Alberta launches second PPP for schools(4)

The second round of school developments in the Canadian province will proceed as a mix of PPP and design-build procurements, instead of as a PPP-only project. Alberta decided to split the procurement after feedback from industry and market indicated that it would be difficult to secure financing for a PPP-only project.

The Canadian province of Alberta has formally launched the procurement process for the development of 10 schools through a public-private partnership (PPP) structure.

An additional four schools will be procured under a traditional design-build procurement structure at a later date, the province said in a statement.

Under the PPP structure, the winning bidder will take on financing risk for the project and collect payments from the province in exchange for maintaining the schools over a 30 year concession period. Under the design-build approach, the government will bear financing risk and make so-called “progress payments” to the winning contractor through the design and construction phases. The schools will receive funding for maintenance through government maintenance and renewal grants.

The government of Alberta set aside $1.15 billion for new schools and upgrading projects and $528 million for maintenance and renewal grants in its latest budget.

The procurements follow the awarding of a PPP contract for the design, build, finance and maintenance of 18 schools in September 2008. That project, estimated at the time to cost C$634 million, was awarded to a consortium of investors led by Babcock & Brown Public Partnerships, a London Stock Exchange-listed social infrastructure fund. Construction has already begun and is expected to finish in June 2010.

A spokesperson for the province said the province decided not to develop all 14 schools in the Alberta Schools Alternative Procurement II project as PPPs since “feedback from industry and market indicated that the two bundle approach would be more inviting” to potential bidders.

“They thought there might be some challenges in securing funding to do a complete PPP,” the spokesperson added.

Bidders interested in the schools being procured as a PPP have until June 2009 to respond to the province’s request for qualifications. Selected responders will then be invited to submit their proposals. The province hopes to name the successful proponent by March 2010.

Bidders interested in the schools to be procured as a design-build will soon be invited to participate in a procurement process along a similar timeline, the spokesperson said.