New opportunities are opening up for contractors working on public projects in Maine. A new bill, already introduced to the Maine Legislature and to be considered when lawmakers return to Augusta in January, would allow for public-private partnerships for the development and operation of public buildings and facilities.
LD 1298, An Act Relating to the Creation of Public-private Facilities and Infrastructure, sponsored by Rep. Karl Ward, R-Dedham, gives authority to a responsible government entity to enter into an agreement with a private entity or person for the development or operation of a qualifying project. The act streamlines the conditions under which public-private partnerships, or P3s, can be executed and sets specific criteria for their realization.
P3s have become popular in quite a few states, having been first tested more than two decades ago. Besides presenting new business venues for contractors in the state, the new legislation liberalizes and stimulates the development of public buildings and facilities, which is of public interest and benefit.
The provisions of the legislation stipulate that the state, its political divisions and state institutions of higher education would be allowed to enter into public-private partnerships in the interest of citizens, if these partnerships allow for the more timely and quality execution of projects.
The goal of these partnerships is the development or operation of public buildings, facilities and related infrastructure, as well as the possibility to make improvements on buildings.
Projects that can be developed under the new legislation include ferries and port facilities, mass transit and parking facilities, power generation and fuel supply facilities, oil or gas pipelines, water supply and waste treatment centers, hospitals and medical facilities, schools, nursing care facilities and recreational centers, among others.
Besides making the construction of new public buildings and infrastructure possible, the legislation includes strict ways for safeguarding public interest.
Comprehensive agreements for public-private partnerships include the requirement for private companies to provide payment bonds and performance bonds for all construction activities. The bonds need to be in compliance with Maine’s Little Miller Act. Additionally, the obligee, the entity requiring the bonds, can be a public one, a private person or an entity combining a public one and a private person.
The purpose of the performance bonds and payment bonds is to guarantee that successful project completion will be delivered by the bond principal, which is the contracting company. In case it does not fulfill its contractual obligations, the obligee can file a claim against the bond and thus ensure the completion of the project.
Public-private partnerships provide a good option for the efficient construction and operation of infrastructure in cases where states cannot financially cover such projects alone.
They also give private companies the opportunity to operate the facilities and ensure long-term business opportunities for them. They cover the initial investment in the project, and in exchange, get to operate the facilities and collect payments within them.
The decision to open up the legislative framework in Maine follows the trend from other states where P3s have become popular in recent years, especially in the aftermath of the economic crisis. A 2004 report to Congress by the U.S. Department of Transportation gives strong support to such partnerships, outlining their benefits and the legal obstacles to their implementation.
P3s also are an efficient way to benefit from the expertise, fast delivery and investment capabilities that the private sector can offer in public sector projects.
Industry leaders will be following with interest the results from this Maine bill if it becomes law, which means more business for contractors and timely and quality execution of infrastructure for citizens.
Todd Bryant is the president and founder of Bryant Surety Bonds, based in Doylestown, Pennsylvania. He is a surety bonds expert with years of experience in helping business owners get bonded and start their businesses.