Brian Cowen (Laois-Offaly, Fianna Fail)

The responsibility for capital project selection and choosing the optimal means of funding such projects rests with the agencies sponsoring and sanctioning such projects. Normally the sanctioning authority will be a Department. I am determined to ensure that value for money for the taxpayer is maximised in the exercise of this responsibility. Accordingly, Departments and implementing agencies, in deciding projects and funding, must operate within the financial framework of the five-year multi-annual capital envelopes as approved by the Government in the context of the annual budget and within the appraisal and procurement framework as set out in my Department's capital appraisal guidelines, interim PPP guidance and procurement guidance.

Under the general conditions of sanction for the multi-annual capital envelopes introduced in budget 2004, Departments are required to comply in all cases with my Department's guidelines for the appraisal and management of capital projects, the interim PPP guidance from my Department and observe the rules on procurement. Revised Department of Finance guidelines for the appraisal and management of capital expenditure proposals in the public sector were published in February and circulated to Departments and agencies for implementation.

To assist State authorities in determining the optimal means of financing public investment projects, the Government established the National Development Finance Agency, NDFA, on 1 January 2003. Its role includes advising on the financing and risk evaluation of Ireland's public private partnership procurement projects and raising or arranging finance for appropriate capital projects. In this respect it provides a centralised expert service to Departments and certain other State authorities. The PPP procurement option should be available to Departments and State authorities for application to appropriate projects where there is the right scale, risk and operational profile to harness the benefits of this approach.

As the Deputy will be aware, there are also reforms planned in the area of public sector contracts for construction and construction related services. The reforms will involve the amendment and introduction of new standard forms of construction contracts which will transfer appropriate risks to contractors where they are best placed to manage them. These initiatives seek to reduce the potential for project cost overruns and provide better value for money for the State. Consultation with the construction industry on the contract-related material will commence shortly.

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