Public-Private Partnerships Are Energizing Higher Education Institutions – Government Contracts, Procurement & PPP

In our last post, we discussed how in recent years
colleges and universities have been among the most successful users
of the public-private partnership (“P3”) model. The
uptick in higher education P3 utility projects comes as no surprise
given the unique demands and features of most institutions, which
often rely on government funding, donations, and increasing debt to
support their operations and programming. In particular, higher
education institutions across the nation have looked to the private
sector’s expertise and capital for cost-effective and
innovative solutions that shift institutions’ risks and burdens
associated with operating and maintaining energy and water utility
systems and related infrastructure, especially in light of the
growing demand placed on aging facilities and systems.

For example, the University of Florida (“UF”) located
in Gainesville, Florida, currently has no source of islandable
power generation to support critical operations in the event of a
grid outage or failure. In addition, its current utility system is
insufficient to meet the needs of UF’s growing campus, and its
cogeneration facility is approaching the end of its service life.
UF elected to turn to the private sector to address these issues
and to achieve a resilient system able to fulfill its needs far
into the future. With the assistance of its technical advisor,
Jacobs Engineering Group, UF is currently in the second phase of
its Central Energy Plant Project, a competitive
solicitation seeking a private sector partner to design, construct,
finance, operate, and maintain a campus thermal energy plant, a
thermal piping distribution loop, and an electrical substation, in
addition to other related facilities. Four teams were recently
shortlisted and will each submit their proposals to UF later this
year.

Nationally, numerous universities, including several of the
“Big Ten” universities like the University of Iowa, the Ohio State University, and the
University of Maryland have also looked to the P3 model to
select private concessionaires to revamp their utility systems.

Notably, on March 11, 2020, the University of Iowa officially
transferred management of its utility system to global energy
provider, ENGIE North America, and Meridiam, an investment firm. In
addition to benefitting from the expertise and investment of its
private partners — including meeting the university’s
goal of being coal-free by 2025 — UI’s partnership
illustrates how a utility P3 project fits within the overall
strategic plan and mission of a higher education institution. As
part of its deal, the university received over $1 billion in
funding, of which $15 million will be used annually to support
teaching, research, and scholarship. Recently, the university’s
P3 Board awarded eight projects using its $15 million
fund, including an interdisciplinary project to develop a new
National Cancer Institute grant in early-stage lung cancer
treatment and a clinical trial to examine the impact of certain
innovative treatments.

The UF and University of Iowa P3 projects, as well as the
multitude of similar higher education utility P3s occurring
nationwide, illustrate the flexibility of the P3 model to offer
holistic solutions that not only address critical utility systems
to meet the institutions’ current and future demands, but also
support campus-wide programs and even create new sources of
revenues. Moreover, higher education institutions make great
partners due to their long-term economic stability. As a result,
private partners also financially benefit from operating said
utility systems as well as collecting other associated fees and
costs. The result is a win-win situation that we expect to produce
a wide range of benefits for years to come.

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