Jonathan Teghtmeyer
Although a company has been hired to build new schools under a P3 arrangement, don’t expect to read the contract anytime soon.
Although a company has been hired to build new schools under a P3 arrangement, don’t expect to read the contract anytime soon.
The Alberta government has contracted the international firm of BBPP Alberta Schools Limited to build 18 new schools in Calgary and Edmonton by September 2010 under a public–private partnership (P3).
The firm won the contract after being the lowest bidder of three teams shortlisted to present proposals. The consortium of five companies is headed by Babcock & Brown Public Partnerships, a London-based firm specializing in P3 projects worldwide. Its proposal was priced at $634 million dollars net present value (NPV). The government estimates that the cost of traditional methods of building the 18 schools would be $752 million NPV.
Alberta’s NDP leader Brian Mason doubts the savings. "Frankly, I don’t buy it. Show us the math," he said. Mason pointed to a study published by the Université du Québec that cites several examples of failed P3 projects and concludes that there is no financial benefit to these arrangements.
While the government describes the process as open, competitive and transparent, Jack Hayden, Alberta’s minister of infrastructure, told reporters that he could not prove the savings because he was not sure if the disclosure rules in the contract would allow it.
Confidentiality clauses in the contract also extend to school boards. Calgary Board of Education chairwoman Pat Cochrane couldn’t comment on restrictions that will keep much-needed daycares and preschools from operating in the new schools in Calgary. The board was informed in a letter from Alberta Education that "school boards would not be permitted to enter into long-term facility space leases with outside parties such as playschools, daycare and community leagues."
Public Interest Alberta (PIA) is also concerned about the P3 process for building new schools. "Only a year ago the Catholic and public boards in [Edmonton and Calgary] had predicted the total costs would be less than $240 million to build," said Bill Moore-Kilgannon, PIA executive director. He argued that, with its excellent credit rating, Alberta should be able to get a better financing rate over the 33 years of the deal than any private company. "As anyone who has taken on a long-term rent-to-own contract knows, you end up paying a lot more than if you just paid for it up front, and you had better read the fine print." As Moore-Kilgannon pointed out, the fine print is unavailable for reading.
This partnership marks phase one of the government’s Alberta Schools Alternative Procurement initiative. Lessons learned will be incorporated into phase two, which will see an additional 14 schools built in and around the two major cities and ready for students within five years.
