Chapter Summary At the end of the twentieth century, both owners and producers are experimenting broadly with “public private partnerships,” “public private ventures,” and “alternative delivery methods.” While trade associations within the construction industry boldly claim that “their” preferred method — Design-Build, Detail-Design-Build, or Design-Build-Operate-Maintain — is “new” or “better,” none of these claims are true. In fact, just the opposite is true. There is no project delivery method that is uniquely and consistently best for the delivery of all infrastructure projects. Inflated marketing claims about the limitless advantages of Design-Build, Design-Build-Operate, or Design-Bid-Build have done more harm than good to a construction industry struggling with its clients (and their constituents) to deliver value for money in infrastructure facilities and services.1 For the first 150 years, America’s infrastructure collection was delivered through contracts between public and private entities along two basic tracks. Track 1 is a “direct” finance strategy that employs the delivery methods in Quadrants I and IV. Track 1 was used by Congress to finance river and harbor improvements throughout the first 150 years of our history.2 Congress relied very heavily, throughout the first 150 years, on a second basic approach to project delivery. Track 2 is an “indirect” finance strategy that employs other people’s money and the delivery methods in Quadrant II. Track 2 was used by Congress to obtain private sector financing for public transportation, energy, and water supply projects. The logic behind the dual track strategy was both political and practical. Some projects, such as the removal of obstructions to river and harbor navigation were clearly of general interest to the national government, and would only be accomplished through “direct” funding of contracts and projects to clear such obstructions. However, many of the nation’s infrastructure challenges required joint government and private sector response, because the federal and state governments simply did not have sufficient resources to pay for all projects directly. In addition, after a series of spectacularly poor investments by Pennsylvania, Maryland, South Carolina, and Virginia in the first half of the 19th century, federal and state governments were no longer inclined to speculate in the deployment of new technologies such as steam, rail, auto, airplane, telegraph, telephone, and electricity. Having nearly bankrupted several of the states through unwise investments in public infrastructure, the appetite of public officials was small for committing limited tax revenues into infrastructure projects. America’s two hundred-year experience with joint public and private investment in infrastructure provides several very practical solutions to problems that are still with us today. The first lesson relates to the role of the federal government in funding non-military infrastructure improvements inside the several states. President Andrew Jackson’s 1830 Maysville Veto, describes the dilemma and confirmed Jackson’s view that the federal government should not fund “internal [infrastructure] improvements” that benefited one section of the country [the mid-Atlantic States] over another [New York and New England]. Jackson’s solution was to shrink direct federal cash support for “internal improvements” to avoid divisive sectional conflicts over the allocation of limited federal resources. Jackson’s theory was that regional projects were best produced regionally. A second, very practical lesson was provided by an 1837 United States Supreme Court decision relating to a “perpetual” franchise to operate a ferry across the Charles River granted to the Trustees of Harvard College by the colonial legislature of Massachusetts. The court found that because the franchise was silent as to whether the state could build or authorize a competing ferry or bridge, the state was free to construct or authorize a competing bridge, even if it destroyed Harvard’s franchise. The decision created doubt in the private sector as to the ability of a current legislature to bind a subsequent legislature. As a result, perpetual franchises (or very long franchises) have never been popular in the United States because both governments and financial markets are looking for security only over a reasonably short period of 20–30 years. A third lesson was learned in another decision of the United States Supreme Court in 1824, Gibbons v. Ogden. The dispute involved the Robert Livingston/Robert Fulton monopoly in New York and Louisiana of steam engine technology to ferry boats operating first in the Hudson River, and later, New Orleans. Competing franchises from different states claimed to give either Fulton or his competitors “exclusive” rights to use the new technology in each state’s waters. The result was a confusing patchwork of states that supported or denied Fulton’s right to monopolize steamboat technology for interstate trips. Gibbons possessed a federal coasting license, upon which the Supreme Court relied to strike down each state’s franchise. The decision established the practice that contracts between local governments and private contractors should be structured around results, not on monopoly use of technologies, materials, or equipment. American governments are still uncomfortable awarding private franchises tied to particular technologies, since there is usually a better, more effective technology just around the corner. America’s historical infrastructure experience also confirms a variety of different roles for the public and private sectors over the years. Depending on the situation, the government’s interest has fluctuated between “direct control” and “general regulation.” On other occasions, the government’s focus has fluctuated between “public” and “private” ownership. The strategy for deployment of new technologies has fluctuated between “exclusive” and “non-exclusive” rights. These fluctuations in infrastructure strategy were produced by changes in politics, technology, economy, and international relations. Between 1789 and 1933, the dual track strategy served the nation well by offering a rich combination of public and private sector expertise and investment in American infrastructure. There is every reason to expect that similar changes will continue in the next century. Different combinations of project delivery and finance methods will produce new solutions to changing public infrastructure needs.