WIN-WIN AGREEMENTS AND PUBLIC PRIVATE INFRASTRUCTURE PARTNERSHIPS: MANAGERIAL AND GOVERNANCE CONCERNS.

Author:Schachter, Hindy Lauer
Position:Case study

INTRODUCTION

This article examines the centrality of negotiating win-win agreements to constructing state and local sector public-private infrastructure partnerships (PPPs) that are both efficient and respectful of public values. Win-win negotiations are defined as ones in which every entity signing an agreement believes it comes out ahead on meeting its goals (Zaleznik 1992). The concept--which is validated by actor perceptions-accentuates the need for managers to move beyond win/lose or zero-sum postures and construct options for mutual gain where possible (Fisher, Ury, and Patton 1991).

We live in an era of multi-organizational governance with increased attention to involving private organizations in public service delivery (Grossman and Holzer 2016). This shift fosters collaboration, a process where independent entities negotiate multi-organizational arrangements including rules and structures to solve problems and decide issues (Thomson, Perry and Miller 2009; O'Leary, Choi, and Gerard 2012). Managerial abilities are one variable that may influence how collaborations develop. Among other resources, successful collaborators have boundary spanning communication facility and the ability to devise win-win solutions (Getha-Taylor 2008).

Partnerships are defined as a type of formalized collaboration (Grossman and Holzer 2016). They differ from other formal collaborative efforts in that both parties contribute to the service rather than having one organization simply buy goods or services produced by another (Hilvert and Swindell 2014).They occur when multiple organizations make a legally binding agreement to share resources to achieve mutually agreed on ends. The aim is collaborative advantage or achieving something that no one organization could produce alone (Vangen and Huxham 2003). A public-private partnership requires that at least one of the partners is a governmental entity and at least one is a private organization, whether from the business or nonprofit sectors.

For at least the past 30 years, jurisdictions have increased use of infrastructure partnerships as tax revenues and user fees have failed to keep pace with service needs (O'Toole 1997, Wang 2009). The ascendancy of new public management or reinventing government in the 1990s accelerated this trend by supporting an assumption that the private sector was more efficient and innovative than government (Osborne and Gaebler 1992). Such an assumption made administrators seek to lower costs and improve substantive quality by partnering with private sector resources even though the evidence that PPPs produce cost gains is limited. While some studies have found infrastructure PPPs financially advantageous for sponsoring governments (e.g., Domberger and Jensen 1997; Engel, Fischer, and Galetovic 2011; Corvino and Rigolini 2016), other studies concluded that various highway, transit and bridge PPPs did not lower costs (Hodge and Greve 2007; Shaoul, Stafford and Stapleton 2012; Vining and Boardman 2008).

Infrastructure PPPs can be analyzed through managerial and governance frames. The first frame evaluates projects based on least cost efficiency and the ability to offer a substantive service such as fast moving, uncongested roads. The second frame assesses whether a project preserves such values as political accountability, responsiveness, equity and transparency.

While many studies have evaluated projects based on cost savings (Little 2011), a PPP's success hinges on more than lowering costs and procuring high quality materials--important as these managerial goals are. Government agencies must also evaluate a project's governance implications including its likely impact on political accountability and responsiveness over time (Siemiatycki 2007). Administrators have to look at a project's equity impact on various constituencies. A comparative study of wastewater treatment PPPs found, for example, that they tended to skew their projects to more affluent communities rather than those with the greatest infrastructure needs (O'Toole 1996). Concentrating on serving the affluent would not be problematic in most private transactions but it is a public sector concern. In fact, some public administration scholars have argued they preferred to see public organizations increase their responsiveness even if it came at the expense of a short-term efficiency decrease (Frederickson 1987).

