains ownership of the asset while in privatization the asset is completely owned and operated by the private partner. Id. at 12-13. Thus, PPPs can facilitate and expedite building new projects, which will otherwise be delayed due to a lack of government funds. See Lawther, supra note 20, at 372-73. Overall, PPPs are a great mechanism to increase the revenue for building and maintaining new infrastructure projects. See Lawther, supra note 20, at 372. See DARRIN GRIMSEY & MERVYN K. LEWIS, PUBLIC PRIVATE PARTNERSHIPS: THE WORLDWIDE REVOLUTION IN INFRASTRUCTURE PROVISION AND PROJECT FINANCE 55–57 (2004) (explaining the difference between privatization and PPPs).
- DELOITTE RESEARCH, supra note 1, at 1.
- Id. at 7. Compared to the pay-as-you-go method, PPPs enable infrastructure projects to be initiated years sooner. Id. at 6-7. PPPs also allow the cost of investment to be spread out over the lifetime of the asset. Id. at 10.
- Id. at 1.
- Id. See, e.g., JAIME RALL ET. AL., PUBLIC-PRIVATE PARTNERSHIPS FOR TRANSPORTATION: A TOOLKIT FOR LEGISLATORS, NCSL 2 (2010), available at http://www.ncsl.org/documents/transportation/PPPTOOLKIT.pdf. “[PPPs] enable the public sector to reduce its own risk and potential financial losses on a project.” RALL, ET. AL., supra at 2. “[A]llocating risk to the party best able to manage it makes it less likely that each project risk will materialize.” Id. at 10.
- DELOITTE RESEARCH, supra note 1, at 2. See, e.g., RALL, supra note 61, at 2. The reduction of total costs comes from the reduction of construction costs and overall lifecycle costs. DELOITTE RESEARCH, supra note 1, at 1. “PPPs often result in significant cost savings and time savings compared to traditional procurement.” RALL, supra note 61, at 9. Savings are derived from “direct incentives to the private contractor for on-time delivery; use of warranties or performance-based contracting; competition among bidders; transfer of risk to the private sector for cost and schedule overruns or revenue shortfalls; and lifecycle efficiencies.” Id.
- DELOITTE RESEARCH, supra note 1, at 1.
- RALL, supra note 61, at 2 (quoting former Governor of Kansas, Bill Graves). “PPPs are one of the many tools that can be used to help address America’s infrastructure deficiencies. PPPs, however, are not the panacea for infrastructure funding.” Id.
- See BUILDING AMERICA’S FUTURE, FALLING APART AND FALLING BEHIND: TRANSPORTATION INFRASTRUCTURE REPORT 15–20 (2011), available at http://www.bafuture.com/sites/default/files/Report_0.pdf; DELOITTE RESEARCH, supra note 1, at 5; Edward Fishman & James B. McDaniel, Major Legal Issues for Highway Public-Private Partnerships, in 51 LEGAL RESEARCH DIGEST 1 (National Cooperative Highway Research Program 2009), available at http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_lrd_51.pdf.
The growth rate of the population in the United States has caused the already suffering infrastructure to deteriorate at a rapid rate. DELOITTE RESEARCH, supra note 1, at 4. Infrastructure deficits pose a huge burden on society, and the implementation of PPPs is the best way to bridge the gap between the funds the federal government provides and the funds necessary to solve the crisis. DELOITTE RESEARCH, supra note 1, at 4. The lack of funding from the federal government is a major problem because many projects are not being properly maintained. Fishman & McDaniel, supra at 1. Federal government investment on American infrastructure has remained stagnant since 1968. BUILDING AMERICA’S FUTURE, supra at 17. The amount of the nation’s GDP going towards infrastructure is merely 1.7%. Id. The federal government commitment has been lacking for the past several decades. Id.
- ENGEL ET AL., supra note 42, at 9–12 (describing the most important PPP funded projects of the past recent years); Fishman & McDaniel, supra note 66, at 9–17 (listing some of the major projects which have been the result of successful PPPs). Between 1991 and 2010 approximately twenty-one PPP projects went into construction. ENGEL ET AL., supra note 42, at 11. The projects were: IH 365 Managed Lanes in Texas; Eagle Commuter Rail Project in Colorado, Port of Miami Tunnel in Florida; North Tarrant Express in Texas; I 595 Corridor in Florida; I 495 Beltway HOT Lanes in Virginia; SH 130 Segment 5–6 in Texas; Northwest Parkway in Colorado; Pocahontas Parkway in Virginia; Indiana Toll Road in Indiana; Chicago Skyway in Illinois; Southbay Expressway (SR 125) in California; Las Vegas Monorail in Nevada; Rte. 3 Boston in Massachusetts; Foley Beach Expressway in Alabama; Greenville Southern Connector in South Carolina; JFK Terminal 4 in the New York/New Jersey area; Camino Colombia Toll Road in Texas; Dulles Greenway in Virginia; and Orange County SR 91 Express Lanes in California. Id.
States such as Utah and Oregon have also found ways to incorporate PPPs into successful infrastructure projects and upcoming developments. Fishman & McDaniel, supra note 66, at 11, 17–18. While all these projects have served as a demonstration of PPP success stories, a few of them get more attention than others. Id. at 9–11, 13, 16–17. The expansion of the Indiana toll road serves as an example of a PPP which resulted out of severe governmental constraints. ENGEL ET AL., supra note 42, at 9. Indiana received $3.8 million from a private partner to upgrade, maintain, and operate the Indiana toll road in exchange for receiving the revenue generated from the tolls for a period of seventy-five years. Id. As a result, the Indiana government was able to distribute the funds, which would have otherwise gone to the operation of the toll road, to schools. Id. The Chicago Skyway PPP is very similar in nature to the expansion of the Indiana Toll Road project. Fishman & McDaniel, supra note 66, at 10. The city of Chicago entered into a partnership agreement with a private entity in which the city was provided with $1.83 billion for the operation and maintenance of the skyway in exchange for the revenues generated by the tolls for a period of 99 years. Id.
