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Sammon Liquidation exposes failure of PPP Procurement Strategy - Jonathan O'Brien TD

8 June, 2018 - by Jonathan O'Brien TD

Sinn Fein spokesperson for Public Expenditure and Reform, Jonathan O’Brien TD, called into question the government’s PPP procurement policy and called for a review of its effectiveness.

This comes fo llowing the announcement of the liquidation of two subsidiary companies of Sammon Group, and the subsequent delay of several school building projects that had been tendered to the Group

Deputy O’Brien said:

“The liquidation of Sammon Contracting Ireland and the Sammon Contracting Group raises serious questions over the government’s continuing reliance on the PPP model to deliver capital projects and public services.

“As a result of this liquidation, several schools in Carlow, Meath, Wexford and Wicklow, which were due to be opened for the new school year, will not reach their expected deadline for opening.

“Not only is this delay unacceptable, it further undermines the government’s irrational belief that private-public partnerships are the best and often only way of delivering capital projects. They are not.

“The delayed project was first tendered in July 2016, as part of the Schools Bundle 5 PPP contract, with the InspiredSpaces consortium having been awarded the contract, and Sammon Group subsequently appointed as the subcontractor.

“While the decision to pursue the project through a PPP arrangement, rather than traditional procurement, was based upon the belief that private-public partnership would transfer risk from the state to the private sector, lead to more efficient outcomes and provided better value for money - the delay of the Schools Bundle 5 PPP contract undermines many of those assumptions.

“Rather than pursue traditional procurement, the government exposed both the project, Sammon Group, its employees and a multiplicity of subcontractors throughout the country to the risks associated with private finance.

“Not only did this arrangement expose these stakeholders to the now infamous British company Carillion, which was a joint stakeholder in the InspiredSpaces consortium - it also delayed a capital project that was due to provide a public service by the beginning of the new school term.

“Now that this project is delayed and subject to a retendering process, the time is right to review the efficacy and delivery of PPP projects.

“A 2011 Report by the C&AG noted that ‘significant costs have been incurred on cancelled PPP projects’ and went on to recommend that ‘Evaluations of the value for money expected to be achieved through procurement of projects by means of PPP should be published’.

“These recommendations should be followed. At a time when PPPs have been rejected throughout Europe as a cost-effective model of procurement, the Government insists on relying upon them.

“The liquidation of Sammon Group and subsequent delay of crucial capital projects should call that reliance into question.”

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