P3s Part 2: Privatizing our Infrastructure is redefining “Buy America”

David Siegler
Aug 24, 2017 · 2 min read
#BuyAmerica

Multinational corporations are banking on America’s short-sighted approach to infrastructure

My last post laid out that public-private partnerships are going to be an immense liability on next generations. While I rightly threw Goldman Sachs under the bus, there are other “management consulting” firms like McKinsey & Co. publishing articles praising P3s for saving DOTs and other transportation agencies significant amounts of time and money. It conveniently leaves out the economic disasters that P3s have already wrought on the US, which IBTimes continues to highlight.

In particular, the multinational corporations that are writing and negotiating these contracts with DOTs that have much less experience and resources are putting in things like “non-compete” clauses:

Corporations engaging in P3s likely learned from the Dulles Greenway project’s fallout that inserting non-compete agreements in their contracts is a great way to keep revenues afloat with a steady stream of elevated tolls or other payments for use of the asset. (The private consortium operating the Dulles Greenway defaulted one year into its 42-year agreement with the Virginia DOT after the state finished a competing project ahead of schedule, siphoning off the Greenway’s traffic.)

In other words, the bridge that YOU take to go to work that has been structurally deficient for over a decade will have to be placed on hold because some foreign company wants its profit first.

It’s not surprising that McKinsey is behind such a public-failure of an idea. After all:

McKinsey has indeed offered some of the worst advice in the annals of business. Enron? Check. Time Warner’s merger with AOL? Check. General Motors’s poor strategy against the Japanese automakers? Check. It told AT&T in 1980 that it expected the market for cellphones in the United States in 2000 would amount to only 900,000 subscribers. It turned out to be 109 million. The list goes on.


Like I stressed in my first post on P3s, they are NOT in and of themselves a “PROJECT DELIVERY METHOD”; they are first and foremost a FINANCING method.

McKinsey’s article references a source that makes this clear:

P3 delivery methods commonly fall into the following categories: design-build (DB), operate-maintain (OM), design-build-operate-maintain (DBOM), design-build-finance (DBF) and design-build-finance-operate-maintain (DBFOM).

Design-Build, a project delivery method that is being used across the country to save time and money for taxpayers, does not NEED to be tied to P3.

But, the multinational corporations that stand to benefit most will have you believing just the opposite.

See Part 1 and Part 3.

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