- See Lawther, supra note 20, at 372.
- See THE HERITAGE FOUNDATION, HOW PRIVATIZATION CAN SOLVE AMERICA’S INFRASTRUCTURE CRISIS 1 (Edward L. Hudgins & Ronald D. Utt, 1992); see also Burchell, supra note 1, at 41 (defining infrastructure as “long-term physical components of systems, such as those that channel traffic, provide drinking water, handle wastewater, operate electrical communication grids nationally, provide recreational opportunities, systems of dams and levees . . . navigable channels of water and rail, light rail, bus transit, parks, state forests, recreational parks of all types, and response vehicles needed for police, fire, and EMS activities”).
- DELOITTE RESEARCH, supra note 1, at 1. The ability of government to properly maintain infrastructure, in order to meet the rates of the rapidly increasing population in certain states, is virtually nonexistent. Id. For example, North Carolina faces a deficit of $28 billion over the next twenty-five years in bridge and highway funding and Wisconsin needs $26 billion to update their transportation system. Id. at 3. Similarly, Arizona will have to turn to “non-traditional” funding in order to build and maintain new highways and other transportation projects. Id. at 4.
- See Burchell, supra note 1, at 1.
- DELOITTE RESEARCH, supra note 1, at 7.
- See Tom Souzzi, How About a Partnership Stimulus? To help rebuild America’s roads and airports, let’s tap the billions of dollars of private capital looking for safe returns, WALL ST. J., Nov. 11, 2010, http://online.wsj.com/article/SB10001424052748704635704575604563679175190.html.
- Dominique Custos & John Reitz, Public-Private Partnerships, 58 AM. J. COMP. L. 555, 557 (2010) (discussing the UK model of 1992); GRIMSEY, supra note 42, at 6–7 (listing the countries in which PPPs were born).
- See generally Government Resources and Accounts Act, 2000, c. 20, § 17, sch. 16 (Eng.) (defining the term “Public-Private Partnerships”).
- See DELOITTE RESEARCH, supra note 1, at 7 (stating that the United Kingdom has become the pioneer for PPP investment in infrastructure). In the UK, typically one hundred PPP projects are started and completed each year. Id. Additionally, PPP projects make up ten to thirteen percent of the UK’s infrastructure investment. Id. The American Recovery and Reinvestment Act of 2009, which was signed into law by President Obama, included $80.5 billion to fix bridges, road, mass transit, and waterways. Burchell, supra note 1, at 41. President Obama also included $72.5 billion for transportation spending. Id. However, according to the American Society of Civil Engineers, of the $2.2 trillion that is needed to repair infrastructure in the United States, only seven percent has currently been authorized. Id. This $2.2 trillion figure, however, does not include the costs of new projects such as high-speed rails and aviation adaptations. Id.
- See AM. SOC’Y OF CIVIL ENG’RS, REPORT CARD FOR AMERICA’S INFRASTRUCTURE (2013) [hereinafter ASCE], http://www.infrastructurereportcard.org/a/#p/grade-sheet/gpa. According to the ASCE, “each category was evaluated on the bases of capacity, condition, funding, future need, operation and maintenance, public safety and resilience,” and awarded a grade. Id. The grades are as follows: Aviation – D; Bridges – C+; Dams – D; Drinking Water – D; Energy – D+; Hazardous Waste – D; Inland Waterways – D-; Levees – D-; Ports – C; Public Parks and Recreation – C-; Rail – C+; Roads – D; Schools – D; Solid Waste – B-; Transit – D; and Wastewater – D. Id.
- Id. For example, the amount of money needed to fund surface transportation alone is $1.7 trillion. Id. However, the government is only able to provide $877 billion, leaving a gap of $846 billion. Id. Similarly, airports need $134 billion for funding. Id. However, the government is only able to provide $95 billion, thus, leaving a gap of $39 billion. Id. In general, the United States seems to be having problems bridging the gap, and $1.6 billion dollars is the amount needed to bridge the gap. Id.
- BUREAU OF TRANSPORTATION STATISTICS, Table 1-4: Public Road and Street Mileage in the United States by Type of Surface(a) (Thousands of miles), U.S. DEP’T OF TRANSP., http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_04.html (last visited Apr. 5, 2015).
- See ASCE, supra note 80.
- Id. Safety concerns are one of the most motivating factors for updating infrastructure. Id. These accidents cost the U.S. approximately $230 billion dollars a year. Id. The ASCE has stated that improving median barriers and widening lanes and shoulders could help to reduce the number of car accidents significantly. Id.
- Id. The U.S transit system is far from comprehensive––approximately 45% of Americans do not have access to public transit. Id.
- Id. Despite the increase in funding (from the federal government to the transit system) the increase in ridership has caused an increase in fares. Id. The number of riders is expected to continue increasing. Id.
- Id. The bridges which remain classified as inoperable or structurally-deficient are the larger bridges. Id. The number of structurally-deficient bridges has been declining over the past few years. Id. However, the funding that has been used to maintain and repair existing bridges has depleted the funds available to fix some of the nation’s large-scale urban bridges. Id. The maintenance of these bridges is important because they carry the highest percentage of traffic in the cities they are located. Id. The lack of funding available to maintain urban bridges will lead to the eventual deterioration of the overall bridge condition in America. Id.
