Under normal circumstances, a contract to upgrade D.C.’s 75,000 streetlights to highly efficient LEDs may not get much attention. But a $309 million proposal Mayor Muriel Bowser has presented to the D.C. Council to do just that is drawing some new questions and scrutiny (a spotlight, maybe?), largely because of the novel approach to getting the work done — and how it will be paid for.

The 400-page contract Bowser sent down earlier this month is a years-in-the-making public-private partnership, under which the contractor — Plenary Infrastructure D.C., a local offshoot of a large Australian firm — will finance the project and maintain the lights and other additions, including Wi-Fi hotspots, for 15 years. D.C. will repay the company over that time period based on specific performance criteria, including how quickly all the streetlights are upgraded (the goal is within two years), and how long it takes the company to repair broken lights. Under traditional contracting, D.C. would borrow money itself and pay a company to upgrade the streetlights, and then either have a separate contract for maintenance, or do the maintenance itself.

The contract represents D.C.’s first and possibly only foray into public-private partnerships — P3 for short — a growing form of government contracting for big infrastructure projects that advocates say has the potential to save cities and states money and minimize the risks in building everything from roads to civic centers.

Locally, Virginia has used P3s to add express lanes on I-495 and an expansion of I-66 outside the Beltway. In Maryland, the Purple Line between Montgomery and Prince George’s counties is one of the country’s biggest P3 transportation projects (including some notable bumps along the way). Bowser launched the city’s first Office of Public-Private Partnerships in 2015, with hopes to build a new jail and police headquarters with P3s. Neither project came to pass, leaving only the streetlight modernization in the works.

But the city’s first possible P3 is sparking questions and concerns among some D.C. lawmakers, who will vote on the proposed contract next week. It has also drawn pushback from the current company that maintains the city’s streetlights — a company whose lobbyists include a former councilmember and two former council staffers. And it now has a powerful skeptic — Council Chairman Phil Mendelson.

“In terms of the promise and the potential of a P3, this is bullshit,” he said in an interview with DCist/WAMU.

In a press release announcing the contract earlier this month, D.C. Department of Transportation Director Everett Lott said the P3 “increases cost savings and performance accountability.” In a council roundtable on Monday, Kathryn Roos, the deputy chief operations officer at DDOT and a former director of the city’s Office of Public-Private Partnerships, said the P3 would achieve the conversion of all of D.C.’s streetlights to LED technology within two years, when a traditional contractor could take as long as a decade. Roos also said the contract would limit the city’s risks.

“A major benefit of the P3 project delivery model is that the District is able to transfer many important risks to private partners,” she said. “These risks often include things such a cost creep, design errors, contractor underperformance, and unexpected maintenance needs.”

Other advocates and officials similarly at the roundtable spoke glowingly of P3s. Marilyn Surakus, an official from Long Beach, California, shared how the city had used a P3 to build and maintain its new civic center. Ryan Mitchell, a contracting official with the Michigan Department of Transportation, spoke about using a P3 for streetlight upgrades along freeways — and how the private financing of the project kept the contractor on task.

“The contractor does not want to risk not performing in any fashion because there is another layer of oversight from their lenders. They have a powerful motivator to perform well,” he told the council. “But like any contract, it’s not perfect.”

And it’s that “not perfect” aspect that some lawmakers were left to question and some critics to highlight.

One of those critics is Bill Dean, CEO of M.C. Dean, the longstanding contractor for the city’s streetlights. He told the council that the proposed streetlight P3 would cost $137 million more than if it were done through a traditional contract where the city financed the costs of the upgrades and maintenance.

“You could literally build another high school with that money,” he said. “Frankly, for $137 million it’s obvious why no major city has chosen this route for its streetlights. It’s significantly more expensive. Our city will be the first city and probably only city to spend this type of money on its streetlight system.”

Dean also accused DDOT of giving his company poor performance reviews after he spoke out against P3 contracts during a March 2021 council hearing. The accusation didn’t seem to convince Councilmember Mary Cheh (D-Ward 3), who chairs the council’s transportation committee. “This does require a leap of faith to think that DDOT is so keen on a P3 that they would spend a year trying to malign the performance of your company,” she said.

Roos said it was unlikely a traditional streetlight contract could come in $137 million cheaper than the P3 the city wants to pursue, and countered that DDOT’s analysis found just the opposite — a traditional contract to upgrade and maintain all the city’s streetlights would cost $431 million, she told Cheh.

Dean’s lobbyists have been making their case to lawmakers in recent days, urging them to reject the contract. (In 2017, Chicago lawmakers opted against a P3 for their streetlights.) M.C. Dean is represented by Georgetown Public Affairs, the lobbying firm set up by former councilmember David Catania and two senior aides. Catania also held a second job with M.C. Dean while he served on the council, and has recently had meetings with Cheh, Mendelson, and At-Large Councilmember Christina Henderson to make the case against the P3. (Ben Young, M.C. Dean’s main lobbyist at Georgetown Public Affairs, is also the treasurer of Mendelson’s re-election campaign.)

In the roundtable and in an interview with DCist/WAMU, Henderson raised the issue of what happened with Maryland’s Purple Line, where the state had to pay a $250 million settlement after the initial P3 contractors walked away from the project during a dispute over cost overruns and delays. She says that example prompts questions around the claim that P3 contracts are a safer financial bet and minimize risks to the government, especially if something goes wrong with the project.

“Maryland is still on the financial hook for some things, and that is built into the contract that we have here. If if we, for whatever reason, back out, it’s not as though it’s just clean, everybody walks away and we’re done. The District will have a financial liability on this. I think that it was important to try to understand what all of those pieces are up front,” she said. “Are we the council asking the right questions about this type of infrastructure project that is going to span several political lifespans?”

Mendelson, who says he’d prefer to undertake the streetlight project with a traditional contract, is particularly concerned about any liability to the city if the P3 company defaults at any point. Under the terms of the proposed contract, D.C. would have to pay 80% of what the company borrowed for the project should it default.

“My understanding is that the terms of the of the deal are that if for some reason the vendor or contractor goes belly up, the District will still have to pay Wall Street,” he said. “So there’s not real risk-shifting.”

In an email to her colleagues on Wednesday, Cheh said that wouldn’t happen. “The contractor will be liable for the repayment of these bonds,” she said.

At the roundtable, Roos tried to reassure lawmakers this week that the city’s proposed P3 union with Plenary would be a solid one.

“We have a very strong prenup in our contract,” she said. “There are very specific mechanisms that ensure the District is protected. There are steps we can take — counseling, you could say — to address them. We have vetted this marriage, we vetted this partner. We’ve gone through a very thorough process.”

For Cheh’s part, she’s urging her colleagues to approve the P3 contract at the Feb. 1 legislative session.

“The P3 model incentivizes preventative maintenance and other operational efficiencies from the contractor,” she wrote in the email to councilmembers. “Because the same contractor is designing, installing, and maintaining our lights long term — and that contractor is on the hook financially where they fail to meet deadlines or quality standards under the contract — the contractor has a direct financial incentive to execute its responsibilities to the best of its ability.”

This story was updated to include additional comments from Cheh addressing what D.C. would have to pay if the contractor defaulted, and to reflect the connection between Mendelson and M.C. Dean’s lobbyists.