The privatization option is by design a means to streamline and improve services by entrusting those services to one or more engineering firms who specialize in specific elements of traffic engineering and road maintenance. This is done in lieu of developing in-house staff engineers and traffic operations. In all, public-private partnerships are risky and will need to have safeguards in place to prevent monopolies, misuse of funds and political favoritism for certain firms over others. In addition, the scope of a private firm will need to be limited to only maintenance and technical work to prevent private firms from having too much access to public funds creating a potential conflict of interest. A private firm is not a government agency, so they should not be in charge of financing major construction projects with public funds. The plus side of the privatization option, however, is that if it is structured correctly that the management can continually change preventing what continues to be a serious problem in public agencies: poor management that is never replaced because the employees have vested, protected jobs where they are impossible to fire, reassign or demote due to political connections. However, politics are also part of private contracts. This is why laws are needed to prevent firms from having undue influence thus an unfair advantage.
While privatization contracts are common in many local governments across the world they tend to be very sporadic in nature and are done on the whims of the state or local government. In Georgia, the cities of Milton, Sandy Springs and Johns Creek initially contracted their roads to a private firm during the transition into cityhood, but they have since taken back that responsibility. This plan is different in that privatization measures are mandated statewide as a means to consolidate that responsibility into a larger agency, but that agency is not to another unit of government.
The idea for a statewide cooperative under private management is similar to the public option, but because of the complications involved in a public-private partnership, a detailed list of rules and regulations are needed to make sure that such an agreement is in the best interest of the state, the local governments and the taxpayers. Creating a for-profit motive means that greater checks and balances are needed to make sure that excess costs are kept to a minimum, cost savings are realized and local standards actually improve. The elements of a private statewide contract plan are as follows:
- Contracts are based on the boundaries of federal regional planning commissions, but they are also based on a minimum population per region of 300,000 residents. This means that, preferably, each regional contract area have on average a half-million residents. States with low populations (under 1 million residents) may contract all local road responsibility to a single firm.
- Inversely, regions with less than 300,000 residents should be grouped with the next largest region in population so that one firm is managing both regions. However, the combined regions are defined prior to any contracts being let.
- Regions may line up with state DOT divisions to allow the state DOT division to better supervise the work conducted by private firms
- Contracts will not be for single counties, cities or a patchwork of local agencies. The region must be clearly defined by the state covering multiple jurisdictions, and the state government will need to create these regions.
- Engineering firms will be responsible for overseeing all traffic control and routine maintenance and will operate as an employee of the state working on behalf of the counties, cities and towns
- Funding provided to the firms will be limited to engineering and routine maintenance activities. Major construction projects, including resurfacing, may only be planned, financed or enacted by a public agency.
- Private firms may hire subcontractors to assist them in completing any activities they do not wish to perform in house although those terms must be agreed on by the sponsoring public agency.
- Each region assigned by the state will be required to be supervised by a different firm. No single firm will be permitted to manage more than one region at the same time.
- All firms will be hired on 5 year contract basis
- After the 5 year contract terminates, the same firm may not work within the same region for two consecutive contracts, but that same firm may be rehired in that region after the next contract with another firm expires
- If number of available firms is less than the number of regions, the state may create its own firm to operate on a five year contract in a region or multiple regions operating without a private firm or assign one firm to two regions each
- This means that if the state has 10 regions and only seven firms bidded on those regions, the state will ultimately assign five firms to two regions a piece
- Commission rates must be established by law based on an average commission rate provided by all bidders. In the instance that a 10% commission is agreed on, a firm bidding on a region must not be allowed to retain more than 10% commission meaning that 90% must be put towards expenses and 10% is retained for profit. The commission rate may vary, but it must be established by legal restraint.
- All local employees maintain current positions although attrition will be established to help streamline services where duplication is not necessary
- Employees of the local agencies will remain employees of the local agency. The private firm may recommend corrective action against an employee, but the decision to fire or rehire remains with the local agency.
- New employees should be employees of the firm, not the local agency but a clause may be made that allows employees to transfer their employment to the new managing firm at the end of a 5 year contract to prevent forced relocation.
