ARTBA Pub-Priv Ventures

ARTBA has one of the best annual get-togethers in the country on investor/business involvement in roads. The next one is Nov 1 and 2 at the Grand Hyatt Wash DC. Good place to hear the leading people share their wisdoms and do their pitches, to swap business cards and generally schmooze. Contact Matt Jeaneret 202 289 4434 for details. That plug done, let’s congratulate ARTBA for substituting “PPVentures” for PPPartnerships (PPP) in its titling.

A partnership has a very specific business meaning. It means an enterprise in which the partners share the risks, share the work, share the decisions and share the rewards equally in a joint business enterprise. A partnership is therefore impossible between government and business. They are different animals. Business and government can’t form a joint business enterprise. People in government just aren’t supposed to put capital at risk, or take profits, and people in business aren’t attuned to the cautious, deliberative, open, rule-driven, responsive consensus-creating styles that are supposed to characterize government.

Government is used to being the boss. It is not legally or politically allowed to be involved in a relationship with business in which it acquiesces to business, so come the crunch whatever the previuous cosy reassurances, it will take charge.

PP Partnership was always misleading term. It became hype - a gooey, oozy feel-good term that obscured more than it specified. And because it was the “in”-thing it got so stretched in meaning it came to cover almost any arrangement in which government and business interact - which is almost every major building project anyway.

We decided not ever to use the PPP term, except in irony, at the opening ceremonies of the Dulles Greenway in the summer of 1995 when this road was described by a Virginia govt official as a “great PPP” Even though investors put up the money, bought the land, supervised the construction... did absolutely everything. There was no government involvement in the project. If ever there was a straight investor designed, financed, built and operated road that was it. VDOT’s involvement was grudging acceptance of the road’s construction by the investors, dispatch of officials for discussions on the interface with the VDOT network, for which time and travel expanses they billed the Greenway, grudging acceptance of the most minimal signage on VDOT approach roads etc. The government did the absolute minimum they could for the project. Then they actively worked to sabotage the toll revenue by accelerating improvements to the competitive Leesburg pike. Some partners! At the other extreme is government designed work put out for traditional construction bid. Contracting officers have been known recently to describe these traditional government contracts let out to business as PPPs. Soon the grant of a building permit will be a PPP?

As one guy put it: “These public private partnerships really are great because both sides come into them with common interests and objectives. Each wants the same things. Government wants business to take most of the risks, take the political heat, put up the money, do most of the hard yakka, and carry the bag when things go bad, while they are in it so they can watch what is going on, so they can offer advice, protect their interests, and if it goes well, bathe in all the glory too. And business is in it because it wants government to put up money, it wants government to bear the brunt of the risks, take the political heat etc. while business gets most of the rewards. Shared interests you see.”

PPVentures doesn’t pretend there is a partnership. It allows for the public and private sides being different species. Venture doesn’t presume equality. And the very word makes explicit an element of risk. PPPartnership is a phony word, which should evoke guffaws. Now about this ARTBA conference... 202 289 4434