BUILDING OUR FUTURE: SCOTLAND'S SCHOOL ESTATE
1. This guidance on the output specification for school Public Private Partnership (PPP) projects has been developed as part of the school estate strategy Building our Future: Scotland's School Estate. 1 It explains what the output specification is, how it contributes to the project, describes the main issues to be considered in developing the specification, and offers a model structure for an output specification. It is intended for local authorities and others involved in school PPP projects to help them achieve their objectives through well considered and clear output specifications. However, many of the issues will also be relevant to school projects using other forms of procurement.
2. The guidance is in 4 parts:
Section 1 Introduction
Section 2 Key issues
Section 3 Model
Section 4 Further information
WHAT IS THE OUTPUT SPECIFICATION?
3. In a schools PPP project, a private sector partner - usually a consortium including builders, facilities managers and lenders - designs, builds and maintains the schools in the project over a contract of around 25 to 30 years. The local authority purchases this work through monthly payments (the unitary charge) over the life of the contract. PPP projects focus on service outcomes - what is required, on risk allocation - where responsibilities lie, and on integrating design, build, service delivery and long-term maintenance.
4. The output specification is, essentially, a brief for the PPP project. It is the core of the Invitation to Negotiate (ITN) documentation. It defines the local authority's requirements for the schools in the project and covers issues such as accommodation, facilities and level of service and is the basis for bidders to prepare their proposals. A key factor in a successful project is that the local authority is clear about what it wants to achieve and makes this explicit in the output specification.
5. As the project proceeds, the output specification is incorporated into the contract - the project agreement - between the local authority and the contractor. The Scottish Schools Standard PPP Contract (SSSC)2 provides a framework for individual project agreements.
6. It is a considerable challenge to set out all requirements in the output specification in a way that is clear, and can form the basis for monitoring performance with facility and service standards which will trigger payment deductions if the contractor fails to meet these.
7. When bidders are preparing their proposals they may ask the local authority to clarify some issues in the output specification. Unless this relates to a matter of commercial confidence for an individual bidder, clarifying information provided should be copied to all bidders. This is good practice and will ensure that all bidders are working to a clear and unambiguous output specification and minimise the need for later clarification and the related risk of time delay and additional cost.
WHO DEVELOPS THE OUTPUT SPECIFICATION?
8. The output specification is the local authority's main mechanism for defining its requirements: it owns the specification and leads on its development.
9. The local authority's project team will need a range of skills and knowledge of matters such as strategic policies and planning, school specific issues, design, building and maintenance, legal issues such as land, procurement and contracts, and financial issues such as modelling, taxation and budget management. Some of this expertise may be provided by internal or external advisors assisting the core team.
10. The project team needs to have a good understanding of wider issues and interests and to take account of these in an integrated output specification. Good communication with stakeholders, including the individual school communities and other interested groups, is essential to develop shared understanding of objectives and shared ownership of a successful outcome.
WHEN IS THE OUTPUT SPECIFICATION DEVELOPED?
11. The output specification is first issued to bidders as part of the invitation to negotiate (ITN) documentation, but its format and content needs to be developed by the project team from the outset of the project. This should happen as soon as the local authority's outline business case has received final approval and the procurement phase begins.
12. An outline draft of the output specification may be issued to potential bidders at prequalification stage of the procurement. This can provide an early structure and focus for more detailed work and send a clear signal about the local authority's commitment and approach to the project.
13. The project timetable should allow a realistic period for the output specification to be developed fully, including appropriate consultation with stakeholders.