Critical Asset Procurement Reform: A Federal P3 Capital Asset Financing Proposal

 

Like the weather, everyone seems to complain about the impediments to federal asset acquisition but no one ever seems able to do anything about it.

Current federal budgetary rules effectively require that the purchase and financing of major, long-lived physical assets of the government be expensed upfront, in the same way as operating costs like salaries and wages. This contrasts with corporate, nonprofit, and state/local practice where long-term capital investments are accounted for separately, in a capital budget. The result? Federal agencies are forced to make inefficient investment decisions: Deferring much-needed capital renewal; making piecemeal acquisitions; favoring lowest initial cost over best value through life-cycle costing.

 

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmail

About Bill Reinhardt

Editor of Public Works Financing newsletter
This entry was posted in Take Back Infrastructure. Bookmark the permalink.