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Informed public discourse regarding public-private partnerships is an essential part of the process leading up to any local government’s decision to enter into such a partnership or selection of the appropriate partner. CH2M HILL OMI is fully committed to participating in all public discussions and processes that are part of a local government’s consideration of a public-private partnership.
Unfortunately, a number of so-called “public interest” groups recently have attempted to derail potentially beneficial public-private partnerships through organized efforts that rely on misinformation and distortion. Such efforts do a disservice to the community and do little to advance informed debate on the important issues involved in public-private partnerships. It is important to separate the fact from fiction in the arguments advanced by these groups.
Fiction: Public-private partnerships result in higher rates for customers.
Fact: Rate stability, predictability, and in some cases lower rates result from public-private partnerships.
Critics try to alarm residents and other customers of water and wastewater treatment systems by implying that rates will rise when a private corporation “takes over” a facility. This argument ignores the facts that ownership of the facility — and control of rate-setting — remains with the local government under the terms of most operations and maintenance (O&M) agreements. No private partner can arbitrarily raise rates. The author of many of Public Citizen’s critical reports on water partnerships has since recanted most of the organization’s positions, writing in December 2002 that “private water operators can and do deliver lower rates.”
Fiction: Private operators are not committed to protecting the environment.
Fact: Environmental compliance is a priority to CH2M HILL OMI because it is the right thing as well as the sensible thing to do from a business standpoint.
Protecting the environment is a critical part of CH2M HILL OMI’s mission. Our dedication to environmental compliance and performance excellence is evidenced by the dozens of awards we have received from regulatory agencies and professional associations over the years.
In addition, environmental compliance is critical to the success of our company. In most partnerships, we assume responsibility for fines associated with plant performance. We have a direct and compelling incentive to do our best to protect the environment. Of course, our performance in this area is also one of the chief ways in which our partners measure our success.
Critics often identify isolated instances of non-compliance and suggest that such performance is evident of a systemic problem. Any comprehensive review of the performance of CH2M HILL OMI would yield a compliance record that is the match of or better than most operators—public or private.
Fiction: Private operators focus on reducing costs instead of providing high quality service to water and wastewater system customers.
Fact: CH2M HILL OMI does focus on efficiency, but not at the expense of quality service.
This is yet another argument unsupported by fact, or even logic. Of course CH2M HILL OMI strives to operate facilities efficiently. Doing so is in the best interest of our local government partners and — ultimately — the customers we serve. But we do not need to skimp on service to achieve efficiency. CH2M HILL OMI can bring economies of scale to bear through bulk-purchasing discounts and greater efficiencies in plant operations such as electrical usage and facilities maintenance. We also have greater flexibility than most government organizations to bring innovation to facilities we manage. In short, we can achieve efficiencies that help us serve customers better.
Fiction: Local governments sacrifice control when they contract with private partners for O&M services.
Fact: Through well-structured contract provisions, performance reviews, and termination provisions, local governments maintain control of their assets and services.
Critics intentionally seek to undermine public-private partnerships by raising the specter of “privatization.” O&M contracts are a far cry from privatization. Privatization implies that the service and the asset (the water or wastewater treatment plant, for example) is being sold to a private company. In a typical public-private partnership, the local government maintains complete ownership of the facility and enters into a contract to have CH2M HILL OMI operate the facility. In addition, contracts contain provisions through which CH2M HILL OMI’s performance is monitored and through which both parties can end the partnership.
Fiction: Public-private partnerships are unproven; there is no track record of success.
Fact: Partnerships have existed — and thrived — in the U.S. for more than 30 years.
The concept of public-private partnerships providing services that were once the sole responsibility of government is not new or uncommon. According to the National Council for Public-Private Partnerships, the average American city works with private partners to perform 23 out of 65 basic municipal services. The first public-private partnership to operate a wastewater treatment plant was struck in 1972. CH2M HILL OMI maintains relationships with partners that extend as far back as 22 years. These partnerships have longevity because they work.
Fiction: Public-private partnerships leave important community resources in the hands of private companies with uncertain financial futures.
Fact: CH2M HILL OMI and its parent company are financially stable and contractual provisions protect the community’s interests.
CH2M HILL OMI has been in operation since 1980 and today has more than 1,600 employees and annual revenue of more than $240 million. In addition, CH2M HILL OMI is part of CH2M HILL Companies Ltd., a Colorado-based, employee-owned firm providing engineering, construction, operations and related services to public and private clients in numerous industries on six continents. CH2M HILL has more than 23,000 employees and generates more than $5 billion in annual revenue. This corporate foundation provides strength and stability. In addition, public-private partnerships provide numerous contractual safeguards to protect the interests of the community.
Fiction: When companies such as CH2M HILL OMI are awarded O&M contracts, the jobs of local government employees and their associated benefits are threatened.
Fact: When CH2M HILL OMI enters into partnerships with local governments, the jobs of current facility workers are protected and they become CH2M HILL OMI employees.
CH2M HILL OMI recognizes the value of having trained, experienced employees to operate important water and wastewater facilities, and we consider existing employees to be essential. Employees are typically offered a package of benefits that is comparable to or better than those they had as public employees. CH2M HILL OMI also offers a variety of education and training opportunities, as well as opportunities for advancement in the company.
Fiction: Private companies discourage conservation of water resources to drive up profits.
Fact: Public-private partnerships are rarely structured so that the private partner benefits by increased consumption.
Contractual agreements in public-private partnerships do not send the money generated from user fees to the private partner. User fees go to the local government and the government, under the terms of the contract, pays the private partner. Increased use also means that the operator must provide increased treatment. There is no evidence to support the contention that private companies encourage wasteful usage of water resources.
Fiction: Private companies neglect maintenance to maximize profits.
Fact: Proper maintenance is essential to efficient plant operations and CH2M HILL OMI’s ability to deliver quality services.
Proper maintenance of facilities is critical to provide the type of service that our public partners — and water and wastewater system end users — expect. Failure to provide that service can jeopardize a partnership or damage a private partner’s reputation. In addition, many contracts include specific provisions related to investments in facility maintenance and upgrades.
Fiction: The corporate profit motive and provision of essential public services are incompatible.
Fact: Public-private partnerships have grown in number and scope specifically because they have proven successful.
For-profit companies have proven in a variety of fields — water and wastewater included — that the private sector can deliver services more efficiently than local governments. The bottom line is that private companies such as CH2M HILL OMI can thrive while providing communities and their residents essential services more effectively and often at lower cost. |
