Legislation offered by U.S. Sens. Rob Portman (R-OH) and Joe Manchin (D-WV) requiring value for money analyses on federal transportation loans was signed into law as part of the Infrastructure Investment and Jobs Act (IIJA).
The $1.2 trillion infrastructure bill was signed into law Monday by President Joe Biden after passing in the House by a vote of 228-206 and the Senate by a vote of 69-30.
Portman and Manchin’s bill requires Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation & Improvement Financing (RRIF) applicants with project costs over $750 million to conduct a Value-for-Money analysis as part of their application process.
“Oftentimes, public-private partnerships (P3) produce high-quality projects at a lower cost. With the vast amount of infrastructure improvements needed around this country, P3s are a helpful way in keeping taxpayer costs down,” Portman said. “This legislation will direct DOT to require certain federally supported projects to do a Value-for-Money analysis, an essential step for states and localities in determining whether or not a P3 would, in fact, be a less expensive, more efficient path forward for project delivery.”
Further, the bill requires the Build America Bureau (the Department of Transportation’s hub for funding and financing resources) to report to Congress on the utilization of P3s and best practices for project financing. Public-private partnerships, or P3s, are contractual relationships between a state or local government and a private entity. The relationship allows for more efficient project delivery at a lower cost, the Senators said. The Congressional Budget Office states that P3s have accounted for only one to three percent of spending for highway, transit, and water infrastructure since 1990.
“Public-private partnerships are valuable ways for states and localities to complete projects through financially sound solutions. The bipartisan infrastructure bill will require states and communities to consider public-private partnerships when reviewing transportation project financing to ensure that we are making the best use of taxpayer dollars,” Manchin said.
The analysis would be required to include an evaluation of the life-cycle cost and project delivery timeframes; the costs of using public financing versus private financing for the project; a description of the key assumptions made in developing the analysis; and a discussion of the benefits and costs associated with the allocation of risk and the determination of risk premiums assigned to various project delivery scenarios.