Partnership structures allocate design, construction, financing, operation and maintenance responsibilities between a public sponsor and a private party.
Structures. Design-build; design-build-finance; design-build-operate- maintain; and concession arrangements where the private partner is compensated through user revenue or availability payments over a long term.
Statutory authority. Many states require express authorisation for these structures, particularly where they depart from competitive bidding or involve long-term commitments. The first question is whether the enabling statute covers the proposed structure.
Procurement. Typically a two-stage process with qualification then proposals, evaluated on qualitative criteria as well as price, with a stipend to unsuccessful proposers to encourage participation.
Risk allocation. The core of the agreement — site conditions, permitting, utility relocation, change in law, force majeure, demand risk, and residual value. Risk should sit with the party best able to manage it, and pricing reflects the allocation.
Performance standards with measurement and deduction regimes, rather than prescriptive specifications.
Handback. Condition of the asset at the end of the term, with inspection and escrow provisions in the final years.
Public interest protections. Rate-setting limits, non-compete restrictions on the public sponsor, and step-in rights on default, each of which requires careful negotiation.