On July 1, 2013, a new law encouraging the development of public-private partnerships (“P3s”) will take effect in Maryland.  The legislation, signed into law by Governor Martin O’Malley on April 9, 2013, is designed to remedy Maryland’s growing infrastructure needs by helping the state build capital projects that it could not otherwise afford on its own.

Although P3s have previously existed in Maryland, practical use of P3s was limited by the absence of guiding legislation in sectors outside of the transportation industry.  The new law, however, formalizes the process for evaluating proposals and clarifies requirements for P3 agreements, while balancing the needs for transparency and for protection of confidential and proprietary information.  Additionally, the new P3 law allows for the possibility of recouping proposal costs for unsuccessful private entity bidders and allows for the submission of unsolicited proposals to address Maryland’s infrastructure needs.

The new legislation, which redefines P3s to focus more on the partnership and collaborative relationship between the public and private sectors, will apply to any sale or lease agreement between the State of Maryland and a private entity relating to a capital facility or structure involving either (i) the private entity assuming control of the operation or maintenance of a State asset or (ii) the private entity constructing, financing, or operating a State asset or facility for State use while collecting fees relating to the use of the asset.

Although the new P3 law does not apply to local governments, a variety of State agencies, including the Department of General Services, the Department of Transportation, the Maryland Transportation Authority, and the University System of Maryland, among others, will be able to take advantage of new P3 opportunities after adopting regulations and establishing processes for the development of P3s in accordance with the new law.