Public-private partnership reforms proposed
After a decade of media grousing, any number of local school-construction squabbles and a nasty 2005 disclosure battle between the governor and a key state agency, a compromise may be at hand to force public-private "partnership" deals into the open sooner.
Thanks to a year-long study by a subcommittee of the Freedom of Information Advisory Council, agreement was reached in late December to tighten FOIA’s "proprietary records" exemption for the so-called "3P" projects.
The controversial exemption dates back to 1995, the year the state’s Public-Private Transportation Act was created to help speed up public projects, cut red tape, encourage innovation and, in theory, save tax dollars.
Seven years later, the General Assembly enacted the Public-Private Education Facilities and Infrastructure Act.
Concerns grew that the government’s move away from traditional public procurement processes, intentionally or not, was denying the public any meaningful voice in how its tax dollars got spent. Involved were some of the biggest and most contentious public projects, ranging from schools and waste-water treatment plants to toll roads, Capitol restoration and information technology systems.
The Freedom of Information Act compromise, which will be submitted to the General Assembly in the 2006 session, removes the never-defined "confidential proprietary records" language from the partnerships’ exemption.
A private company’s trade secrets and internal financial records would stay confidential. Virtually anything else could only stay private during the negotiating process, and only if a would-be contractor and a public body documented in writing their reasoning to keep information secret until negotiations ended.
Solicited or unsolicited, "conceptual" proposals would be disclosed within 10 days of acceptance for consideration. For the first time, planned public expenditures would have to be part of the disclosure.
Before an interim or comprehensive deal is struck with a favored contractor, the proposed agreement would need to be publicly disclosed, with at least one copy of the agreement made available for public inspection.
Before the signing, public comment would be accepted for at least 30 days (to keep the deal from being uncorked at the last minute). Public hearings would be permitted, but not required (that’s how local government lobbyists wanted it).
Once an interim or comprehensive agreement was signed, all remaining procurement records would be disclosed upon request -- except for trade secrets, private financial records and a public body’s staff or consultant cost estimates.
A subcommittee of four FOI Advisory Council members, led by former-Del. Bill Axselle, worked out the proposed language. A lobbyist who handles legal work for a number of PPEA/PPTA deals, Axselle called the compromise a good balancing of safeguards against excessive secrecy, interests of would-be contractors and the bargaining position of a public body.
Until recently it was thought that state agencies, especially the Virginia Department of Transportation, had wisely mandated extensive disclosure rules to insure plenty of public input, thus going beyond the required bare-bones disclosures spelled out in current law.
Last summer, however, the Virginia Information Technology Agency and its board got hammered on newspaper editorial pages and in the governor’s office for needlessly withholding details of a proposed $2.5 billion contract to outsource the state’s IT systems.
VITA argued that it needed to keep bids under wraps, except for "conceptual" plans, to get the best deal for taxpayers. (At one point, perhaps with greater candor than was intended, one official conceded that it also made things easier for the agency, politically. Too much disclosure might have allowed state employees or other possible critics to pick items apart and delay the process.)
The Roanoke Times said editorially, "The technology board was confusing a peek at selected proposals with genuine transparency. "
Eventually it was learned that a potential partner, IBM, wanted to move some of the IT work to New York, and had made no provision to locate a backup data center and help desk in rural Virginia -- a key goal of the Warner Administration and a key part of a Northrop Grumman proposal. IBM called the omission "a mistake." A Bristol Herald-Courier editorial argued, "The IBM miscue makes the case against secrecy." (Northrop Grumman got the contract.)
At the local government level, it increasingly seemed that "conceptual" disclosures told the public almost nothing. Significantly, ones submitted to county school boards told the boards of supervisors almost nothing, even though it is the supervisors who must finance a school project. Controversies arose in counties all over the state, including Bedford, Clarke, Chesterfield and Stafford.
School boards said their hands were tied by confidential clauses in proposed 3P deals; supervisors insisted they had a right to be in the loop.
Larger issues seldom got talked about, but as newspaper editorials noted, the lack of transparency at the local and state levels invited public backlash -- or worse.
The Virginia Press Association, which had protested the overly broad language of the PPTA exemption a decade earlier, called it an invitation for "over-designation" of a private entity’s proposals as confidential and proprietary.
Without public scrutiny, particularly for school construction and other projects of great interest to the public, mistrust of the whole 3P process was beginning to occur. (In Bedford, where the school board went into 14 closed sessions to talk about PPEA proposals, supervisors and taxpayers did not learn until the eleventh hour the price tag of a big school project that was being talked about.)
VITA officials did not see a problem, noting that the state’s traditional Request for Proposal (RFP) procurement process had always kept things under wraps until winning bidders were picked.
Overlooked was: (1) the extensive public involvement and public bidding that had always occurred in local school construction programs; (2) the growing public expectation for openness when tax dollars are spent (something Gov. Warner obviously understood); (3), the growing skepticism about the government’s misuse of condemnation powers (built into some 3P "conceptual" plans); (4) the 3P process can seem rushed, creating an appearance of insider deals; and (5) the danger of doing business with talented hustlers whose unsolicited proposals might seem -- and might be -- too good to be true.
Sen. Edd Houck, D-Spotsylvania, planned to sponsor the FOI Advisory Council’s recommended FOIA revision, including some clarifying language in the partnership statutes.
Houck chairs the council and was a co-chair of the Axselle subcommittee along with Roger Wiley, a local-government attorney, and John Edwards, editor/publisher of the Smithfield Times.
Del. Ken Plum, D-Reston, gets some of the credit for the push for greater public scrutiny of 3P projects. A year ago, he introduced a VITA bill to create a closed-meeting exemption to talk about partnership proposals -- an exemption that eventually was found to be unneeded. Meantime, access activists asked that the bill be rewritten to tighten the 3P disclosure rules. Plum then struck the bill and got a legislative go-ahead to send the knotty issue to the FOI Advisory Council for further study.
(When the legislature created the council six years ago, the study-commission role was one of its assigned duties.)
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