- ASCE, supra note 80. Pennsylvania is at the top of the 22 state list––a total of 24.4% of its bridges are structurally-deficient. Id. Twenty-one percent of the bridges in Iowa and Oklahoma are classified as structurally-deficient. Id. The nation’s capital, the District of Columbia, tops the list of structurally-deficient and functionally obsolete bridges, combined. Id. A total of 77% of D.C.’s bridges fall into at least one of those categories. Id.
- Id. (“Since 2009, capital investment from both freight and passenger railroads has exceeded $75 billion, actually increasing investment during the recession when materials prices were lower and trains ran less frequently.”); see also Press Release, President Obama, Vice President Biden to Announce $8 Billion for High-Speed Rail Projects Across the Country ( Jan. 28, 2010) (on file with author). Eight billion dollars was the initial federal government investment to fund thirteen new highspeed rail corridors across the country. Press Release, President Obama, supra. The major corridors of the project are: Florida, California, Chicago-St. Louis-Kansas City, Madison-Milwaukee-Chicago, Charlotte-Raleigh-Richmond-Washington, DC, Eugene-Portland-Seattle, Detroit-Chicago, Ohio, and Northeast. Id.
- See CAMBRIDGE SYSTEMATICS INC., NATIONAL RAIL FREIGHT INFRASTRUCTURE CAPACITY & INVESTMENT STUDY ES-1 (2007), available at http://www.camsys.com/pubs/AAR_Nat_%20Rail_Cap_Study.pdf . The United States Department of Transportation (“DOT”) estimates that the use of freight railroads will increase 88% by 2035. Id. An estimated $148 billion is needed for infrastructure expansion and maintenance in order to meet DOTs projections and expectations by 2035. Id. Without these funds, the railroad system will be operating above capacity, which could lead to an increase in congestion in the already congested railroads. Id. at ES-2.
- AM. SOC’Y OF CIVIL ENG’RS, FAILURE TO ACT ECONOMIC STUDIES, http://www.asce.org/failure_to_act_economic_studies/. It is estimated that by 2020 there will be a $1.1 trillion gap in the investment funds needed and the amount available. Id. As a result, households will have to shoulder an additional $611 billion in costs, and the burden placed on businesses will be $1.2 trillion. Id. If this deficit is not prevented, it will result in a $3,100 drop in household disposable income per year, cost the country 3.5 million jobs, and result in a $3.1 trillion loss in GDP.
- See generally ASCE, supra note 80 (providing a breakdown of key facts and statistics about Florida’s infrastructure). The breakdown of the grades of the different subcategories is: Aviation- B-; Bridges- B; Coastal Areas- D-; Education- D+; Energy- D; Flood Control- D+; Ports- C; Roads- C; Transit- C; Urban Runoff- C; and Wastewater- C. Id.
- Id. Due to a decrease in transit ridership, availability has decreased and funding for transit projects has been reduced. Id. Service availability will increase once the economy improves and unemployment levels decrease. Id. A new project, Sun Rail, was approved and is moving forward. Id.
- Id. The revenue available to Florida for transportation has significantly decreased. Id. The transportation revenue sources have been diverted from transportation to non-transportation projects. Id. Thus, the main component that needs to be addressed is the establishment of a stable funding source. Id. Without such action, the condition of the highways will deteriorate, and thus, fall below average. Id.
- Id. Coastal areas are in dire need of maintenance. Id. There are approximately 398 miles out of 825 miles of beach that are severely eroded. Id. Although regional efforts are on their way, poor inlet management and depleted off shore resources could severely limit the number of beach nourishment projects. Id. Similarly, the condition and capacity of our water structure storage facilities and lakes is considered to be poor, or failing. Id. Although the main structures (canals, rivers, levees, and dikes) are in overall good condition, approximately $750 million dollars are needed in the next ten years. Id. Schools are another area that is in dire need of funding. Id. Currently, the state appropriates $650 million in its budget for schools. Id. However, approximately $3 billion is needed to meet the full implementation of class size reduction. Id.
- NCSL, STATE LEGISLATIVE INFRASTRUCTURE PRIORITIES 2012–2013 4 (2012), available at http://www.ncsl.org/documents/transportation/Infrastructure_Priorities2012.pdf (listing the different methods that states have been using in order to increase the funds available to infrastructure). Among the several funding methods were: bonding taxes, gas taxes, vehicle taxes, PPPs, tolls, sales taxes, and VMTs. Id. 47.9% of the states used PPPs, while more than 70% of the legislatures used taxes to gather the funds. Id.
- NAT’L CONFERENCE OF STATE LEGISLATURES, TRANSPORTATION FUNDING AND FINANCE LEGISLATION DATABASE (2013), available at http://www.ncsl.org/issuesresearch/transport/ncsl-transportation-funding-finance-legis-database.aspx. Transportation Funding and Finance Legislation Database is an up-to-date source for transportation funding and finance legislation introduced in all 50 states and the District of Columbia since 2013. Id. This website provides lists and information on the legislation, which the states have enacted with respect to transportation. Id. Here, you may also find the most recent legislation on PPPs. Id.
- Id. (selecting “All States” and “Public-private partnerships” from the search section located at the bottom of the page; then click “Search.” Results accurate as of Mar. 15, 2015). Id. The states with bills supporting, or enacting, some type of PPP agreements are: Arkansas, Florida, Georgia, Kentucky, Massachusetts, Maryland, Maine, Minnesota, North Carolina, New Jersey, New Mexico, Ohio, Oregon, Texas, Virginia, and West Virginia. Id.
- See generally id. (providing a short description of the above-referenced bills).
- Custos, supra note 77, at 557. The United States is different from other countries in regards to adoption of a central statutory framework for PPPs. Id.