Only recently have a few scholars explicitly analyzed the political or public value impact of PPPs, that is to say their effect on public accountability, transparency, equity and responsiveness. A study of partnerships in the Netherlands found that in different situations PPPs could strengthen, maintain or undermine public values (Reynaers 2014). Koppenjan and Enserink's (2009) study of urban PPP contracts concluded that for PPPs to uphold sustainability values governments had to tailor agreements to fit the situation rather than using one size fits all patterns. In short, these studies concluded that contingency factors affected PPP/public value relationships.

As safeguarding public values is one of a public administrator's responsibilities, designing effective partnerships requires careful agency assessment of what it expects partners to contribute. The agency has to understand which values it wants to maximize and whether a given arrangement helps enhance such values (Brown, Potoski and Van Slyke 2006).

Partnership structures vary in terms of which entity has responsibility for designing, constructing, operating, maintaining and financing projects. They also vary in how long the arrangement lasts (Eggers et al 2010).Public administrators have to negotiate which division of responsibilities and which time limit preserves or enhances public values in a given relationship. For this task administrators need managerial skills along with political understanding. Difficulty in achieving this double gift of managerial and political competence occurs because sometimes administrator skills that create the win-win leadership necessary to broker managerially successful PPPs can lead to creating agreements which may generate public value concerns. In other words, administrators skilled at getting to understand the goals of a private firm are likely to spend time with that firm's executives helping them to meet their agenda. During their sessions together the public administrator may become so immersed in trying to reach an agreement that he or she may lose sight of ways in which the private agenda may conflict with public needs. The ensuing problem is similar to one that scholars have described when regulatory agencies interact with the entities they regulate (Joffee1970, Carpenter and Moss 2014). The cooperation that should comprise their relationship can shade into capture when a regulated institution's actions are able to shift the public agency's focus from protecting the public interest to upholding an industry-specific agenda. To protect public values administrators have to be aware of this dilemma and explicitly keep it at the forefront in negotiations.

Van Gestel, Voets and Verhoest (2012) argue that contextual factors impact a partnership's performance. State and local statutes and economic climate are examples of contextual factors that set limits to what is feasible in a given partnership's creation. Administrative capacity, particularly the existence of a savvy project champion, is a crucial contextual factor for developing a win-win arrangement. A relatively unexamined contextual variable is what Bozeman (1987) called the relative publicness of the business-sector partner by which he meant the degree to which it is subject to political authority, e.g., the extent to which it gets its resources from government. This factor may influence the extent to which a private firm depends on upholding public values to have a good long-term relationship with government agencies.

All leaders need the ability to influence people to achieve goals. In fact, management and organizational behavior textbooks often use this ability to define leadership (e.g., Robbins and Judge 2013). A PPP champion, however, must exercise this ability in more variegated terrain than traditional public leaders. Like them he or she must make coalitions with a variety of urban stakeholders including business and community groups. The PPP champion, however, must also cement relationships with potential partners. He or she must practice collaborative leading which Van Wart (2011) argued focuses on extending the pie or augmenting external win-win arrangements. As McGuire (2006) noted, collaborative leaders need skill in four areas: Activation--the ability to identify the right people and resources for the project, framing--the ability to facilitate agreement on roles, mobilizing--the ability to inspire commitment in the undertaking, and synthesizing--the ability to promote purposeful interaction among the project's participants.

It would seem that the import of these skills centers on the leader's ability to make a meaningful synthesis out of disparate perspectives. Activation, framing, and mobilizing should be evaluated in terms of the synthesis they create. However, one difficulty in exercising such skills--especially the integrative skill of synthesizing--is that as independent entities the private partners have their own reasons to approach the project, some coalescent with public aims and others unique to the private sector. Ultimately, the private entity is responsible to its board of directors, who act on behalf of its shareholders in a for-profit corporation, while the public entity is responsible to the citizenry at large. While some projects may benefit both constituencies, others might benefit shareholders but effectuate public loss.

Van Slyke (2007) has argued that the last scenario is best explained through agency theory which argues that principals and their agents may sometimes have disparate...

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