Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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65. To ask the Minister for Public Expenditure and Reform his views on whether the commitment to public private partnerships as a means to finance capital projects should be reconsidered in view of the collapse of a company (details supplied); and if he will make a statement on the matter. [4285/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Public Private Partnership (PPP) model is an internationally recognised model to design, build, finance, operate and maintain public infrastructure. In accordance with international best practice, PPP contracts typically include detailed provisions that apply in the event of the liquidation of a consortium member of the PPP company, or an entity under the contract, to ensure that the project proceeds to completion. The case the Deputy refers to highlights the prudential need for and value of such arrangements.

Under the terms of such PPP contracts, in the case of liquidation of a consortium member, or an entity under the contract, the PPP consortium’s funders and remaining shareholders are required to intervene and implement rectification measures to ensure that the project is completed to the satisfaction of the State.

This process is underway in the case of the Schools Bundle 5 PPP (as a consequence of the Carillion plc liquidation). Liquidation of a company such as Carillion plc is an unfortunate development but would impact all projects regardless of whether procured traditionally or by means of a PPP. The issue, therefore, is not PPP-specific.

The contractual mechanisms within a PPP project agreement are designed to limit the State’s financial exposure in such a scenario. An important feature of PPPs (which does not arise in traditional procurement) is that no payments are made until the facilities are handed over to the State and are operational. Once facilities are operational, payments to the PPP company are linked to service performance and availability of the facilities over the lifetime of the contract, and deductions apply when the facilities are not performing or are unavailable. The latter payment mechanism is not a feature of a traditional model which has regular milestone payments during construction.

PPPs continue to provide benefits to the State as a procurement method which enables the public sector to harness the innovation, commercial and management expertise and efficiencies of the private sector to design, build, finance, operate and maintain State facilities with a specified residual life on handback. PPPs will continue to be a procurement method available to the State for appropriately structured projects where they demonstrate value for money over a traditional procurement option.

As the Deputy may be aware I established an Inter-Departmental/Inter-Agency Group last year to review Ireland's experience of using PPP and to make recommendations on the future role of PPPs, in the context of the new 10 year capital plan. I would expect the Group's deliberations to take account of any implications for future national PPP policy of the development referred to in the Deputy's question. It is currently intended that the outcome of the review will be published alongside the new capital plan.