- The private firm will have its own staff of engineers, inspectors and technicians who are used to oversee and assist all counties, cities and towns with traffic studies and road maintenance activities
- If a county, city or town has one or more engineers hired expressly to handle road maintenance, they will become joint employees with the private firm under their direction working simultaneously with the local agency
- As a condition of the contract, all firms must comply with state and federal standards
- State standards may be substituted for standards developed by a statewide multi-agency commission created in conjunction with recommendations from participating firms
- Some state standards may be in excess of local budgets or needs (such as use of diamond grade sheeting), so having different standards in this case would make sense
- The state reserves the right to supervise the activities of the firms to make sure they are following proper standards, following all protocols and meeting maintenance goals
- Firms who fail to meet state and federal standards, misuse funds or fail to uphold their duties will be considered in breach of contract with penalties including termination, fines and/or removal from consideration from future contracts once their current contract expires
- Private firms must respect local laws and ordinances and must structure all work based on the laws and ordinances of the county or municipality
- Example: if the town sets all speed limits to 25, the firm may not conduct an internal traffic study and raise the speed limit unless the town and/or state government agrees to the study or change
- Example: if truck routes are established on local roads and streets, the private firm must obtain permission and make modifications as necessary if they plan on posting guide or route signs along restricted roads
- Private firms may not commence any construction activities without the prior funding and approval of the state, county or municipality
- Example: fictional Allen County funds a project for reconstructing Whiteoak Trail from a dirt road into a two lane paved road. The private firm may only be involved in construction supervision paid for by funds used for the project.
- Another engineering firm may be chosen for construction that is not in charge of maintenance
- Private firms will only be permitted to maintain roadways maintained by counties and municipalities unless the state expressly expands that responsibility to cover state road maintenance within their assigned area
- Any private firm may consolidate any road maintenance function under their limited jurisdiction as long as there are no layoffs of existing government employees
- Employees from more than one jurisdiction may be grouped together to provide specific duties if deemed reasonable by the private firm
- Sparsely used and costly equipment will be stored and shared among all agencies and owned by the private firm
- Duplication of services should be phased out wherever possible
- Facilities and equipment may be combined, shared, taken out of use or relocated to best serve the needs of the region and to reduce costs
- The state should create a statewide agency designed to establish standards and to supervise the private firms to reduce the role of the state DOT
- The statewide agency would be structured as an association made up of elected officials from each county, city and town involved to make sure that operations remain locally-driven
- Policies and procedures may be further streamlined by creating the statewide agency
- The agency would most likely have the same type of name as in the public version of the Statewide Contracting Plan such as "Tennessee Local Roads Commission"
- The agency will also be able to oversee and approve contracts, set commission rates and serve as a liaison between local agencies, the private firms and the state DOT
- In issues that the local roads commission does not adequately understand, they can defer all responsibility to the state DOT
It should also be noted that standards may be created that differ from state standards in this system considering that state supervision would be limited to regulating the activities of the private firms. If the statewide local roads commission elects to create separate standards from the state, they may do so if done in committee with the private firms hired to manage local roads. The idea is not to have the state to take over local roads, so keeping a separate structure with limited state oversight is an ideal solution.
Transitions from one public agency to another are perilous, and the fear of job losses and titles are very real. If the idea is to centralize road maintenance responsibility under a statewide unit, doing so with private forces may be the best way to do so. By privatizing the process, it allows the entire process to be done on a trial basis without any disruption to existing local agencies. Instead of consecutive five year contracts, the initial five year contract is the only contract allowing competing engineering firms to help transition a decentralized maintenance structure into a cooperative structure over a five year transitional period. Using private forces will also allow outside input on how to better operate a centralized public agency working on behalf of local agencies. When the transition is complete, the local roads commission will select employees from all participating firms to become employees of the statewide local roads commission with the private option transitioning to a public option.
Privatization of road maintenance may also be a tool to clean up local waste and corruption as a private employee under contract obligation will not be affected politically the way a public employee would doing the same job. The private firm makes those decisions with the cooperation of local governments while the state is there to put a stop to those decisions if the private firm is in major error. Using the centralized privatization model allows local agencies to hand off responsibility for road maintenance to a larger firm that just happens to not be another government agency.