The U.S. Department of Transportation (USDOT) recently announced a long-awaited Notice of Funding Opportunity (NOFO) for public agencies to enhance technical capacity to deliver projects using a public-private partnership (P3) model. Authorized by the Infrastructure Investment and Jobs Act (P.L. 117-58; also known as the IIJA), $57.72 million is available through the Innovative Finance and Asset Concessions Grant Program (Program) for public agencies to hire technical, financial and legal experts (either on staff or as consultants) to support the evaluation and delivery of P3 projects. This highly anticipated program opens the door to P3 projects for public agencies that may not have the existing capacity to evaluate and deliver such projects.
As our readers know, P3 delivery can provide transformational benefits to the right project, improving collaboration by involving key players at critical stages of project development and allocating project risks to the party best able to bear those risks. However, our readers also know that the development and procurement of P3 projects, done right, is much more involved than the development and procurement of conventionally delivered projects. And this is where the benefits of this Program come in.
The purpose of this Program is to facilitate the development of P3 projects that advance the Administration's priorities of "safety, equity, climate and sustainability, and workforce development, job quality, and wealth creation" (page 4 of the NOFO). The NOFO recognizes the need to enhance technical capacity related to P3 project delivery and is explicitly geared towards supporting public agencies that have not been able to even consider P3s for lack of expertise. For example, if an agency requests a grant of up to $1 million, non-federal matching funds are not required, which is highly unusual for federal grant programs (page 10 of the NOFO). However, this 100% federal share makes perfect sense when considering that the purpose of this Program is to build capacity.
The NOFO makes two types of grants available – "technical assistance grants" and "expert services grants." Technical assistance grants may be used to retain technical, financial and legal advisors, and other individuals with P3 expertise, to develop organizational capacity and support programmatic activities. Expert services grants are similar, but the hiring of in-house or consultant support must be to "explore leveraging public and private funding in connection with the development of a specific existing asset" (page 5 of the NOFO; emphasis added).
Under the NOFO, USDOT intends to award grants of up to $2 million and expects to award between 30 and 45 grants. USDOT intends for these funds to be used across the Nation, specifying that no more than $4 million under this Program will be awarded to entities within a single state during any three-year period. It is important to remember that the IIJA authorized an additional $40 million under this Program for fiscal years 2025 and 2026.
As we noted years ago, the fact that a public agency may have limited resources bears no connection to whether that agency has significant infrastructure needs that could benefit from P3 delivery. The availability of this grant funding is a welcome opportunity to build capacity in the agencies that need it most. At Nossaman, we have witnessed firsthand how effective alternative delivery can be and join with the rest of the P3 industry in eagerly awaiting the success of this Program.
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