Public-private partnerships

On August 8, 2011, the 1st District Court of Appeal broke new ground when it published a decision holding that Phase 2 of the Presidio Parkway project can move forward as a public-private partnership (P3). The Presidio Parkway Project is the first project to reach award under California’s new public-private partnership statute, Streets and Highways Code section 143. The project was challenged on three separate grounds by the Professional Engineers in California Government (PECG), an engineers’ union. The Court of Appeal affirmed the trial court’s ruling approving the California Department of Transportation’s (Caltrans) use of the new statute, and should encourage the consideration of P3s as a project delivery method in California.

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The Professional Engineers in California Government, the union representing state engineers, has filed suit to stop the project to replace Doyle Drive, the 1.6 mile highway that connects the Golden Gate Bridge with the City of San Francisco. The lawsuit alleges that the project impermissibly uses a Private Public Partnership (P3) contrary to the State law authorizing the project. Instead, the engineers union asserts that the project should be awarded to the lowest bidder pursuant to a traditional design-bid-build process, with the design component being performed by State engineers.  Under the current arrangement, Hochtief Concessions and Meridiam Infrastructure will design, construct, operate and maintain the road.

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Governor Schwarzenegger recently announced a plan to promote public-private partnerships in order to meet California’s long-term infrastructure needs. (See Los Angeles Times article.) Public-private partnerships are contractual agreements which are formed between public agencies and one or more private companies whereby the private company finances, builds and manages public facilities for a specified period of time.


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