Public-Private Partnership Center

Department of Budget and Management, 23 December 2012

In line with the Aquino administration’s goal to close the nationwide classroom gap by 2013 and prime up development via Public-Private Partnerships (PPPs), the Department of Budget and Management released P8.81 billion to the Department of Education (DepEd) for the implementation of  Phase II of the Public-Private Partnership for the School Infrastructure Project (PSIP II).

The PSIP II involves the design and construction of 10,680 classrooms—including school furniture and comfort rooms—in 14 regions nationwide.

“The release will help the DepEd stay right on track towards its goal of closing the classroom gap by end-2013, as directed by President Aquino. Engaging the private sector is key in achieving this, as it will allow the Administration to optimize the resources and capacities of the private sector, all while delivering critical goods and services to the Filipino public,” Budget and Management Secretary Florencio B. Abad said.

The budget chief also noted that the DepEd is now authorized to implement the PSIP II through national government financing under a turnkey or Build-Transfer (BT) contract, besides the option of going through PPP financing under a Build-Lease-Transfer (BLT) contract.

“We’re favoring the turnkey mode of procurement for this PPP project because it’s much more cost-efficient than the BLT process. If we adopt a BT contract for PSIP II, it will exclude the cost of financing and maintenance, items which are otherwise tucked into a BLT contract.

“Besides that, BT contracts have been shown to be more successful at attracting bid participants to a particular project. If we have a larger show of hands from the private sector, that means that we’re looking at a more competitive pool of bidders and that, consequently, the government stands to get a very fair price for the execution of a project,” Abad said.

He added that the positive impact of BT contracts on the Aquino administration’s PPP program may be instrumental in pushing the national economy further.

“If we are able to engage more private sector players in our major public programs, we can expect infrastructure development to proceed at a brisk pace. The spending uptick and employment opportunities generated by this will allow us to ensure inclusive growth in the country, where more Filipinos stand to benefit from the Administration’s socio-economic development platform,” Abad said.