Public-Private Partnerships (commonly known as “P3s”) are very popular across the country, including the recently announced renovations at LaGuardia Airport as one example. P3s are also gaining significant attention here in New Jersey. Although P3s have thus far been focused on educational settings in New Jersey, there is potential for this funding method to be used for a wide variety of projects ranging from infrastructure to transportation.
P3s are often touted as a solution for economic growth and development because a private entity steps in to fill a funding gap that is not being filled by the government. Because, however, P3s require a private entity to “partner” with the government, private entities that are interested in participating in P3s need to be mindful of New Jersey’s pay-to-play restrictions, which limit a business entity’s eligibility for government contracts or agreements based on political contributions. For example, if a private entity wants to enter into a public-partnership with the State of New Jersey, the private entity needs to make sure that the entity and certain associated individuals (such as the entity’s officers and owners) have not made “reportable” contributions (a contribution greater than $300) to a New Jersey gubernatorial candidate, political party committee or legislative leadership committee within certain periods of time that may range from 18 months to 5 ½ years. If a private entity wants to partner with the government at the local level, the entity will need to certify compliance with local pay-to-play restrictions, which may contain an absolute ban on contributions (in any amount) and may also cover contributions to PACs that provide support to local candidates and party committees.
Although pay-to-play compliance is often the last piece of the “P3” puzzle, it cannot be overlooked. If a private entity cannot certify compliance with New Jerseys pay-to-play restrictions, this failure may result in significant delays or may even render the private entity ineligible for the project. As businesses explore new opportunities to work with the government, they will have to keep in mind that their political contributions may affect eligibility for P3s and other contracting opportunities.