REGINA - For governments that seek to defend the public-private partnership (P3) model and their continued use of it, the “value for money” (VfM) report is often the primary means by which governments seek to lessen public skepticism and justify their decision in opting for a P3.
In Saskatchewan, “value for money” is often held up as the determining factor in government decisions to pursue a P3. Speaking in defence of the decision to use the P3 model for the Regina Bypass, Minister for SaskBuilds Gord Wyant pointed to the value for money report as evidence, stating “the report confirms what our government has said many times — that a P3 was the right decision for this project.”
When asked about what model might be used to complete the upcoming renovations of Prince Albert’s Victoria Hospital, Premier Scott Moe also deferred to the upcoming VfM assessment:
“We have a process to decide how the project will be built,” he said. “Whether it will be a traditional build, P3, what level of design-build will come into that. It’s an audited process that we go through, the best value for money on behalf of the taxpayers and residents of Saskatchewan.”
Given the importance of the VfM to decisions on whether to pursue a P3 or a traditional public
build, it is of utmost importance that they are an objective and impartial measure that can guide government’s procurement decisions. To test the VFM test, CCPA Saskatchewan wanted to know how often the VfM test recommends the P3 model. We identified 47 publicly-available VfM assessments from P3 projects in Saskatchewan, Alberta and British Columbia conducted over the past 15 years. Of these 47 VfM assessments, only one recommended against the P3 model in favour of a traditional public build. That is a 98 percent approval rate for P3s versus the public model.
CCPA Saskatchewan Director Simon Enoch states that “the fact that the VfM tests we evaluated so overwhelmingly recommended the P3 model in virtually every instance lends credence to a longstanding criticism that these tests are often biased in favour of the P3 model.”
Using evidence gathered by provincial auditors, Is There Value in Value for Money Assessments? Testing the VfM Test in Western Canada demonstrates how the assumptions built into the VfM test as well as the interests of those who author them, combine to create an assessment method that, while not guaranteeing the selection of the P3 model, is nevertheless heavily weighted in its favour; an astounding 98 percent of the time in Western Canada.
In light of how compromised these tests are, the report recommends the following reforms to the procurement process in Saskatchewan.
- VfM tests should not be conducted by parties that have a stake in one particular outcome.
- Provincial P3 agencies should not have the contradictory mission of promoting the P3 model, administering the contract process and evaluating the success of these projects.
- The Provincial Auditor should develop their own risk assessment model that employs historical data for past projects and fairly allocates risks between models. This model should be used for all VfM assessments in Saskatchewan.
- The government of Saskatchewan should apply a discount rate to public borrowing for the public sector comparator and not assume that traditional builds are “unfinanced,” when they clearly are not.
- VfM assessments should be conducted and released to the public prior to the selection of the model. Releasing VfM reports after the financial close of a project serves as a post-hoc justification for the government’s decision and allows for no democratic deliberation by the public.
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