Public-Private Partnerships Can Relieve the Budget Squeeze

Public-private partnerships help governments cope with tough budgetary times.

by / September 14, 2008

With funding sources diminishing and the need to appeal to funders becoming an increasingly competitive process, some IT project sponsors have begun seeking more creative solutions. For some, these solutions come in the form of public-private partnerships. Such partnerships combine the public sector's ability to establish an effective infrastructure for service delivery with the private sector's knowledge and expertise, helping both to remain competitive long term.

According to some experts, public-private alliances are becoming more common as budgets become tighter. Richard Norment, executive director of The National Council for Public-Private Partnerships, said the public sector is beginning to identify opportunities presented by an underutilized asset. Growing expenses - such as health care, Social Security and paying interest on the national debt - have dramatically reduced the number of federal dollars available over the past decade, he said.

Yet, as the population increases, the demand for more public services increases. And if government at the federal, state and local levels lacks the financial resources to meet demands, the challenge is to find ways to identify new potential. For that reason, public-private partnerships offer a diverse and unrecognized potential to tap into innovative resources.

"In a public-private partnership, you have blending of the resources - sometimes it is money, but it is also innovative ideas, process for implementation," Norment said. "Basically what you are tapping into is the experience of the private sector."

For instance, a municipality may hire a private provider to install cameras at intersections to snap photographs of certain types of infractions. The vendor then sends out the tickets and takes a percentage of the fine to cover equipment costs. For police, this type of cooperative endeavor reduces the demands of preparing related paperwork, since a recording of the incident is automatic.

Norment agrees these types of partnerships are here to stay, especially now that funding is in short supply.

"I think the budgetary constraints that all levels of government are seeing, matched with the increasing demands of the public, are inevitably going to lead to more public-private partnerships," he said. Establishing alliances between the public and private sector helps build closer working relationships, which result in more effective service delivery, he said.

Pioneering Partnerships
Adrian Farley, interim deputy director of the Procurement Division for the Department of General Services, said California was one of the first states to use public-private partnerships for IT procurement.

One of these public-private projects was a consortium with consulting company A.T. Kearney. The company's role was to provide its expertise on strategic sourcing, Farley said. In return, the consulting group received a share of the savings.

While Farley touts the merits of integrating resources into such strategic alliances, he also said when the public and private sector get together, there must be strong fiscal accountability. The solution that worked in California was to hire a third party to document the total savings. For the consortium effort, which turned out to be approximately a three-year venture, the total documented savings exceeded $100 million.

Another public-private venture in New York is intended to cost-effectively bring broadband Internet access to rural residents. The state's Universal Broadband Initiative involves the creation of a fiber-optic ring that will provide the basic infrastructure for vendors to tap into and provide Internet access, according to Ed Hemminger, CIO of Ontario County, N.Y.

"We think we are unique in that we do not provide services in direct competition with the private sector," Hemminger said. "We just provide the backbone infrastructure."

He called the project a countywide initiative and said the scope of this endeavor is much greater than the typical IT project. In fact, Hemminger predicts the infrastructure created by the installation of the 180-mile fiber-optic ring - consisting of 144 strands

- will have the capacity to connect services provided in and around Ontario County. These services include the police and fire departments, educational institutions, municipal operations and local businesses.

"We are not providing any services," said Hemminger. "You can come to us and get a list of vendors that are going to use the fiber ring to provide Internet access."  

Construction of the fiber-optic ring began in June 2006, with the first 40 miles completed by November 2007. The expected completion date is slated for June 2009. In addition to being CIO, Hemminger also serves as the CEO of the Finger Lakes Regional Telecommunications Development Corp., a $7.5 million nonprofit development corporation set up to develop and manage the project. 

The project benefits both the public and private partners, he said.

"[The private sector] can do things that the government can't do, and we can do things the private sector cannot do," he said. "I think it is a wonderful marriage." For its efforts, the nonprofit recently earned a Best of New York Award for Excellence in Technology Supporting Economic Development from the Center for Digital Government.

Economic Benefits
One of the strongest proponents of public-private ventures is Alain E. Kaloyeros, vice president and chief administrative officer of the College of Nanoscale Science and Engineering at the University at Albany.
According to Kaloyeros, the emerging trend also has enormous potential to effectively stimulate economic growth.

"In the 21st century, a knowledge-based economy that is truly global - the ability to generate and share information both quickly and securely - is playing an increasingly vital role in helping to both create and exploit new opportunities that drive economic prosperity, investment and growth," Kaloyeros said. "It's critical for companies and organizations in both the public and private sector - as well as our national competitiveness - that continued advances be made in the area of information technology, and just as importantly, that the work force be educated and trained to take full advantage of this unprecedented opportunity."

Emerging technologies, such as nanotechnology biometrics, show promise for organizations in every industry and sector, Kaloyeros said.

"Now, more than ever, an exponential rise in the cost of conducting advanced technology development and specialized work force education and training demands collaboration. Whether a large or small corporation, government body, independent contractor or public employee union, no one entity can go it alone and meet the ever-changing demands of the information economy," he said.

"Public-private partnerships that combine the best of industry, academia and government offer a new paradigm for technology-based education, research and commercialization that is already providing tremendous benefits to the IT industry and holds even more promise for the future," Kaloyeros said


Suzane Bricker Contributing Writer
Suzane Bricker has extensive experience as a grant writer for educational institutions and social services agencies, and has secured funding for her own nonprofit organization in south Florida. She has a master's degree in mass communication with a minor emphasis in science writing.