Ms Ann Campbell:

My colleagues and I thank the Chairman and members for their invitation to attend this meeting to discuss issues relating to Dundalk Institute of Technology's financial statements 2014-2015, specifically to address the accumulated deficit, non-compliance with procurement guidelines, and developments at Dundalk Institute of Technology, DkIT, since the publication of these financial statements. We have submitted detailed information to the committee in advance of this meeting on the matters for consideration. Therefore, in my opening statement I will summarise the key points.

To put the accumulated deficit in context, it is important to note the severe cuts in funding to higher education as a result of the recession. At DkIT, HEA funding was reduced by 34% between 2007 and 2012. The institute managed to maintain a break-even financial position until 2012-2013, when an operating deficit of €711,000 occurred. From that point onwards, DkIT was no longer attracting sufficient income to meet its obligations. Funding for apprenticeship blocks, for example, declined by €2.5 million, and funding for nursing education reduced by €1.4 million over the period. Given that staff and support facilities were effectively fixed costs, it was unavoidable that financial challenges would arise. A plan agreed with the HEA in May 2014 to address an underlying deficit from the previous year and return the institute to a balanced budget did not meet its objectives in that period for the reasons outlined in our written submission. However, this plan did provide a foundation for savings in 2015-2016. The institute recorded a net operating deficit in 2014-2015 of €1.314 million, bringing the accumulated deficit to €3.24 million. A new three-year financial plan agreed with the HEA in January 2016 identified savings of €2.074 million over a three-year period from 2015 to 2018 to bring the institute to a balanced budget. The institute is pleased to report its draft accounts show an operating surplus of €127,000 for 2015-16, and current estimates indicate the institute will again break even in 2016-2017.

The institute endeavours to ensure full compliance with procurement procedures and guidelines and is actively working with the Office of Government Procurement, OGP, to ensure that all procurement is in accordance with its model. The general principle is that a competitive process should be carried out for all public contracts. However, urgent and exceptional circumstances may arise which are unforeseen and have not arisen due to any action or inaction on the part of the contractor. Regarding the procurement with supplier B in 2014-2015, such exceptional circumstances did apply, as set out in our written submission. Regarding the other more significant items of non-compliance, DkIT considers that supplier C should not be included in the list of non-compliance as this refers to a student recruitment agency based in Beijing, and given both the nature of the service and the location, a tender process could not be run. Regarding supplier D, the OGP had no framework in place for the service in question. DkIT discussed the matter with the OGP and on its advice extended the contract. The contract with supplier A was extended to provide additional necessary security at short notice, pending the procurement of a new contract.

Over the years, DkIT has delivered learning and teaching, research and engagement within budget and in good value-for-money terms for the State. The institute's accumulated deficit, which arose as a result of deep cuts to its budget, represents 2% of its annual income. As previously outlined, the institute achieved a small surplus in 2015-2016 and forecasts a balanced budget for 31 August of this year. Such savings are achieved at a considerable cost, but the institute is resolute in its determination to return to sustainability so that it can continue to serve its learners and the region.