- See DELOITTE RESEARCH, surpa note 1, at 7; TRANSPORTATION FUNDING AND FINANCE LEGISLATION DATABASE supra note 104; Souzzi, supra note 73.
- See HIROYUKI ISEKI ET AL., TASK B-2: STATUS OF LEGISLATIVE SETTINGS TO FACILITATE PUBLIC PRIVATE PARTNERSHIPS IN THE U.S. 2 (Cal. Partners for Advanced Transit & Highways 2009), available at http://www.path.berkeley.edu/PATH/Publications/PDF/PRR/2009/PRR-2009-32.pdf. Although states develop their own contract law, Congress may facilitate the creation of infrastructure, which is common amongst all states. Id. at vii. Many states are in disagreement about things such as a noncompete clauses. Id. at ix-x. Legislation is the highest hierarchical instructional setting, and thus, the enactment of PPP statutes aid in determining the types of contracts that transportation agencies and private firms may enter into. Id. at iii.
- See Julia Paschal Davis, Public-Private Partnerships, 44 PROCUREMENT LAW 9, 9 (Fall 2008) (discussing how procurement law applies, or should apply to PPPs). By and large, it is in the general public’s interest to abide by the protection of procurement laws. Id. The restrictions in procurement laws not only create rights, but they also define risks and preserve open competition opportunities. Id.
- See infra Part V.B–C.
- See generally Roland Nikles, “Is It Public, Or Is It Not?” What To Watch For When Public And Private Become Entwined, and Why It Matters, 46 PROCUREMENT LAW 3, 5 (2011) (explaining that the real challenge to PPPs is the difficulty in characterizing the project as “public” or “private”). The failure to establish whether a project is public or private has become common. Id.
- See United States v. Binghamton Const. Co., 347 U.S. 171, 176-77 (1954) (“[t]he language of the Act and its legislative history plainly show that it was not enacted to benefit contractors, but rather to protect their employees from substandard earnings by fixing a floor under wages on Government projects”). See generally Erie Cnty. Indus. Dev. Agency v. Roberts, 94 A.D.2d 532, 534 (N.Y. App. Div. 1983) (discussing prevailing wage requirements to the development of bond projects); Frank Bros., Inc. v. Wisconsin Dep’t. of Transp., 409 F.3d 880, 886–87 (7th Cir. 2005) (discussing the history of the Davis-Bacon Act and how it relates to preemption and state law); Bd. of Trade Inc., v. State, Dept. of Labor, Wage and Hour Admin., 968 P.2d 86, 92–93 (Alaska 1998) (finding that working in close geographic proximity to a large construction project is enough to meet the “on site” requirement of Alaska’s Little Davis-Bacon Act). See generally Hunter v. City of Bozeman, 700 P.2d 184 (Mont. 1985) (exemplifying the existence of wage prevailing acts at state level).
- See infra Part V.C.
- Davis, supra note 114, at 9.
- See 41 U.S.C. § 3301 (2011); 41 U.S.C. § 3701 (2011); 41 U.S.C. § 3703 (2011). Criteria for awarding contracts: the agency shall award the contract to the responsible “source whose proposal is most advantageous to the Federal Government.” 41 U.S.C. § 3703(c). An executive agency shall obtain “full and open competition through the use of competitive procedures.” 41 U.S.C. § 3301(a)(1).
- See Davis, supra note 114, at 9.
- See id.
- Nikles, supra note 116, at 7 (stating that private entities may enter into contracts freely).
- 41 U.S.C. § 3703 (2011) (“[t]he executive agency shall award the contract with reasonable promptness to the responsible source whose proposal is most advantageous to the Federal Government, considering only cost or price and the other factors included in the solicitation”); H.B. 85, 115th Gen. Assemb., Reg. Sess. (Fla. 2013) (stating that in order for a solicited proposal to be awarded it must undergo a bidding process). After the bidding process, only the proposal which is most beneficial to the public and most economically feasible to the governmental agency will be selected. H. B. 85, 115th Gen. Assemb., Reg. Sess. (Fla. 2013).
- See, e.g., Miller v. McKinnon, 124 P.2d 34, 38 (Cal. 1942); J&J Contractors v. Idaho Transp. Bd., 797 P.2d 1383, 1384 (Idaho 1990); Nikles, supra note 116, at 7. In Miller v. McKinnon, the California Supreme Court held that a contract made in violation of a statute, which requires competitive bidding, is void and unenforceable. Miller, 124 P.2d at 34. Similarly, in J&J Contractors v. Idaho Transp. Bd., the Idaho Supreme Court found that a party could not recover under quantum meruit because the contract was in violation of competitive bidding laws. J&J Contractors, 797 P.2d at 1384. Thus, when a contract is between a public partner and a private partner, and it fails to abide by the applicable procurement procedures governing the state or federal agency, that contract is void. Nikles, supra note 116, at 7.
- See DELOITTE RESEARCH, supra note 1, at 8; Davis, supra note 114, at 10.
- See DELOITTE RESEARCH, supra note 1, at 8. The determination of whether a PPP serves either a public or private purpose depends largely on the amount of private sector involvement in financing the infrastructure project. Id. There are approximately seven types of PPPs. Id. The “Build-Transfer” model allows the government to enter into a contract with a private party in order to aid in the building or maintenance of a facility under government supervision. Id. Once the facility has been built, the government assumes responsibility for maintaining it. Id. The second model is “Build-Lease-Transfer,” which is virtually identical to the build-transfer model except that upon completion, the facility is leased to the government until it has fully paid the private partner for the lease. Id. The third model is the “Build-Transfer Operate” in which the private sector owns the facility during the building stage. Id. After that, title is transferred to the government. Id. The fourth model is “Build-Operate Transfer,” in which at the end of the building phase, the government assumes the operation of the facility. Id. The fifth model is the “Build-Own-Operate-Transfer,” in which the government grants the private party a franchise to finance, design, build, and operate a facility for a specific period. Id. The sixth model is the “Build-Own-Operate” in which the government grants a private entity the rights to finance, design, build, operate and maintain a project; the private sector retains ownership of that project. Id. The seventh model is the “Design-Build-Finance-Operate/Maintain,” which is very similar to the Build-Own-Operate with the exception that the private entity does not retain ownership over the facility. Id. Thus, the more money the private sector invests, the more likely the PPP will not be subject to procurement laws. Id.
