10. Deputy Joan Burton asked the Minister for Education and Skills the status of his Department’s action in dealing with the fallout from the collapse of a company (details supplied) and contracts undertaken by Departments with the company; and if he will make a statement on the matter. (Question 13416/18 asked on 29 Mar 2018)
Deputy Joan Burton: This question relates to the collapse of a company involved in public private partnerships, PPPs, and the affected Capita and Carillion contracts, some of which are with the Department of Education and Skills. Will the Minister make a statement on the current situation?
Deputy Richard Bruton: InspiredSpaces is the special purpose vehicle, SPV, that was set up to deliver the schools bundle 5 PPP project, which involves the construction and operation of five school buildings and one further education college across four sites in Bray, Wexford, Kells and Carlow.
Carillion Private Finance is a 50% shareholder in InspiredSpaces, together with the Dutch Infrastructure Fund, DIF. The construction subcontract was with Carillion Construction Limited while the services subcontract was with Carillion (Ambs) Limited. As both Carillion Construction Limited and Carillion (Ambs) Limited have entered liquidation, the construction and services agreements relating to the project have been terminated and must now be replaced.
In accordance with the terms of the PPP contract, it falls to InspiredSpaces in the first instance to put in place the necessary rectification measures to ensure delivery and operation of the school buildings. Although Carillion Private Finance is not in liquidation, its directors have mandated DIF to act on behalf of InspiredSpaces in putting in place the rectification plan in consultation with the project funders. DIF has indicated that a number of contractors and service providers have been invited to quote for finishing the works outstanding on the relevant buildings and for the provision of facilities management services over the 25-year lifetime of the project. It expects to receive final bids from tenderers, with whom it has already had extensive engagement, by early April.
Based on this, the expected timeframe for the evaluation of tenders and the appointment and mobilisation of the successful contractor and facilities management company, DIF is targeting all six buildings to be operational for the beginning of the coming school year, with the most advanced schools to be delivered earlier in the summer.
The National Development Finance Agency, NDFA, is continuing to engage actively with DIF as the rectification plan is implemented. DIF has confirmed that, in conjunction with its lenders, it will deploy all necessary resources towards achieving the target dates outlined.
Officials from my Department and the NDFA most recently met representatives of all affected schools on 14 March in Tullamore. A senior DIF representative also attended that meeting in order to provide a full update on its plan to secure delivery and operation of the six facilities as soon as possible.
I am not aware of any contract undertaken by other Departments with Carillion.
Deputy Joan Burton: The schools in question are the Loreto college in Wexford, Coláiste Ráithín and St. Philomena’s primary school in Bray, Eureka secondary school in Kells, and Tyndall college and the Institute of Further Education in Carlow. When does the Minister expect these projects to be completed, available to the school communities to be taken over and opened? In the case of two of the schools, which are almost complete, I understand that it will be early or mid-summer before it is possible to take them over. Is the Minister giving a commitment that the other projects will be available for the start of the new school year in September? Given that the cost of these projects is significantly higher than had the Government borrowed the money and paid for them directly, will the Minister indicate whether there will be changes in their cost profiles or will any increase in costs be covered by the PPP project’s insurance?
Deputy Richard Bruton: DIF is targeting all six buildings to be operational by the beginning of the coming school year. We will work with the schools to ensure that, if this target is not being fulfilled, contingency plans are in place. We do not control the issuing of tenders and so on but, under the contract, DIF is standing this out of its money. Other than a small sum of €4 million in respect of site clearance, it has not received any money from this contract. The financial arrangements are such that DIF does not get any payment until the schools are handed over. In that context, the costs are not changed and our commitment remains as it was. Any cost implication is borne by the contractor involved - DIF - if the contracts come in at a different tender price than it intended.
As to selecting PPPs, we ensure that there is a balanced mix. PPPs have been used for a small proportion of our plan rather than a large one. It is prudent that there be a mixed and balanced portfolio of construction approaches.
Deputy Joan Burton: I understand that the tenders are due back by early April. When will that be? Clearly DIF is the Dutch Infrastructure Fund. When does he expect work to recommence to complete the projects? His reply implied all the schools would open in September whereas the understanding that has been given is that in the two projects that are pretty much complete, the school authorities could take possession of the buildings by the end of May. Is the Minister implying that is changing as well?
Deputy Richard Bruton: I reiterate my original reply. DIF is targeting all six buildings to be operational for the beginning of the coming school year, with the most advanced schools to be delivered earlier in the summer. The fund, not the Department, is receiving the tenders and it expects to receive final bids from the tenderers with whom it has had extensive engagement by early April. DIF is handling the tenders but we are keeping a close eye on this through the NDFA and the Department. We regularly meet DIF representatives. The fund is receiving and adjudicating on the tenders, not the Department. Breaching those arrangements would expose the State. It is only on the handover of the schools that the State will begin to make payments. That provides protection and ensures that the pressure is on DIF to meet the timeline.
Deputy Joan Burton: Will that be early April for the tenders?