Damien English (Meath West, Fine Gael) | Oireachtas source

I am pleased to take the question to bring some clarity to this issue. The Deputy's question and some public commentary on this matter appear to be based on an assumption that the balance of the contract for bundle 1 of the social housing PPP programme after the pure construction cost is excluded is all attributable to management and maintenance of the homes to be delivered under the contract. This assumption is not true or accurate. I am happy to break down the figures with the Deputy. I cannot give all the science behind it but it will come out at a later stage.

The full value of the PPP contract includes a range of costs. The construction costs cover what might be referred to as the pure bricks and mortar costs in respect of the homes involved and the associated infrastructure, including play and community facilities. It is not only for houses but associated facilities. The remainder of the contract includes not only management and maintenance costs but also other costs, including the costs of finance for the project, projected inflation over the 25 years of the operational life of the contract, and the costs of complying with other terms of the contract. Such other terms include the requirement for certain quality requirements to be met when the homes involved are passed over to the local authorities concerned at the end of the 25-year period. That is the key part. They have to be handed over at the end of the period in a certain condition. That is the key part of the PPP.

It is a different model of delivery with its own requirements. This can give rise to incompatible comparisons between individual elements across different methods of delivery. It is one method among many in the toolkit. It is a question of comparing apples and oranges when people compare it directly with the approved housing body situation. I understand why there is confusion but at all times there is a value for money element to this. We have to apply a value for money process to the four different stages. Like all social housing project delivery mechanisms, it is essential that homes delivered through public private partnerships represent value for money for the taxpayer. In that regard, clear requirements are laid down centrally by the Department of Public Expenditure and Reform through which the National Development Finance Agency, as the professional financial advisers for projects of this kind, develops a public sector benchmark that reflects the cost of delivering the contract concerned through traditional procurement mechanisms. This is then used as the benchmark against which value for money tests are undertaken at a number of stages in the procurement - there are four different stages - primarily when it comes to assessing the final tenders submitted.

The successful tender under bundle 1 of the social housing public private partnership, PPP, was assessed in this manner and was lower than the public sector benchmark, thereby representing value for money.

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