- See Davis, supra note 114, at 10.
- See id.
- See Decker v. Kan. Dep’t of Soc. Rehab. Ctr., 942 P. 2d 667 (Kan. Ct. App. 1997). This case involves a lease agreement between plaintiff and defendant. Id. Resolved in light of the pertinent statute, the court turned to the body of the contract in order to determine whether it was subject to procurement. Id.
- See Associated Subcontractors of Mass., Inc. v. Univ. of Mass. Bldg. Auth., 810 N.E.2d 1214, 1221 (Mass. 2004). The plaintiffs claimed that the contract in which they entered into with the defendant was free from procurement laws. Id. at 1214. The contract was to build a housing complex at the university using the money paid by the students to the university. Id. at 1217. The court concluded that even though the university is a public entity, the monies used to finance the project was that of the students, and the students were private individuals who were paying to live on campus. Id. at 1221. Thus, the funds were nongovernmental, and in turn, the contract was not subject to procurement laws. Id. at 1222.
- See DEL. CODE ANN. tit. 16, § 9605 (1995); D.C. CODE § 32–305 (2007).
- Achen-Gardener, Inc. v. Superior Court, 809 P.2d 961, 967 (Ariz. Ct. App. 1990), vacated on other grounds, 839 P.2d 1093 (Ariz. 1992) (“Municipalities may enter into development agreements with private corporations by resolution or ordinance. A.R.S. § 9–500.05(A). By entering into a development agreement with a municipality to perform public improvements financed from public funds, the private corporation stands in the shoes of that municipality and becomes an ‘agent’ under A.R.S. § 34–101”).
- Id. at 969 (noting that if the works are to be paid for by the public, then they are public in nature, and the public entity simply cannot delegate its duties in such a way as to avoid competitive bidding procedures) (citing Central Ariz. Water & Ditching Co. v. City of Tempe, 680 P.2d 829, 831-32 (Ariz. Ct. App. 1984)).
- Davis, supra note 114, at 11. PPPs are hybrid in nature. Id. They are the result of the combination of the public and private sectors for public and private purposes. Id. Jurisdictions are split as to whether to apply procurement law to PPPs; and if so, to which kinds of PPPs. Id.
- See supra Part V.
- Nikles, supra note 116, at 5.
- Univ. Research Ass’n v. Coutu, 450 U.S. 754, 756 (1981) The Act was “designed to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area.” Id. at 771.
- 40 U.S.C. § 3142 (2006) (originally enacted as Act of Mar. 3, 1931, ch. 411, § 46 Stat. 1494).
- E.g., CAL. LAB. CODE §1771 (West 2013) (stating that employees, which are employed for public works, shall not be paid less than the prevailing wages); DEL. CODE ANN tit. 29, § 6962(6)(c) (West 2013) (stating that contracts which fail to abide by prevailing wage laws will be void); N.J. STAT. ANN. §34:11 (2007) (stating that any contract for public works shall ascertain the prevailing wage from the commissioner and pay the employees nothing less than the prevailing wage); tit. 16 PA. CONS. STAT. § 5001(e)(1) (2011) (stating that all public contracts should abide by the Pennsylvania Prevailing Wage Act); TEX. GOV’T CODE ANN. § 2258.021(a)(1) (West 2013) (stating that a worker employed for public work or on behalf of the state or political subdivision should not be paid less than the prevailing rate of per diem); WASH. REV. CODE § 39.12.20 (2007) (stating that every employee working under a public building service maintenance contract shall be paid no less than the prevailing rate of wage).
- Davis, supra note 114, at 9, 11 (stating that PPPs are hybrid in nature).
- See 40 U.S.C. § 3142 (2014) (stating that every contract over $2,000 and to which the United States is a party, for construction or maintenance of a public building, the workers must be paid according to the prevailing wage laws that the Secretary of Labor determines). See generally LaSalle Partners v. United States, 48 Fed. Cl. 797, 798 (Fed. Cl. 2001) (stating that a contract between the United States General Services Administration and two private entities is a PPP).
- See supra note 143 and accompanying text.
- Nikles, supra note 116, at 5.
- See generally CONN. GEN. STAT. § 4–258(4) (2011) (stating that evaluation and determination criteria should include a determination of which PPP proposals serve a public purpose); LA. REV. STAT. ANN. § 48:2084.13 (2006) (stating that in order to determine which proposal gets selected, the public entity must consider whether or not the proposal serves a public purpose); MD. CODE ANN., STATE FIN. & PROC. § 10A–103 (2013) (stating that a public-private partnership may be established “in connection with any public infrastructure. . . .”). But see ALA. CODE § 6–5–710 (2013) (stating that PPPs may be entered into in order to remodel, construct, or maintain any public or private infrastructure).
- See 40 U.S.C. § 3142 (2006).
- Hardin Mem’l. Hosp., Inc. v. Land, 645 S.W.2d 711, 714 (Ky. Ct. App. 1983). In this case, the court concludes that Hardin is, without question, a public entity because it is a public hospital owned by a public entity. Id. The county owned the land on which the hospital was built and retained ultimate control of the hospital’s operations, the hospital was an agent or authority acting on behalf of the county, and thus, it constitutes a public agency. Id.
