More PPP schools being considered by Ministry of Education

Wednesday 10th February 2016

Plans for more schools to be built under the Ministry of Education's Public Private Partnership have been set out in a tender document sent to interested companies.

In December last year, the ministry announced plans for six new schools around the country under a PPP. They include three new primary schools in Auckland, one new primary school in Hamilton and the relocation and co-location of Shirley Boys' and Avonside Girls' high schools in Christchurch. All would open by 2019.

It would be the third deal between the public and private sector to build and maintain schools, and the largest so far. The tender makes clear that further schools may be included into the project with projected openings in 2020 or 2021.

"Active consideration is being given to the inclusion of additional schools in order to further leverage design, construction or maintenance efficiencies ... should the inclusion of additional schools be sought, this may result in construction of these additional facilities overlapping with the core bundle to support openings in 2020 or 2021, subject to value money considerations," the document said.

It goes on to say that bidders' ability to expand the project to include these schools should be given some consideration in any expression of interest.

Public Private Partnerships see the government contract as a joint company to build and maintain a school for many years into the future, taking on responsibility for all aspects of its management such as furniture, security, waste removal and looking after the grounds. In December, Associate Education Minister Nikki Kaye estimated PPP3 would deliver savings of between 3 to 8 percent over the lifetime of the contract.

However one investor in PPPs in New Zealand was sceptical further schools would be added to PPP3. The executive director of the Morrison & Co PIP Fund, Steven Proctor, said "for someone considering bidding on one of these things those type of words always feel like a soft promise. Often they don’t eventuate, in fact mostly they don’t eventuate."

However, he expected PPP3 to be a success, attracting a number of bids: "There’s a number of people lining up to bid for it and it's very attractive, although frankly it’s a little bit small, we’d rather it were bigger. I think we’ll have good competition, I think we’ll get some great designs at a good price, and I think we’ll get a good outcome. But I think everybody that’s going to bid would have preferred it if it were bigger.”

In a statement the head of the education infrastructure service at the Ministry of Education, Kim Shannon, said they had reserved the option to add additional schools where it is possible and beneficial.

"We have included this possibility in the tender document so that potential bidders understand the scope may increase, most likely after a contract is signed. This would allow us to assess bidders on their capability to deliver a larger project than the six identified schools," Shannon said.

"The ability to add and expand schools is a feature of previous school PPP contracts and is standard practice. Given our plans to build several new schools and rebuild a number of existing schools, it makes sense to retain the option of using an existing PPP to deliver similar schools," she said. "We would not expand the project to an unreasonable degree, and we would negotiate a revised contract budget with the successful tenderer."

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