Mr. Jim Breslin:

I thank the Chairman and members for giving me the opportunity to make a brief opening statement. I am here in my capacity as Secretary General of the Department of Health and Accounting Officer for the Health Vote. I am accompanied by Tracey Conroy, assistant secretary, acute hospitals policy division. While the invitation to me for today specified that it was to assist the committee in its examination of the 2017 financial statements of the National Paediatric Hospital Development Board, I am aware that the committee also recently requested the development board to provide additional information in advance of this meeting relating to the current position on the children's hospital project. I will, therefore, also comment with regard to the project overall.

The National Paediatric Hospital Development Board is established under the National Paediatric Hospital Development Board (Establishment) Order 2007, SI 246 of 2007. Under the order, the board is charged with keeping all proper and usual accounts and all special accounts as the Minister may from time to time require and to submit an annual financial statement to the Comptroller and Auditor General for an audit report to be carried out in accordance with the Comptroller and Auditor General (Amendment) Act 1993. The board's annual financial statements for 2017 were submitted to the Department on 24 August 2018 following the completion of the Comptroller and Auditor General's audit and were laid before each House of the Oireachtas on 25 September 2018 pursuant to section 11 of the Comptroller and Auditor General (Amendment) Act 1993.

The board has full statutory responsibility for the design, procurement, build and equipping of the new children's hospital and the outpatient and urgent care centres. It receives its capital funding for the project from the HSE as the sanctioning body for the new children's hospital programme. As set out in the 2017 financial statements, costs of €67.2 million were incurred by the National Paediatric Hospital Development Board in 2017. Following Government approval of the construction investment decision in April 2017, the main contractor, BAM Building Limited, which had been selected as the preferred bidder through a procurement process overseen by the development board, was contracted in August 2017 to build the new children's hospital and outpatient department, OPD, urgent care centres and instructed to begin phase A - substructure works. Work began on site in October 2017. Work was also progressed on the detailed design for phase B. When Government approved the construction investment decision in April 2017, the capital cost for the delivery of the hospital build project following the evaluation of main construction tenders and selection of preferred contractors was €983 million, of which €916 million was to be met by the Exchequer. In December 2018, following completion of the guaranteed maximum price, GMP, process, the capital cost for the delivery of the hospital build project now stands at €1.433 billion. The total of €450 million requires net additional Exchequer funding of €320 million, of which €50 million is VAT, and an additional €130 million in philanthropy funding.

In December 2018, when the Government approved the construction investment to allow phase B of the hospital to be instructed, the Government made very clear its serious concerns at the major escalation in the cost of the project. Accordingly, the Government has also approved the commissioning of an independent review of the escalation in cost in determining the adjusted contract sum. This independent review, which was commissioned by the HSE, is under way and will examine the contributory factors and associated responsibilities in order that any potential weaknesses are identified and comprehensively and speedily resolved in the interests of the successful completion of the project and the effective management of public funds. The development board is fully committed to collaborating with this review and to implementing any recommendations arising. The HSE and the Department will equally fully support the expeditious conduct and implementation of the review.

In advance of the meeting, I circulated a briefing note prepared by the Department for the Oireachtas Committee on Health earlier this week that sets out the detail of the cost escalation. At the committee, the Minister and I put on the record our deep unhappiness with the escalation in the cost of the project from €983 million to €1.433 billion.

As Accounting Officer I take this situation extremely seriously and regret the very significant increase in public funds over that originally committed by the Government based on the business case submitted by the development board. The Minister also outlined that the Government is resolved that the project should proceed to completion without delay so that, at long last, children in need of specialist paediatric care can access it in a modern and appropriate setting with all the facilities and technology that can support staff to deliver the best outcomes. I am happy to address any queries committee members may have.