- See People ex rel. Bernardi v. Illini Cmty. Hosp. (Bernardi), 163 Ill. App. 3d 987 (Ill. App. Ct. 1987). See also Lycoming Cnty. Nursing Home Ass’n, Inc. v. Commonwealth, Dept. of Labor & Indus., 627 A.2d 238, 242 (Pa. Commw. Ct. 1993) (stating that in order to be considered a public body, a private entity must be funded by a public entity). But see Nw. Ohio Bldg. & Constr. Trades Council v. Ottawa Cnty. Improvement Corp., 122 Ohio St.3d 283, 2009 -Ohio- 2957, 910 N.E.2d 1025 (holding that a private for-profit company which applies for a loan from the government does not qualify as a public entity). In Bernardi, the court found that an Illinois not-forprofit hospital was a public body because it received funds from Pike County based on an act, which authorized counties to levy taxes for the purpose of maintaining non-sectarian hospitals. Bernardi, 163 Ill. App. 3d at 988. This court looked at the legislative intent by examining the plain meaning of the language of the pertinent legislature. Id.
‘Public body’ means the State or any officer, board or commission of the State or any political subdivision or department thereof, or any institution supported in whole or in part by public funds, authorized by law to construct public works or to enter into any contract for the construction of public works, and includes every county, city, town, village, township, school district, irrigation, utility, reclamation improvement or other district and every other political subdivision, district or municipality of the state whether such political subdivision, municipality or district operates under a special charter or not. Id. at 989.
- Opportunity Cent. of Se. Ill., Inc. v. Bernardi, 204 Ill. App. 3d 945, 949 (Ill. App. Ct. 1990) (holding that if something is publicly funded, it constitutes as public use). The statute in question specified that public works referred to all fixed works constructed for public use and by a public body. Id. The court interpreted this to mean that if a company was constructing fixed works and that the government or a governmental agency funded the company, then the nature of the work was public. Id.
- See Nikles, supra note 116, at 5.
- Nikles, supra note 116, at 9.
- See L. Suzio Concrete Co., Inc. v. New Haven Tobacco, Inc., 611 A.2d 921, 925 (Conn. App. Ct. 1992); Rhode Island Bldg. & Const. Trades Council v. R.I. Port Auth. and Econ. Dev. Corp., 700 A.2d 613, 615 (R.I. 1997); James J. O’Rourke, Inc. v. Indus. Nat. Bank of R.I., 478 A.2d 195, 197–98 (R.I. 1984). In Suzio Concrete, the court held that despite the contract clause requiring the purchaser to build a foundation before title would be transferred, the sales agreement was, at its core, a land sales agreement, not a construction contract. Suzio Concrete, 611 A.2d at 926. Thus, the ultimate use of the property was private and not public. Id. A building used for private purposes, such as the operation and occupation of a private company, is considered private despite being built on public land. Rhode Island Bldg. & Const. Trades Council, 700 A.2d at 615. Even if a public entity owns the land, issued the bonds, and held the general contract for construction, the operation of a meatpacking plant is not considered to serve a public-purpose. See O’Rourke, 478 A.2d at 198.
- Contra O’Rourke, 478 A.2d at 195; Rhode Island Bldg. & Const. Trades Council, 700 A.2d at 615; Suzio Concrete, 611 A.2d at 926.
- 42 U.S.C. § 1983 (2015).
- United States v. Jacobsen, 466 U.S. 109, 113 (1984). In a § 1983 claim for a violation of the Fourth Amendment, the challenging party must show that the private entity acted as an agent of the government and with the government’s knowledge. Id. Otherwise, the state action against the private entity is wholly inapplicable. Id. In this case, a private freight carrier company opened a suspicious package to find that it contained cocaine. Id. Consequently, the freight carriers proceeded to call the federal agents and informed them of the contents of the package. Id. at 111. The federal agents searched and seized the package. Id. Despite the fact that a person’s package is subject to a legitimate expectation of privacy, the private party with whom the government had no connection conducted the warrantless search. Id. at 122. Thus, due to a lack of connection between the governmental agency and the private entity, the private party was not subject to the § 1983 claim because they did not violate the Fourth Amendment. See id.
- Lugar v. Edmonson Oil Co., 457 U.S. 922, 937 (1982) (holding that the depravation of a right must be fairly attributable to the state); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 349 (1974) (stating that the Fourteenth amendment does not shield people from private action, no matter how discriminatory, wrongful, or pervasive); Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 173 (1972) (holding that racial discrimination by a private entity does not violate the Equal Protection Clause). Fair attribution has a two-part test. Lugar, 457 U.S. at 937. First, “deprivation must be caused by the exercise of some right or privilege created by the [s]tate or by a rule of conduct imposed by the state or by a person for whom the [s]tate is responsible.” Id. at 937. Second, “the party charged with the deprivation must be a person who may fairly be said to be a state actor.” Id. at 937.
- Jackson, 419 U.S. 345 at 352 (citing Nixon v. Condon, 286 U.S. 73 (1932); Terry v. Adams, 345 U.S. 461, 473 (1953); Marsh v. Alabama, 326 U.S. 501, 508 (1946); Evans v. Newton, 382 U.S. 296, 299 (1966)). Although petitioner argues that state action is present because the respondent provides an essential public service as specified by a Pennsylvania statute, the Pennsylvania courts have determined that, for the purposes of the statute, furnishing utility services is neither a state function nor a municipal duty. Jackson, 419 U.S. at 352.
- Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 157-8 (1978). Accord Campbell v. United States, 962 F.2d 1579, 1582 (11th Cir. 1992) (citing Shelley v. Kraemer, 334 U.S. 1, 13 (1948); Blum v. Yaretsky, 457 U.S. 991, 1003 (1982)). The Constitution only protects individuals from the government. Campbell, 962 F.2d 1579, 1582. Thus, it does not affect the relationship between two private parties no matter how wrongful or discriminatory. Id. In Campbell, a mother is suing a physician for wrongful birth alleging that he failed to perform the necessary tests to determine whether the fetus was healthy, or if the child would be born with some mental incapacity. Id. However, the state of Georgia does not have a wrongful birth statute. Id. The challenging party argues that Georgia’s failure to remedy this wrong constitutes an unconstitutional state act due to the physician’s actions, or lack thereof. Id. Although the Supreme Court of the United States does not delve into the nature of Georgia’s failure to provide remedy through a wrongful birth statute, it holds that said failure does not make the party’s act unconstitutional. Id.
- Flagg, 436 U.S. 149, 158.
- Jackson, 419 U.S. at 353.
- Stark v. Seattle Seahawks, No. C06-1719JLR, 2007 WL 1821017 (W.D. Wash. June 22, 2007).
- Id. at *1 (“[t]he Fourth Amendment prohibits only unreasonable searches conducted by the government or its agents.” Id. at *3 (quoting United States v. Jacobsen, 466 U.S. 109, 113 (1984)).
- Stark, 2007 WL 1821017, at 1 (W.D. Wash. June 22, 2007). Civil action for a depravation of rights gives private individuals the right to seek a remedy in equity and an action at law against any governmental agency that deprives them of any rights, privileges, or immunities secured by the laws of the Constitution. 42 U.S.C. § 1983 (2015). The Washington Constitution provides that “[n]o person shall be disturbed in his private affairs, or his home invaded, without authority of law.” WASH. CONST. art. 1, § 7 (2015).
- Stark, 2007 WL 1821017, at *1-2 (W.D. Wash. June 22, 2007). First and Goal, one of the defendants in the suit, contracted with the Stadium Authority to construct a new field for the Seahawks after threats that they were going to get sold to Los Angeles. Id. Qwest Field, the stadium, is a public entity because it belongs to the Stadium Authority. Id. at 2. Moreover, the funds to build the stadium came mostly from public funds. Id. After the field was completed, First and Goal became the master tenant of the stadium. Id. The agreement, which the parties entered into, resembles two of the seven different PPP models. DELOITTE RESEARCH, supra note 1, at 8. The agreement between the parties in this case resembles the “Build-Own-Operate-Transfer,” in which the government grants the private party a franchise to finance, design, build, and operate a facility for a specific period of time, and the “Build-Own-Operate” in which the government grants a private entity the rights to finance, design, build, operate and maintain a project; the private sector retains ownership of that project. Id.
- See Stark, 2007 WL 1821017, at *3.
- Id. at *4.
- Burton v. Wilmington Parking Auth., 365 U.S. 715, 725 (1961) (holding that the exclusion of a person of color from a restaurant, which is operated by a private owner under lease in a building financed by public funds, is a violation of the Fourteenth Amendment). The Supreme Court found that the government had placed itself into a position of interdependency with the restaurant. Id. As a result, the private entity’s actions were not considered purely private and were thus attributable to state action. Id.
- Stark, 2007 WL 1821017 at *4.
- See id. at *8.
- Davis, supra note 114, at 11.
- See Stark, 2007 WL 1821017 at *3.
- See id. at *4.
- Nikles, supra note 116, at 7.
- BRIAN A. WOLF, FLORIDA CONSTRUCTION LAW AND PRACTICE § 14.2 (The Florida Bar 7th ed. 2013).
- See F.D. Rich Co., Inc. v. United States Indus. Lumber Co., Inc., 417 U.S. 116, 121–22 (2002) (holding that a mechanics lien is a remedy available to a supplier of labor or materials only on a private construction project). See also WOLF, supra note 181, at § 14.2 (stating that contractors and subcontractors may assert a lien against the private owners of a property as a way of securing payment).
- F.D. Rich, 417 U.S. at 122.
- See The Miller Act, Pub. L. No. 86–135, § 1, 73 Stat. 279 (1959) (codified as amended in 40 U.S.C. § 3133(b)(4)) (2006). See also Nikles, supra note 116, at 8 (stating that the correct determination as to whether a project is public or private greatly impacts the remedies available to the injured party).
- 40 U.S.C. § 3133(b)(4) (2006) (amending 40 U.S.C. § 270a(a) (2002)); WOLF, supra note 181, at § 14.2. The Miller Act required the contractor to post two bonds. WOLF, supra note 181, at § 14.2. The first provided the government with protection in the event of contractor default. Id. The second provided the subcontractors security for the contractor’s payment obligations. Id.
- The Miller Act, Pub. L. No. 86–135, § 1, 73 Stat. 279 (1959) (codified as amended in 40 U.S.C. § 3133(b)(4)) (2006); WOLF, supra note 181, at § 14.2. In 1959 Congress amended the Act. WOLF, supra note 181, at § 14.2. This amendment provided that no lawsuit was to be commenced once one year had passed after the day “on which the last of the labor was performed or material was supplied.” 40 U.S.C. § 3133(b)(4).
- Brooks Architect Engineer Act, Pub. L. No. 103–355, § 5, 108 Stat. 3243 (1994) (codified as amended in 40 U.S.C. § 3131(b) (2006)); WOLF, supra note 181, at § 14.2. This 1994 amendment added a new section to the Miller Act. WOLF, surpa note 181, at § 14.2. The new section provided that section five of the Miller Act does not apply to contracts that fall short of $100,000. 40 U.S.C. § 3131(b).
