The Education Funding Agency is seeking contractors to bid for its first batch of privately financed priority schools worth up to £150m.
The OJEU notice was issued the day after the government set out plans in the Investing in Britain’s future strategy to finish the Priority School Building Programme, which will rebuild 261 schools in England two years ahead of schedule by 2017.
Seven secondary schools in Hertfordshire, Luton and Reading will be rebuilt under the new batch of schools, which will take 15 months to procure.
The construction value is expected to be £122m, while the total funding required for the batch is up to £150m.
Last week, chief secretary to the Treasury Danny Alexander confirmed £1.3bn of capital has been allocated to the PSBP, which he said would allow the programme to be completed two years early.
The provision of capital funding for the PSBP is expected to speed up its delivery as the procurement period for capital-funded batches, which can be as little as 26 weeks, is substantially shorter than the 15-month procurement time for the privately-financed batches of schools.
Capital investment was needed after the private finance 2 element was cut from £2bn to £700m in May, leaving 137 schools without funding.
Following Mr Alexander’s funding announcement, a further four batches of capital funded schools have now been created by the EFA, comprising six schools in Derby, nine in the East Midlands, six in Nottinghamshire and seven in the North-west.
The construction value of each of the new batches has not yet been announced.
The construction industry this week backed the government’s commitment to speed up PSBP, under which construction has begun at only one of the 261 schools to date, by Wates in Coventry.
Asked if it is realistic to complete the PSBP by the end of 2017, Wates education chief Steve Beechey told Construction News: “Yes, it is if they [the EFA] continue to progress at the rate they have been doing in terms of moving on with batches. There is a good possibility that the [target] will be met.”
He added that the onus is now on the EFA to get the remaining batches of capital and privately financed batches out to the market.
The Treasury also committed to investing £21bn in schools over the next parliament to create more than 500,000 new school places and address schools maintenance.
EC Harris education partner Louise Allanach described the investment in schools as “welcome and needed”.
She added: “We can definitely say that there has been a lack of capital and funding for this in recent years.
“Our perspective is it is going in the right direction, but there are still real issues.”
Chancellor George Osborne announced funding for up to 180 free schools, 20 studio schools and 20 university technical colleges in 2015/16 in his spending review.
But Labour’s shadow education secretary Stephen Twigg MP said: “David Cameron is failing to address the primary school places crisis – which is happening now.”
He added that the government’s commitment to new free schools in 2015/16 is “wasting public money by setting up schools in areas where there isn’t a shortage of places and where parents don’t want them”.
PSBP aggregator to create ‘level playing field’ for contractors
The EFA has released details of the aggregator model that will raise almost £700m of private finance for the rebuilding of 46 schools under the PSBP.
EFA private finance deputy director Dan Rudley told Construction News the ‘master aggregator’ – a financial institution – would access long- and short-term debt to deliver the PSBP.
An OJEU notice for the aggregator is expected at the end of July and a nine-month procurement process will follow.
Mr Rudley said the aggregator creates a “level playing field” for contractors bidding for five PF2 schools batches.
But contractors must also submit a ratings pack to a credit agency when bidding and achieve an investment-grade credit rating to win work.
“We expect batch bidders to attain a triple-B credit rating at least. But there is no advantage to getting more than a triple-B rating, it’s pass/fail.”
Ms Allanach said: “They [the EFA] are moving along quicker. The private finance element is not as big, and so the design and build process is quicker.”
But Galliford Try education director Michael Buchanan was less confident about the EFA’s ability to deliver PSBP early, and said it would not be enough to clear the maintenance backlog.
Mr Buchanan told Construction News: “Accelerating the Priority School Building Programme – if it can be done, as progress to date has been slow – accounts for only 261 projects.
“There are 24,372 schools in England. At this rate, we are falling behind fast.”
A Department for Education spokesman said the PF2 schools are on schedule to be completed by the end of 2017.
He added that work on a second priority school is due to begin “imminently”, which will be delivered by Sir Robert McAlpine in the north of England.