A Public-Private Partnership Gone Bad

September 29, 2008

For release Oct. 1 and thereafter (702 words)

A trusting relationship between private and public leaders is a requirement if Indiana is to deal with its immediate challenges, let alone emerge as a state known for its quality of life and economic prosperity

That is why several in my business community were overwhelmingly supportive when their mayor approached them with the idea of a public-safety training facility organized around a private-public partnership. This partnership would serve not only our city but the region.

We had reason to hope it would become a national model of excellence. We were confident the idea could work, that combining the abilities of the private and public sectors could provide a training capability larger and more efficient than otherwise would be possible. Best of all, it could be self-supporting — that’s right, free from tax support, an innovative concept in funding the future of public safety.

Understanding why this did not become reality, understanding why bad politics pushed out good policy, is important if Indiana cities are to prosper in these economic times.

This will not require an assignment of blame. It will require, however, the ability to discern sincere effort from mere posture, systemic reform from political maneuver.

TO ATTRACT quality partners from the private sector, the standards of leadership on the public side must be much higher than in a normal business partnership. That’s because the public and private sectors are not equals. Let me explain:

In business, if you don’t like what your partner is doing, you have options — the ultimate being to severe the relationship. You cannot do that with your local government; you cannot make a few phone calls and find a new city hall.

Again, it is the responsibility of the more powerful of the two partners, the government, to elicit the necessary confidence in the partnership.

If your city officials will not accept that role, the level of cooperation found in the more prosperous communities cannot be realized, the economic incentives will not align to produce the intended policy results.

That, sadly, proved to be the case in my city, where a new city administration in effect told its private-sector partners in the Northeast Indiana Public Safety Academy to take a walk.

THROUGH NOVEMBER and December of 2007, the city and the Northeast Indiana Public-Safety Foundation worked diligently to negotiate a mutually agreeable contract. Negotiations began to languish, however, as the new administration settled into office.

As chairman of the foundation’s board, I contacted Mayor Tom Henry in hopes of expediting the process. I was assured that the final details would be worked out quickly.  A few weeks later, however, the doors to City Hall in effect closed. They would remain closed.

There would be real costs to this. City Hall’s failure to operate in good faith in negotiating the contract not only prevented the academy from customizing training programs for sale to regional industry but also put its director and employees in impossible positions, their roles, responsibilities and authority becoming confused — hopelessly so, as it turned out.

Overnight, an innovative idea representing six years of work by talented public and private experts was reduced to a shell — one filled with nothing more substantial than politics as usual.

The mission for the academy created under the prior administration, a commitment to develop regional training, a self-supporting operational plan and a national model of excellent, was abruptly derailed. The reason, apparently, was to allow a new set of politicians to fill its salaried positions — all quite legal if, to my mind, unethical.

This sort of thing, please know, doesn’t work in any kind of partnership.

Those of us who worked so hard to build the foundation have learned to beware a situation where city-hall officials treat public-private partnerships as political conveniences, where the private sector is asked to do the paying and the public sector wants to do all of the spending.

That is an arrangement that the honest and civic-minded in your city’s business community will reject. Our local governments, for all of their talk of creating jobs and furthering economic development, can only prosper in wholehearted cooperation with the private sector.

Pete Eshelman, CEO of American Specialty of Roanoke, is the former chairman of the board of the Northeast Indiana Public-Safety Foundation. This is a summary of a larger work written with a fellow board member, Joe Ruffolo, to be published in the upcoming issue of The Indiana Policy Review.


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