Brian Cowen (Laois-Offaly, Fianna Fail)

The PPP is an integrated procurement option and has an important role to play when applied to appropriate projects where there is the right scale, risk and operational profile to harness the benefits of the new approach. The assessment of value for money in a PPP project involving private finance takes account of issues such as the risks transferred to the private sector. The key test involves comparing the cost of procuring the project using traditional means with the cost of procuring it by means of PPP. Other factors, such as the long-term nature of the contract with the private sector, the optimum combination of whole-life cost and quality, the potential for quicker delivery of infrastructure and performance related payments, are also relevant to establishing if a particular option is the best value for money solution overall in a project.

If one looks at this objectively, there is no question that the PPP design build operate models, which have been designed by the National Roads Authority to provide us with the roads programme which is now being rolled out, could not have been rolled out with the same budgetary discipline and with time lines being respected through traditional procurement. Not all the skills involved in the appraisal, design and execution of those contracts are available in the public service. It is, therefore, a question of marrying these skills and identifying the public procurement requirements, the priorities and the way the PPP will provide us with the means to get the job done. However, it depends on the nature of the project as this would not apply to every project. Ensuring good contractual arrangements, transferring risk and incentivising the need to get the job done quickly are means of saving money which would not be possible if we went through traditional procurement means.

The wider economic benefit is part of the analysis. It cannot be a hard financial analysis of one over the other. There is a wider economic benefit by bringing a project on stream more quickly. According to the mid-term evaluation of the national development plan, the return is approximately 16% on the investment. That is what the Economic and Social Research Institution said. There is no question that PPPs have a role. Do we decide that is it for PPPs because of a report by the Comptroller and Auditor General? The evidence is quite the contrary.

Given that it is a new procurement mechanism, we can learn lessons as we go along. I do not claim to know everything about it, no more than anybody else, but other governments use it effectively. Given that we complain about infrastructure deficits here, there and everywhere, we must use PPPs as part of a number of responses, including traditional procurement and traditional means of doing a job. It is clear that is the case. We should have sufficient confidence in what we have rolled out so far and take the independent evaluation of that as a means of looking at the big picture rather than decide there was a problem with a particular school or with a bundle of five schools. It might have been different if it had been a bundle of 20 schools. That is another point about PPPs, namely, that one gets greater critical mass rather than 20 individual contracts.

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