Oireachtas Joint and Select Committees
Thursday, 11 June 2015
Public Accounts Committee
Special Report No. 88 of the Comptroller and Auditor General: Restructuring the Administration of Student Grants
10:00 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Before we begin, I again remind members, witnesses and those in the Visitors Gallery to turn off all mobile telephones as the interference from them affects the sound quality and broadcast transmission of the meeting.
Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the House, or an official by name or in such a way as to make him or her identifiable.
Members are reminded of the provisions within Standing Order 163 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.
I welcome Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, and ask him to introduce his officials.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I also welcome Ms Jacinta Stewart, chief executive officer, City of Dublin Education and Training Board, and invite her to introduce her officials.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I also welcome Mr. John Burke from the Department of Public Expenditure and Reform. I invite the Comptroller and Auditor General, Mr. Seamus McCarthy, to make his opening statement.
Mr. Seamus McCarthy:
The State, through the Department of Education and Skills, provides student support grants which totalled €366 million in 2013 and €372 million in 2014. Grants are payable in respect of tuition and other fees and as a contribution towards an eligible student’s living costs. In addition to funding, the Department has overall responsibility for ensuring students receive the support to which they are entitled on a timely basis.
Up to and including the academic year 2010-2011, there were three means-tested grant schemes for third level students and a separate means-tested scheme for students attending post-leaving certificate courses. The schemes were administered by 66 agencies, namely the 33 local authorities and the 33 vocational education committees. The Student Support Act 2011 enabled the consolidation of the four schemes into a single unified statutory scheme. The Act also enabled the Minister to designate one or more public bodies as a grant-awarding authority for the consolidated statutory scheme. The Department issued a call for proposals from statutory agencies interested in taking on the role. City of Dublin VEC, now City of Dublin Education and Training Board, CDETB, was selected in April 2011 as the single national awarding authority for student support. Plans were made for CDETB to take on the administration of the scheme for all future new applicants for grants, commencing for the academic year 2012-2013.
The ETB established a separate internal unit named Student Universal Support Ireland, or SUSI, to administer the scheme. SUSI was expected to deliver a better service to grant applicants through streamlined processes, greater consistency in dealing with applications, faster processing due to economies of scale and the implementation of an online applications system. However, many of the expected benefits of the new centralised process did not materialise in 2012 to 2013. In fact, significant operational issues emerged for SUSI in its first year of operation resulting in substantial delays in the processing of claims and payment of grant support, which caused serious difficulties for many students and their families. I am happy to note that the initial problems were dealt with by the end of its first year of operation and that the performance of SUSI was much improved in the 2013 to 2014 academic year.
The operational issues that occurred in 2012 to 2013 were comprehensively documented in a consultancy report commissioned by the ETB and prepared by Accenture. That looked mainly at SUSI's internal processes and the management of the implementation project. In general, my office's examination does not revisit those issues. Instead, it reviews how the overall reform of the system was managed from initial planning through to the go-live date of SUSI's online application system. It considers in particular the extent to which the serious operational issues in 2012 to 2013 were a consequence of the earlier planning process. The funding and administration costs of SUSI are also reviewed.
The process of moving from 66 awarding authorities to a single grant authority required detailed planning and commitments across a range of areas to ensure systems and processes were fit for purpose, that sufficient and experienced staff resources were in place, and that the new arrangements were adequately communicated to students. Based on its own detailed proposal, the ETB was recommended as the awarding authority in April 2011 and it commenced preparation for the implementation of SUSI. The proposal envisaged that the system would go live by March 2012 to handle new grant applications and payments for the 2012 to 2013 academic year. While the onus was on the ETB and SUSI to implement the plan, there was regular reporting to the Department on the development and delivery of the project. However, the ETB was only formally appointed as the statutory awarding authority in May 2012. In my view, certain elements necessary to ensure successful project delivery were not adequately planned. This resulted in key risks not being identified, key planning assumptions not being tested, and a final implementation plan not being put in place until April 2012. There was no formal monitoring of delivery of milestones by the project implementation group, nor were there any formal escalation procedures in the event of adverse outcomes. These weaknesses in planning contributed to the serious operational issues that arose after the system went live in June 2012.
One of the expected benefits of centralisation of the grant administration was the possibility of data sharing with other State agencies, primarily to reduce the onus on applicants to provide to SUSI documentation and information already held by public bodies. Such data sharing arrangements were not in place for the 2012 to 2013 academic year. Delays in securing all the required documentation were a significant problem for SUSI and these contributed in turn to delays in deciding on applications and commencing payments. In addition, when data sharing operations were eventually put in place, the ETB identified that in 2012 to 2013, 790 students already in receipt of the back to education allowance from the Department of Social Protection had also received grants from SUSI to which they were not entitled at a cost of approximately €1.9 million. The ETB also discovered a number of other categories of overpayments in 2012 to 2013 totalling a further €2.2 million.
