Mr. Seamus McCarthy:

Go raibh maith agat, a Chathaoirligh. The 2024 appropriation account for Vote 13 - Office of Public Works records gross expenditure of €694.5 million. Appropriations-in-aid of the Vote amounted to €31.7 million. The surplus on the Vote at the year-end was €12.4 million which was surrendered back to the Exchequer.

The account is presented under two programme headings. Just under €563 million, or 81% of the total, was spent on the estate management programme and almost €132 million, or 19% of the total, was spent on the flood risk management programme.

The OPW provides office and other types of accommodation to other central government Departments and offices, using a combination of leased and State-owned property. The associated costs are a direct charge on the estate management programme. This includes rent payments totalling €111.2 million; property maintenance and supply payments of almost €83 million and public-private partnership unitary payments amounting to just under €22 million.

Costs associated with the OPW’s portfolio of heritage properties amounted to €54.5 million in 2024.

In parallel with routine management of its property portfolio, the OPW manages a large programme of new capital works, substantial building alterations and extensions. Under subhead B6, new works, alterations and additions, the OPW incurred expenditure of €141 million in 2024.

Separate from the building activity charged to Vote 13, the OPW also acts on an agency basis on behalf of other Departments and agencies. This mainly relates to the carrying out of major capital works and the leasing of accommodation. The expenditure associated with this agency activity is reflected in the respective appropriation accounts of the client Departments and agencies. As indicated in note 2.15, expenditure incurred by the OPW on an agency basis, and not reflected in Vote 13, amounted to €254 million in 2024.

I issued a clear audit opinion in relation to the appropriation account but drew attention to two matters disclosed by the Accounting Officer in the statement on internal financial control: procurements to the value of €16.3 million in 2024 that were not compliant with public procurement rules and control issues in relation to projects below €500,000.

Chapter 5 of my report on the accounts of the public services for 2024 reviews the development of a proposed national science centre, which has resulted in a contingent liability of €70.4 million disclosed in the appropriation account of Vote 13 The project originally commenced in 2003 as a perceived no-cost initiative to develop the science centre museum as part of a proposed major mixed-use development at Heuston Gate in Dublin. The initial agreement between the OPW and the centre’s promoters was for provision of a building of 4,645 sq. m, with the promoters taking responsibility for the fit-out and exhibits, and the recurrent operating costs. The property development did not proceed as originally envisaged.

In 2013, the OPW and the promoters entered a new agreement committing the OPW to provide a building of 9,580 sq. m at Earlsfort Terrace - more than double the original size and in a more valuable and sensitive location. Various cost estimates for the State’s liability in respect of the museum were provided at different stages in the development. By May 2024, the construction cost to be borne by the State stood at an estimated €70.4 million with the potential for further increases. To date, the project has cost the Exchequer approximately €4.27 million in legal expenses, State funding provided to the operator, and site preparation costs at both the Heuston Gate and Earlsfort Terrace locations. The examination found that the proposed science centre project has never been evaluated or appraised in accordance with the public spending code or other applicable capital expenditure guidelines. Furthermore, we found that as no formal sponsoring agency or sanctioning authority has been appointed for the project, the key controls designed to safeguard the Exchequer were not applied in the management of the science centre project. This ultimately led to a premature commitment of Exchequer resources. The key learnings of the examination focused on the need for robust project governance and safeguards to prevent and manage project scope drift and cost overruns. These learnings were accepted by the Accounting Officer.

Chapter 6 of my report on the accounts of the public services for 2024 examines the OPW’s management of office accommodation. The chapter reviews three main aspects: the sufficiency and appropriateness of property data collected, the extent of analysis undertaken to inform property decisions and the effect of the shift towards remote working on client requirements for office space.

In relation to data held by the OPW, the examination found, based on a sample of properties examined, that there are material errors and inconsistencies in respect of its property database. At some of the locations visited by the examination team, it was not possible to reconcile the information on the database with buildings on the ground. Separately, it was found that buildings with energy ratings below the target A3 level are still being acquired by the OPW, contrary to policy.

Protracted delays in fitting out premises for occupation led to substantial rental payments for buildings that were unoccupied. In the case of the Distillers Building in Dublin 7, the lease commenced in July 2022 with an initial rent-free period of nearly two years. However, the premises remained vacant up to the time the report was being completed, at a rent cost of €12 million plus VAT.

The report sets out five recommendations, including initiatives by the OPW to improve the quality of the data in its property database, to better document its intentions as regards energy upgrading for new acquisitions and to commit to reporting publicly on the utilisation of its office accommodation portfolio. In relation to leased office accommodation, it was noted that the OPW should formally record decisions made on whether to avail of lease break opportunities and should document any significant departures from property-related circulars in force.

The Accounting Officer has accepted the recommendations, and indicated timelines for their implementation.