Out of Control Policy Blog

A chance for private roads in D.C.

In this WaPo op/ed, a couple of George Washington U. profs point out some of the details of a proposed privatiztion of part of the Washington Beltway. More important, they talk about how the proposed deal is strucuted and make some great recommendations for modelling in on successful similar deals in the U.K.

The British experience offers critical lessons for Virginia.
For example:

? The private sector, which invests in the projects, should
bear the risk of operating the roads. In that way, the
investors have a stake in ensuring that roads are built on
time, without cost overruns, and are run efficiently.

? The private sector should demonstrate expertise and access
to technology to create "value for money" in building and
operating the project.

? The government should define what is to be built in terms of
what it wants to accomplish, but it should allow the private
sector to design the most cost-effective solution for the life
of the project, usually 25 to 30 years or more. Service criteria,
such as lane availability and safety, should be spelled out in
the contract.

? Payments from the government to the contractor should not
commence until the project is complete and the services are
delivered. Payments for operating a road should decrease if
the operator fails to meet agreed-to performance indicators.

The Dulles Toll Road buyout proposal offers no sharing of
risk, no demonstrated value for money and no performance
benchmarks, all of which makes it look like a bad deal
for Virginia taxpayers. However, the proposal might be
restructured to bring in private investors and contractors
in a British-style partnership.

Adrian Moore is Vice President, Policy

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