Redeployment is a central feature of public sector reform. It offers the potential to increase effectiveness across the public sector through better utilisation of resources and knowledge transfer. In sanctioning SUSI, the Department of Public Expenditure and Reform stipulated that required staff be sourced through redeployment. However, after six months of engaging in the process, only 13 positions from an expected 36 had been filled through redeployment. Temporary staff had to be contracted in urgently to deal with applications and, in the end, it took 17 months until an adequate level of redeployment happened.
The Department is responsible for ensuring there are adequate arrangements for the administration of the student grant scheme. However, when SUSI was launched, it did not put in place a formal service level agreement with the ETB incorporating relevant performance indicators. This was only done in February 2013 to specify performance indicators for the 2013 to 2014 grants. Following a tender process, the ETB outsourced the provision of document management and contact call centre operations for SUSI in December 2011. However, it departed from good procurement practice in a number of areas. Although the outsourced provider commenced service in January 2012, the contract with the service provider was not signed until February 2013, which was 13 months later. Furthermore, no penalty mechanism is specified in the contract with the service provider to cover the event of a failure to provide the contracted level of service.
Up to June 2013, there were appeals of decisions by over 11% of applicants with a rate of 74% turnover of initial decisions on appeal. This raises concerns about the quality of the initial assessments and the level of quality control. In fact, what had happened was that staff were moved from quality control duties to front-line claims assessment in response to greater than expected demand, and this may have reduced the overall quality of decision-making on applications. I further note that the funding mechanism for SUSI, coupled with the delays in processing applications and making payments, resulted in the ETB holding very large bank balances at the end of 2012.
The administration costs of SUSI for the year ended 31 December 2012 totalled €7.16 million. However, because of operational difficulties at various stages in the process, significant administration costs were also incurred in early 2013, which related to the first year of operation. These were primarily outsourcing costs. From commencement of SUSI up to March 2013, these totalled €5.9 million compared with a budgeted amount of €1.8 million. The achievement of potential economies and efficiency gains was part of the business case underpinning the proposal to establish a single awarding authority. However, the projected benefits were not quantified and the baseline cost and operational performance of the existing system had not been identified. As such, it is not possible to evaluate whether the projected benefits have been fully realised. Both the level of staffing allocated to SUSI and the level of outsourced services are significantly higher than originally envisaged. While there have been reductions in the overall number of staff employed in VECs and local authorities, the extent to which this is attributable to SUSI is not known.
Mr. Seán Ó Foghlú:
I thank the Chairman for the opportunity to make this opening statement to the committee on special report No. 88 of the Comptroller and Auditor General on the restructuring of the administration of student grants. As requested, I forwarded an advance briefing to the committee and will keep my opening remarks as brief as possible.
The Comptroller and Auditor General's report clearly outlines the circumstances surrounding the planning and implementation phases of this project, which was designed to integrate a number of means-tested schemes and centralise administration from 66 awarding authorities to a single, unified authority. The report analyses the key issues relevant to the establishment of SUSI and identifies in particular the factors which ultimately resulted in a period of delays in 2012 to 2013 which caused distress for many students. I express my sincere apologies for the difficulties encountered in the opening months of SUSI's operation and for any distress or inconvenience caused to grant applicants and their families. Equally, the report notes the much improved performance in 2013 to 2014. That improvement has been built on and consolidated in 2014 and 2015. The Department of Education and Skills has given careful consideration to the content of the report and the recommendations for the Department arising from it. The Department is committed to implementing the recommendations and has made substantial progress in that regard. Specifically, the Department has revised fundamentally its approach to change management planning and governance through the establishment of a programme office within the Department to support the implementation of major projects under the public service reform plan.
The planning and implementation of the reform of the administration of student grants took place in a very difficult and different economic environment. There was little scope to put in place the dedicated additional resources now recommended for projects of this size and scale.
New applications for student grants were increasing at an unprecedented rate, while the capacity of local authorities and VECs to deal with the increase was diminished by the impact of the public service moratorium. Government decided that a single agency solution should be implemented and the Department drew on the expertise and experience of existing State bodies in developing and implementing that solution.
