Center for Alternative Finance and Procurement Mission

The mission of The Center for Alternative Finance and Procurement (CAP) is to consult with governmental entities regarding best practices for procurement and the financing of qualifying projects and to assist governmental entities in the receipt of proposals, negotiation of interim and comprehensive agreements, and management of qualifying projects under Chapters 2267 and 2268 of the Texas Government Code.

What is a P3 (Private-Public Partnerships)?

P3s are project specific programs, defined by the contractual relationship between a public-sector agency and private sector consortium to provide services required to: plan for and design, build and deliver, finance, operate, and/or maintain infrastructure assets needed to deliver a public facility or service.

A P3 is a contractual arrangement between a project sponsor and a private sector entity in which the skills, assets, and risks are allocated among the parties in order to achieve the highest value for money over the lifecycle of the asset. Furthermore, remuneration for delivery of the asset and/or service is typically tied to performance, so both the project sponsor and the private entity are incentivized to uphold the terms of the P3 contract.

Benefits of P3s

P3s allow governments to introduce private sector capital into a project and also harness private sector innovation, management and technical expertise. When the private sector more cost-effectively manage risks, taxpayers benefit from lower long-term project costs, higher quality services, and reduced time to delivery of and operational asset. These incentives arise because the P3 contract holds the private partner responsible for completing planned project phases for a fixed cost and fixed schedule, agreed upon during procurement, and it can provide the private partner with decision-making power and control of the asset in completing those phases. In other words, a P3 relies on appropriate transfer of risks from the public sector to the private sector in order to ultimately realize efficiency gains.

Partnerships between public entities and private entities for the development of infrastructure can help meet the needs of the people of Texas by improving the schedule for delivery, lowering the cost, and providing other benefits to the public.

P3s can facilitate access to the expertise, innovation, and capital of the private sector. This type of project delivery can enable governments to provide solutions on a faster timeline than otherwise possible. They encourage innovation and accountability due to procurement processes encompassing the entire life cycle of a project. Using the P3 model to increase the throughput of infrastructure development helps stimulate the economy. P3s can protect taxpayers by shifting risks to the private sector, avoiding unnecessary debt, preserving bond capacity, and protecting public credit ratings.

For more information please contact:
Center for Alternative Finance and Procurement
At Texas Facilities Commission
1711 San Jacinto, Austin, TX 78701
512-463-7598