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PF2 school procurement delayed till spring

Exclusive: Education Funding Agency director of capital Mike Green has confirmed that privately financed schools under the £2 billion PSBP will not come to market until spring at the earliest.

The £50 million London batch of capitally funded schools under the Priority School Building Programme has gone to the market this week, following batches in the North-east and Midlands.

However, Mr Green told CN discussions are ongoing about the privately financed £2bn programme, with procurement now scheduled to start in the spring after originally being pencilled in for a December 2012 launch.

He said: “PF2 and the [change in] private finance means we have had to have a rethink.

“We’ve pushed forward with the capital [schools] and we’re making sure we get that out the door so we don’t lose traction and our pace in the programme.

“We have pushed private finance [back] – a very hard decision we have had to do.”

However, Mr Green insisted it was not because the EFA had been surprised by private finance 2 but that it wanted to take the time to get it right.

The £2bn privately financed schools are the first major government scheme to use the new form of private finance.

“We were talking to [the Treasury] all along,” Mr Green said.

“We have a great relationship with the Treasury and I’m told that’s almost unprecedented in the way government works – they are very keen for this to work as well.

“So we have all groups of people wanting this to work. It’s just a question of getting through it now and making sure that it does.”

The EFA had expected to be able to start procuring privately financed work last month, but the PSBP is the first scheme to go to market under the new PF2 and one contractor told CN “it made sense” that time was taken to make sure the details were right.

CN understands that around 10 of the 12 North and Midlands academies framework contractors showed an interest in the initial batches of capitally-funded schools to be procured through the framework.

Winners of the Midlands and North-east batches are expected next week, with Bam Construct, Sir Robert McAlpine and Wates in the running.

Five of the eight batches have now had bidders’ days, with the remaining three to take place within the month.

Mr Green said: “I have to say I’m really pleased with the way the capital batches are going out the door and the response from all the contractors.

“The bids we have had at this stage, we can see the designs coming through – I’m very pleased.”

The Department for Education is due to set out how it will spend the extra £1bn allocated to it in December’s autumn statement, after CN revealed the first work on that tranche of funding would start in the autumn.

The firms carrying out the £15m schools estate survey on behalf of the EFA are currently assessing 200-300 schools per week and will complete their work by the summer.

Meanwhile at yesterday’s Westminster Education Forum keynote seminar on the future of school buildings, several delegates raised the point that the standard of EFA staff managing the relationship between the schools, local authorities and builders needed to be outstanding.

The EFA launched a recruitment drive last year and Mr Green told CN it had received “several hundred” applications and found “some very good people”.

He added: “It won’t surprise you to hear that there are very good people out there in the market at the moment because a lot of areas are quiet, local authorities have let some people go, so we have found some great people.

“If you’d asked me 18 months ago are you worried about recruitment [the answer would have been] yes of course.

“Now my worry is no longer recruitment – I’ve moved on from that; now my worry is getting private finance people around the table and getting the deal done so we can get on with it.”

Mr Green also denied that the level of spending allocated to the £2bn privately financed side of PSBP had changed, after the initial construction cost was set at £1.75bn last month.

“Nothing has changed whatsoever,” he said. “It’s the way people cut numbers, whether you’re talking about the upfront cost of capital, the cost of running the building… absolutely nothing has changed at all.”

However, he said there would be opportunities to save on the £2bn figure, depending on the industry and the detail around private finance.

“We call it a £2bn programme but it’s only when the schools are out there and the deals are done will we know how much it is,” Mr Green said.

“If people get the efficiency thing and people come back and pleasantly surprise us with the cost of finance… we call it a £2bn programme but if I do my job well it might come in at £1.8bn – there are all sorts of variables.”

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