Despite the absence of detailed baseline information and the very real challenges experienced in securing key inputs, particularly staff, the Department worked hard with the CDETB, the Department of Public Expenditure and Reform and others to address and resolve these problems. When the processing difficulties arose in 2012, additional resources were immediately deployed to ensure that these were resolved as quickly as possible and to ameliorate the impact on students. By January 2013, the number of grant applications processed by SUSI was already 18% ahead of the equivalent figure in 2012.
The two subsequent years of operation have seen very substantial improvements in SUSI's delivery of service. In line with the 2013 Accenture review, SUSI has streamlined and simplified its grant application processes and improved its communications, stakeholder management and the customer experience. In particular, improved data sharing arrangements with other Departments and agencies have facilitated more accurate verification of information, and significantly reduced the burden documentation for applicants.
The Department has strengthened SUSI's resourcing, programme governance and organisation. It has provided for an augmented management structure and increased staffing capacity within SUSI. It has put in place a management framework agreement with the CDETB to steer ongoing service improvement in SUSI. Key performance indicators and service metrics are in place to ensure that service delivery is on track and critical requirements in areas such as funding, risk control and compliance are being met. The arrangements for implementation of the management framework agreement include regular structured engagement between the Department and the CDETB through monthly operations review meetings and quarterly business reviews.
Over the past two years, SUSI has dealt successfully with significant increases in the overall number of new and renewal applications, while improving the quality of its service on an ongoing basis. Figures submitted in advance briefing to the committee indicated that despite a doubling of the number of applications, processing performance is now better than at any time over the past ten years. The provision of an integrated grants processing system for SUSI, under the public sector reform shared services initiative, with a target implementation date of March 2017, will provide an even greater scope for both cost efficiencies and service improvements into the future.
The experience of restructuring the administration of student grants and the establishment of SUSI hold out valuable learning for other major reform and public service transformation projects. The lessons for public sector reform have been identified and assessed in a recently published implementation case study report that was carried out for the Department by the Centre for Effective Services. The report has been disseminated through the reform and delivery office of the Department of Public Expenditure and Reform. It has also been forwarded to the committee.
The Department will continue to work with the CDETB, SUSI and all of the relevant stakeholders to ensure ongoing improvement in the administration of student grants and the continued delivery of a high level of service to grant applicants.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call on Ms Stewart to make her opening statement.
Ms Jacinta Stewart:
I welcome the opportunity to attend before the committee here today and to assist in its consideration of the Comptroller's special report. I am accompanied by Mr. Alan Murphy, Head of Operations at SUSI and Ms Mary McGrath, assistant principal officer, CDETB Budgets and Finance.
The City of Dublin Education and Training Board was selected by the Department of Education and Skills as the preferred deliverer of the transition from 66 grant awarding authorities to SUSI, as a single national authority. From the selection of the CDETB in April 2011, to the planned go-live date for the new service in May 2012, there were just 13 months in which to meet the challenge of transforming the student grant delivery model for Ireland.
In taking on responsibility for this task on a public service and not-for-profit basis, CDETB had a track record as the deliverer of major projects in the education sector. In particular, and as one of the largest and high-performing former awarding authorities, we had developed and rolled out an online grant application system and back office processing systems to many other authorities. We thus had the relevant experience and expertise to perform strongly in the transformation of student grant administration under a single national authority.
Given the particular complexities of the existing regulatory system of student grants in the Irish education sector, there was no reliable baseline for how a single grants awarding authority might perform at a national level. Ultimately, our experience and expertise and the optimism of our proposal were insufficient to overcome the significant unforeseen challenges of limited time, and of securing the resources necessary to ensure the timely and effective delivery of the project, in the early months of SUSI's first year of operation.
As the special report has clearly identified, the implementation phase of the project during 2011 and 2012 was characterised by a series of delays that exposed planning and resource deficiencies and, ultimately, led to uncertainty, difficulty and distress for many students and their families. I apologised for this at the time and I do so again today. We moved quickly at the time to rectify the situation. We have worked very hard at all times to improve and enhance our services to students and other stakeholders.
Notwithstanding the acknowledged under-performance in terms of service delivery in SUSI's first year, the key change objectives of the overall transformation were met. In particular, the transition from 66 individual authorities to a unified national service; the migration to a fully online grant application system; the outsourcing of appropriate functions; the substantial automation of application and document processing; the electronic payment of maintenance grants to all students in monthly instalments; and, a seasonally flexible staffing model were all achieved in SUSI's first year. In its subsequent two years of operation, SUSI has continued to build on this achievement through a programme of continuous service improvement, both internally and externally. The challenges and achievements of our early experience, and the lessons learned from the project as a public service delivery transformation, are the subject of a recently published implementation case study which I understand has been submitted to the committee.
