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AN R 0 I N N I DEPARTMESTOF OIDEACHAIS EDU CATION AGUS SCILEANNA A ND SK I LL S Office of the Secretary General Department of Education and Skills Oifig an Ard-Runai An Roinn Oideachais agus Sci leanna Ms Margaret Falsey Committee Secretariat Committee of Public Accounts Leinster House Dublin 2 Ref: PAC32-l-768 Our Ref: 51813844 O March 2018 Dear Ms Falsey I refer to your letter of 21 February, on behalf of the Members of the Committee of Public Accounts, requesting a note in relation to the financial information available on Public Private Partnerships (PPPs) ahead of the meeting of 22 March 2018.
There are eight closed PPP contracts in the education sector, as follows: • five operational school bundles (Pilot Schools and Schools Bundles 1-4), which together cover 27 schools • one school bundle under construction (Schools Bundle 5), which includes five schools and one further education college • two operational higher education projects, t he National Maritime College of Ireland and Cork School of Music, both in CIT The above contracts are all Design, Build, Finance, and Maintain (DBFM) contracts, with the private partner remunerated by the Exchequer through Unitary Charge payments over 25 years.
In addition, work is progressing towards Financial Close on the Grangegorman PPP project.

This project, which together with Schools Bundle 4 and 5 formed a key part of the Government's 2012 stimulus package, will provide core academic infrastructure for DIT at its new Grangegorman campus.
Sraid Maoilbhride, Baile Atha Cliath 1, DOI RC96, Eire Marlborough Street, Dublin 1, DO I RC96, Ireland 11' +353 -(0) 1-889-6400 ~~ +353-(0)1-889-6798 Bl secgen@education.gov.ie Q www.education.ie A higher education PPP programme, provided for in the Government's 2016-2021 Capital Plan, is currently at advanced appraisal stage and ha:s a focus on expanding capacity in the Institute of Technology sector.
For ease of reference, the financial information requested by the Committee in relation to education sector PPPs is appended to this letter in tabular format, as follows: • Annex 1 provides the full list of education bui!ldings delivered through PPP, including key contract dates and the capital value of each building • Annex 2 provides summary data relating to enrolment trends across the PPP school bundles, measured against the long term projected enrolments for those bundles • Annex 3 provides a summary of unitary charge payments on education PPP projects, to include past expenditure and projected future commitments • Annex 4 provides a detailed breakdown by education PPP project of projected unitary charge payments over the period 2018-2043 • Annex 5 provides the Public Sector Benchmark (PSB) and Value for Money headroom in relation to Schools Bundles 1-3 • Annex 6 provides a summary of deductions on education unitary charge payments for the period 2013 to 2017 • Annex 7 provides a summary of variations with cost implications for the period 2013 to 2017 • Annex 8 provides a summary of third party revenue across education projects for the period 2014 to 2017 It should be noted that a range of financial information in relation to PPPs in the education sector is already publicly available.
The Department's Appropriation Accounts include details of annual unitary charge payments per project, as well as the total of projected future commitments.

Information is also regularly provided to the Department of Public Expenditure and Reform which publishes on its website details of unitary charge payments across the sectors and the contract value [i.e .

design and construction costs] of PPP projects.


The chapter on PPPs in the 2016 Report of the Comptroller and Auditor General includes a range of other financial information, including in relation to deductions, variations and third party revenue.

Since the procurement of Schools Bundle 1, the Public Sector Benchmark (PSB) has been the key tool used to assess Value for Money in education PPP projects.
The PSB represents a comprehensive estimate of the whole life cost to the State of procuring a project using traditional procurement, including risk.

It has been the practice of this Department for some time to publish PSB information on education projects once five years have elapsed after contract close.

Late last year, and in the interest of transparency, the Department took a decision to publish a greater level of detail in relation to PSBs than was the case previously.
The breakdown of the PSB across capital costs, recurring costs and risk, as well as the Value for Money headroom when compared to the successful tenderE~r's price [See Annex S], was published on the Department's website in January.

A narrative!

also sets out the rationale for, and approach, to the PSB.

We have also now agreed with the NDFA that they would release to the Committee the detailed Value for Money reports for Schools Bundle 3, 2 and 1 with appropriate redactions.
Schools Bundle 3 was signed in 2012, Schools Bundle~ 2 was signed in 2010 and Schools Bundle 1 was signed in 2009.

These will be provided to you shortly.

These reports were prepared by the N DFA, acting on behalf of the Department as Sanctioning Authority for the projects.

The reports were prepared just prior to Financial Close on each of the projects, with an addendum after Financial Close demonstrating the final position.
While the current PPP Guidelines require that the PSB not be made public, except in the case of one-off projects, the revised draft Guidelines, which are currently being finalised by the Department of Public Expenditure and Reform, provide for publication of the PSB "once an appropriate period of time has elapsed and the commercial sensitivity of the information on the project is no longer an issue".
Our view is that five years is an appropriate period of time after which concerns around commercial sensitivity will generally have receded .

In relation to contracts closed within the previous five years, there is a risk that sharing information on the PSB could have negative repercussions for the State, both in terms of managing the construction phase of the contract and in potentially influencing the price that future bidders for education projects might seek.
The information provided in all of the appended tables relates only to contracts which have already been closed .

Once Financial Close has been achieved on the Grangegorman PPP, I will be pleased to provide further financial information relating to that project.

Projected future payments relating to both the Grangegorman PPP and the higher education PPP programme are currently captured in the global PPP projections prepared by the Department of Public Expenditure and Reform .
I am ready to provide any further briefing requested ahead of the meeting on 22 March and welcome further discussion of the issues at the meeting.

Yours sincerely se;_ 6t:o& Sean 6 Foghlu Secretary General