While embarrassing for new Labour's flagship policy, it is no less embarrassing for the SNP whose "not for profit trust" alternative is being pioneered in Argyll and Bute - nobody has yet come forward to bid for the pound;80 million contract, although the memorandum inviting expressions of interest is still being formulated.
Speaking to The TES Scotland, the source, who did not wish to be named but who has a recognised track record in developing PPP in schools, pointed to other embarrassments for the politicians.
* Although pound;2 billion is available for school building projects, construction work is taking place only in Midlothian and West Lothian, accounting for just pound;60 million.
* The PPP project in Dumfries and Galloway has short-listed four contractors (Jarvis, Gleeson, Atkins and AWG) but has not yet moved to the next stage in a process that can take four years.
* Renfrewshire is at the negotiating stage, but just two contractors have expressed an interest - Ballast Wiltshire and the financially beleaguered Amey.
* And in Highland, only AWG showed any interest. The council was poised yesterday (Thursday) to go ahead with this bid for the pound;100 million contract, although the Scottish Executive normally insists on three or four competitors.
Highland says the Executive is satisfied because the bid has passed the "best value test", making it more cost-effective than it would be under conventional public sector borrowing.
There are seven other councils where there is little sign of activity despite having been given the go-ahead by ministers to spend pound;430 million on PPP projects last June.
The nine councils which benefited from the further pound;750 million released last month "must all be concerned at this lack of progress", the source says.
He attributes the slowdown to several factors. "A contractor can spend over pound;500,000 bidding for a PPP contract and lose. It is also clear that contractors are apprehensive about contracts which include refurbishment of existing buildings. These tend to be difficult to manage, cause disruption and generate opposition among staff and parents. Contractors would prefer to cherry-pick and go for new build only."
He suggests that there must be an urgent post-election parliamentary review of how Scotland's crumbling school estate should be improved. "PPP is creaking, while the SNP's not for profit trust has yet to show any success."
His views have found support from Michael McAuley, head of the infrastructure group at Dundas and Wilson, Scotland largest legal firm. Mr McAuley noted in a newspaper article last month that councils, particularly outside the central belt, are struggling to get more than two bidders interested.
Mr McAuley said the early PPPs had more than eight consortia chasing them, but the market was becoming "overheated". This was a particular problem for the SNP's alternative, he suggested, since it offered no return to shareholders.