The CDETB has noted the conclusions of the special report. The board has accepted and implemented its recommendations in the areas of procurement, staff training and quality control. As requested by the committee, I have submitted a briefing paper in advance of this meeting. It identifies key issues for the CDETB and SUSI, arising from the special report. My colleagues and I are available to advise and assist the committee in its consideration of the special report and on any matters arising for the CDETB and SUSI.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Ms Stewart. Can we publish both statements, please? Agreed.
Robert Dowds (Dublin Mid West, Labour)
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Go raibh maith agat, a Chathaoirleach. Cuirim fáilte roimh anseo inniu. Like all public representatives, I was very much aware of the initial difficulties at SUSI because it put a huge workload on my office, which was probably the same for every other Deputy in this place. However, I recognise that the situation has greatly improved and now we rarely get requests for assistance on this front. When do people get their grants at this stage? Can the chief executive outline how things have improved?
Ms Jacinta Stewart:
Students are paid once they are registered. We receive notification of their registration from their college so, effectively, the majority of students are paid from October onwards.
Looking back in terms of what happened at the time, we had a huge amount of documents. I am conscious that Deputies received a lot of complaints at the time. One of the things we were really anxious to do was to link with other statutory bodies. A number of those statutory bodies are particularly important for us such as the Department of Social Protection, the Revenue Commissioners and the General Register Office. We can now link up with those bodies within 24 hours. In 2012 students had to get that documentation themselves which led to a massive amount of documentation. We co-operate with other bodies but the three I outlined have been particularly important for us.
In terms of how we operate internally, we have streamlined the grants as students come to us. We have a pre-assessment which is going on currently and we seek a minimum amount of documents from students. Most students will only need two documents but in 2012 we could have sought between ten to 12 documents.
Robert Dowds (Dublin Mid West, Labour)
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Does this situation relate to the appeals issue? I noticed that there was an appeals rate of 11% in the period covered by the report, of which 74% of appeals were successful. Can the chief executive explain the situation?
Ms Jacinta Stewart:
In 2012-2013, every issue that a student raised became an appeal.
In 2013 we introduced a review system. Let me outline a number of issues that arose in the system in 2012-13. For example, students who were eligible for a grant were automatically deemed to be paid at the adjacent rate, which was based on living within 45 km of the college, whereas in some cases they should have been paid at the non-adjacent rate, as they lived further than 45 km from the college. We corrected this fault in the system relatively quickly.
Cases in which the circumstances of students had changed or new information became available also gave rise to appeals. Accenture examined the data which showed that change of circumstances and new information accounted for 40% of appeals. We have now separated that segment in order that we deal with these issues separately.
A number of other issues gave rise to appeals in the year 2012-13. We asked students to provide the documentation we needed at the time of processing their applications. As was stated, much of the documentation returned to us was incomplete. A number of students produced documentation after the processing stage and it was then classified as an appeal.
Robert Dowds (Dublin Mid West, Labour)
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Is Ms Stewart expecting the number of appeals to drop, given the streamlining of the administration of the organisation?
Robert Dowds (Dublin Mid West, Labour)
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That represents a drop of more than one half in the number of appeals.
Robert Dowds (Dublin Mid West, Labour)
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Is the current success rate of appeals similar to the previous rate or has it declined?
Robert Dowds (Dublin Mid West, Labour)
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That represents a reduction on the previous 74% rate.
Robert Dowds (Dublin Mid West, Labour)
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The main area on which I wish to focus is the procurement of services. I understand Abtran was the successful company to provide outsourced services. I also understand its tender was the most expensive. Why did SUSI go for the most expensive tender?
Robert Dowds (Dublin Mid West, Labour)
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Obviously, the information I have before me is slightly incorrect. In his report the Comptroller and Auditor General referred to the delay in signing the contract with the service provider, which was not signed until February 2013, in spite of the service commencing 14 months earlier? What was the reason for the significant delay?
Ms Jacinta Stewart:
A draft contract was signed by the outsource provider when the tender was accepted. We had concerns about a number of areas, data protection being one. We had a scoping and a service level agreement in place for the whole of that period. We have accepted the recommendation of the Comptroller and Auditor General and will not start a project until the contract has been signed. That delay should not have happened.
Robert Dowds (Dublin Mid West, Labour)
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As Ms Stewart stated, Abtran's tender was the second most expensive.
