Mr. Robert Watt:

I am pleased to have the opportunity to be here today, with Secretary General Mr. Seán Ó Foghlú and colleagues from the Department of Education and Skills, the National Development Finance Agency and Transport Infrastructure Ireland, to offer any assistance we can provide to the committee in its consideration of Chapter 4 of the Comptroller and Auditor General's Report 2016 - Overview of Public Private Partnerships. We welcome the report and its recommendation.

The primary role of the Department of Public Expenditure and Reform in PPPs is to facilitate the PPP process centrally by developing the general policy framework and the capital investment policy framework, within which the PPP operates. The new national development plan, launched by the Government recently, is the new framework within which we consider these matters. The Department of Public Expenditure and Reform also facilitates the PPP process by providing central guidance to Departments and other State authorities in that context. Responsibility for individual PPP and concession projects rests with the relevant sponsoring Department or agency, where appropriate. This includes financial responsibility and responsibility for compliance with the requirements of the public spending code and the overall PPP guidance set out by our Department.

The Department of Public Expenditure and Reform publishes a full suite of guidance to facilitate the PPP process, which is available on the central PPP unit's website at www.ppp.gov.ie.

To ensure that Departments obtain the best value-for-money from public capital investment, PPPs are subject to the same robust and rigorous project appraisal process as applies to traditionally procured projects. All projects over €20 million are required under the public spending code to be subject to a cost benefit analysis or cost effectiveness analysis. In addition, the public spending code also requires that the sponsoring agency seeks the advice of the National Development Finance Agency, NDFA, on all projects above €20 million, in terms of the optimum means of financing the project on a value for money basis, to assess whether traditional or PPP methods of procurement are the best way to ensure value for money and to deliver the project for the taxpayers and citizens. The public spending code also provides that the options should be considered by the sponsoring agency as part of the project appraisal.

The public spending code requirements ensure that all PPPs are subject to specific value for money tests at four stages during the procurement process. There are particular requirements in respect of PPP projects.

Following completion of the project, all PPPs are subject to the public spending code requirement that a post project review be carried out, once sufficient time has elapsed to allow the project to be properly evaluated with sufficient evidence of the flows of benefits and costs from the project. There should be two separate focuses of such a review - project outturn and the appraisal and management procedures. These may be undertaken at the same time or at different stages, but they should be done as soon as is practicable. In the case of PPP projects, once contract close has been reached, the cost of the project to the sponsoring agency is essentially set for the duration of the contract. It is, therefore, possible for an element of the post project review to be undertaken on a provisional basis at that stage. A final, definitive post-project review for PPP projects will effectively only be possible at the completion of the contract when the asset is handed back to the sponsoring agency and all costs arising under the PPP contract are definitively known. This is normally after 20 or 25 years, which is the normal period over which these contracts are set. An interim review conducted mid-way through the life of the contract could provide a useful indication of the likely final outcome at hand-back.

Post-project reviews are not the only mechanism for reviewing past experience in order to draw lessons which can be applied in the future. The NDFA is the financial adviser on all PPPs and procures all accommodation projects on behalf of the sponsoring Departments. Experience gained on each project procured helps inform the procurement of each subsequent project. The NDFA also carries out an in-house lessons learned exercise following all PPP procurements. This enables them to see what improvements can be made in processes and procedures. This has resulted in a number of changes in the way PPPs are procured over the years. The Department of Public Expenditure and Reform chairs a PPP steering group, which meets regularly to review progress across all PPPs in planning, procurement and operation. This group provides a forum for the sharing of information and experience in the planning and delivery of PPPs, so that lessons learned on one project or in one area can be applied across the entire PPP programme.

The committee will also be aware that there have been two recent reviews of PPP policy in Ireland. One review was part of the public investment management assessment, PIMA, of Ireland undertaken by the IMF in July of last year at the invitation of the Department of Finance. We asked the IMF to review of capital planning and appraisal, including PPPs. The second PPP review was undertaken by an inter-Departmental and agency group, which was established in 2017 to review Ireland's experience of PPPs and to make recommendations on the future role of PPPs in the context of the Government’s new ten year national development plan. The PIMA report categorised the institutional strength of-----