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New Brunswick Auditor General criticises government's decision to build P3 schools

Preferential treatment of P3 model distorted analysis results.

MacPherson: Should obtain legislature approval via budget process before signing multiyear contractsFREDERICTON, NB, January 12, 2012: Auditor General Kim MacPherson looked at the province's decision to design, build, maintain and operate the new Eleanor W. Graham Middle School and Moncton North School using a public-private partnership (P3) in her latest report. She found that the P3 decision was not properly supported by a preliminary analysis.

"The analysis should be carried out early in the process so that a reasonable recommendation can be made of a preferred procurement method," said MacPherson. The analysis was performed only after the government announced the P3 decision.

She also noted the government was already committed to this multi-million dollar project long before the legislative assembly had an opportunity to debate it. In her view, government should obtain approval of the legislature through the budget process before multi-year contracts are signed.

  "If the province is willing to commit funds to maintain a school under the P3 model, it should be willing to do the same under the traditional approach."

MacPherson found some aspects of the value for money (VFM) analysis were appropriate. However, she did not agree with how the VFM analysis considered ongoing maintenance and repair needs of the schools. The analysis assumed all such costs would be funded under the P3 model but not for the traditional model. MacPherson believes if the province is willing to commit funds to maintain the school under the P3 model, it should be willing to do the same under the traditional approach. Treating one model differently distorted the comparison and may have changed the decision to adopt the P3 model.

In her report, the auditor general also noted that provincial budget restraint has led to the deferral of needed maintenance and rehabilitation work at schools. If government approves the construction of a new school, regardless of the delivery method (P3 or traditional), the long-term cost of operating and maintaining the facility should be factored into the decision at the time and protected in future budgets. Otherwise, unanticipated school closures like the 2010 mid school year closure of Moncton High School and École Polyvalente Roland-Pépin in Campbellton will continue.

The Auditor General's 2011 report contains three volumes; Volume I on Provincial Wastewater Commissions was previously tabled in October 2011. Volume II focuses on matters arising from the annual financial audit of the province and Crown agencies. Volume III reports the results of the Value for Money projects completed during 2011.

Links and sources
  Auditor General finds public private partnership evaluation process needs to improve

Posted: January 19, 2012

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