By Bruce Jervis
Pressing needs for infrastructure and other public facilities, combined with limited funding sources, are changing the way public projects are financed. Increasingly, the constructor is also the financier, compensated through lease payments, tolls, or other user fees.
These new project arrangements have proved challenging to the public procurement system. The bidding laws in many states have been slow to keep pace. Some states, however, have been proactive. A recent challenge to a lease-leaseback arrangement in California was squarely addressed by the procurement statutes. The procurement was exempt from competitive bidding.
Is this a good thing? Bidding laws are intended to maintain fair, open competition, avoiding favoritism and assuring the taxpaying public of the best value. Awarding large contracts through non-competitive channels calls these principles into question. Should competitive procurement requirements apply to constructor-financed projects? Is this even feasible? I welcome your comments.