- Construction Industry Payment Protection Act of 1999, Pub. L. No. 106–49, § 2, 113 Stat. 231 (1999).
- Codifying Title 40 of the United States Code, Pub. L. No. 107–217, § 1, 116 Stat. 162 (2002); WOLF, supra note 181, at § 14.2. The modern and expanded version amended the original Act in several ways. WOLF, supra note 181, at § 14. Although previous versions of the Miller Act required a cap to be placed on bonds, the new version states that the general contractor must furnish a bond for an amount that is equivalent to the total value of the contract. Id. Additionally, the amendments of the Act provide that any claimant may provide notice of a bond claim through any third party carrier system that provides written verification. Id.
- ARIZ. REV. STAT. ANN. § 28–7656 (2004) (“[t]he county shall pledge all or any part of the bridge construction revenues to be received and the county’s rights in the bridge construction intergovernmental agreement to the payment of an amount of the bonds secured by bridge construction revenues.”); COLO. REV. STAT. ANN. § 32–11–561 (2013) (“the proceeds of taxes, pledged revenues, and other moneys, including without limitation proceeds of bonds to be issued or reissued after the issuance of interim debentures, and bonds issued for the purpose of securing the payment of interim debentures. . . .”); FLA. STAT. § 255.05 (2012) (“[a] person entering into a formal contract with the state or any county, city, or political subdivision thereof, or other public authority or private entity, for the construction of a public building, for the prosecution and completion of a public work, or for repairs upon a public building or public work shall be required, before commencing the work or before recommencing the work after a default or abandonment, to execute and record in the public records of the county where the improvement is located, a payment and performance bond with a surety insurer authorized to do business in this state as surety.”); IND. CODE § 36–1–12–13.1 (2012) (“the appropriate political subdivision or agency . . . shall require the contractor to execute a payment bond to the appropriate political subdivision or agency, approved by and for the benefit of the political subdivision or agency, in an amount equal to the contract price if the cost of the public work is estimated to be more than 200,000.”); N.J. STAT. ANN. § 2a:44–143 (West 2013) (“[w]hen public buildings or other public works or improvements are about to be constructed, erected, altered or repaired under contract, at the expense of the State or any contracting unit . . . [t]he contracting unit or school district, shall require delivery of the payment and performance bond . . . as provided for by law, with an obligation for the performance of the contract and for the payment by the contractor for all labor performed or materials, provisions, provender or other supplies. . . .”).
- Nikles, supra note 116, at 7.
- 40 U.S.C. § 3131(b) (2006).
- BLACK’S LAW DICTIONARY 1253 (9th ed. 2009).
- BLACK’S LAW DICTIONARY 201 (9th ed. 2009).
- Nikles, supra note 116, at 7 (stating that when public entities or government officials fail to ensure the validity of a bond, they may be liable to pay claims that would have otherwise been covered under the payment and performance bonds).
- Patrick J. O’Connor, Statutory Bonds or Common Law Bonds: The Public-Private Dilemma, 29 TORT & INS. LAW J. 77, 78 (1993).
- Id. at 78–79. Due to budget restrictions and reductions, there is an intensifying movement toward PPPs. Id. In addition to questioning the “public work” aspect of the Miller Act, PPPs also question the “federal character” of the project. Id. The activity and work being performed should be carefully examined in order to determine whether they are outside the scope of the Miller Act. Id.
- 40 U.S.C. § 3131(b) (2002).
- See United States ex rel. Warren v. Kimrey, 489 F.2d 339, 342 (8th Cir. 1988) (holding that a contract for sale of government property is not a contract covered by the Miller Act); Chi. Rigging Co. v. Uniroyal Chem. Co., 718 F. Supp. 696, 700 (N.D. Ill. 1989) (holding that a contract for demolition of a government building is not covered by the Miller Act). But see United States ex rel. Shlager v. MacNeil Bros. Co., 27 F. Supp. 180, 181 (D. Mass 1939) (holding that the contract for salvaging a sunken ship should survive a motion to dismiss for lack of meeting the requirements of the Miller Act).
- See Warren, 489 F.2d at 340. This case involved a contract between a buyer of government buildings and a contractor. Id. The buyer and contractor entered into a contract for the demolition of said buildings. Id. The contractor was fired, at a later date, and brought suit against the contractor for the performance bond. Id. at 341.
- Shlager, 27 F. Supp. at 180. In this case, a company entered into a contract with the United States for the removal of a sunken ship. Id. The company executed a bond conditioned upon expedited payment to the workers. Id. at 181. Without fully elaborating on its reason(s), the court found that this type of contract constituted “public works” for the purposes of the Miller Act. Id.
- See supra Part V.
- United States ex rel. Noland Co. v. Irwin, 316 U.S. 23, 30 (1942) (discussing the similarities between the Miller Act and the National Industrial Recovery Act).
- Id. at 29.
- Id. at 30.
- Nikles, supra note 116, at 8.
- Id. at 7.
- Custos, supra note 77, at 557 (stating that the United States has not enacted a central statutory framework for PPPs).
- See supra note 49 and accompanying text.
- See supra notes 43–44 and accompanying text.
- See supra note 50 and accompanying text.
- See supra notes 47–54 and accompanying text.
- See supra notes 44–45 and accompanying text.
- See supra notes 25–31 and accompanying text.
- See infra notes 223–225.
- BLACK’S LAW DICTIONARY (10th ed. 2014).
- BLACK’S LAW DICTIONARY (10th ed. 2014).
- BLACK’S LAW DICTIONARY (10th ed. 2014).
- See supra notes 223–225.
- See supra Part V (A).
- See supra Part V (B).
- See supra Part V (C).
- See supra Part V (D).
- See supra notes 148–157 and accompanying text.