Robert Dowds (Dublin Mid West, Labour)
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I appreciate the support of the Comptroller and Auditor General.
Robert Dowds (Dublin Mid West, Labour)
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Perhaps Ms Stewart might send a note to the committee secretariat clarifying the matter.
Robert Dowds (Dublin Mid West, Labour)
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I am aware that after the contract was agreed to, changes were made to it. Let me elaborate. It strikes me that the company was able to change the contract on a number of occasions to suit itself. There is a question about whether it was the most expensive contract; about the delay in signing the contract; about how the nature of the contract was changed, in that the timeframe for dealing with calls was varied, as well as a provision that when the number of calls exceeded a certain number, the service level agreement would not apply. That seems to work in favour of the company, not in favour of those trying to use the service. We are all aware that this was a major problem at the time. Will Ms Stewart explain why that was allowed to happen?
Robert Dowds (Dublin Mid West, Labour)
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There was no requirement in respect of the time it would take to respond to the remaining 20% of calls.
Robert Dowds (Dublin Mid West, Labour)
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I am afraid there is a disagreement between us on that issue.
Mr. Seamus McCarthy:
Yes. Paragraph 4.33 states the ETB reduced the service level requirement in respect of calls answered in the contract call centre. The original target, as we understood it, was 100% of calls would be answered within 30 seconds. The arrangement that was put in place instead was that 80% of calls would be answered within 20 seconds and there was no specific target on the time it would take to answer the remaining 20% of calls. That is what I have said in the report.
Ms Jacinta Stewart:
First, I will respond to the question about the reduction in the figure from 100% to 80% of calls to be answered in 20 seconds. We were concerned that it would be very expensive to answer 100% of calls within 30 seconds; therefore, we reduced the timeframe to 20 seconds in respect of 80% of calls in an effort to try to save money.
Robert Dowds (Dublin Mid West, Labour)
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That would not result in money being saved because it would lead to a significant demand being placed on people like us which, in turn, would lead to a demand being placed on other public servants.
Ms Jacinta Stewart:
We had forecast a certain number of telephone calls being received, but as the crisis hit, the increase in the number of calls was 240%. Now the number is much closer to the figure we had forecast, but in that period the volume of calls was huge. If we had continued with the agreement that 100% of calls would be answered within 30 seconds, it would have cost an additional €500,000.
Robert Dowds (Dublin Mid West, Labour)
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It seems the company had a "get out of jail" card because if the number of calls increased to a very high level, the service level agreement would not apply.
It is no wonder there were major problems at the time.
Robert Dowds (Dublin Mid West, Labour)
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Does the witness accept that was the case?
Robert Dowds (Dublin Mid West, Labour)
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It refers to the average waiting time for answered calls.
Robert Dowds (Dublin Mid West, Labour)
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Many.
Robert Dowds (Dublin Mid West, Labour)
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Whose fault was this? Was this the fault of Abtran or the City of Dublin Education and Training Board?
Ms Jacinta Stewart:
We made forecasts based on what we expected to happen. We had no database for doing that. Once we identified an issue we moved quickly to deal with it. There was a period of six to eight weeks in October and November of 2012 when that was very difficult. As the graph indicates, the waiting time decreased in December and January. The number of calls received was way outside what we expected them to be. As people got concerned, they spoke to people in the call centre for much longer than we had forecast. People were very concerned and we were very conscious of that. We were working with Abtran to improve the service and ensure we got the best service we could.
Robert Dowds (Dublin Mid West, Labour)
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Is SUSI satisfied it took the best service provider in Abtran?
Robert Dowds (Dublin Mid West, Labour)
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The best we can say is that it is working much better now. I am sure Deputy Áine Collins and others are very glad it is.
Mr. Seamus McCarthy:
On that point, figure 5.6 indicates the number of calls expected. I suppose that in the period of August and September, before people go to college, it was anticipated that call levels would be at their highest. The number of calls received are illustrated, with grey bars indicating where calls were abandoned. One might imagine with an abandoned call, the caller would return at a later stage. They were running at a much higher level, at 10,000, to 12,000 calls, in that period around November, when the delays in answering calls were occurring and there was longer engagement with callers.
Robert Dowds (Dublin Mid West, Labour)
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Does this relate to Abtran receiving payments of €5.9 million for the services provided to March 2013, which was over three times what was originally budgeted, an amount of €1.8 million? That is a huge difference.
Ms Jacinta Stewart:
Absolutely. There were issues around phone calls. The Deputy can see that huge increase. There were also issues around document management, as the number of documents was outside the number we expected. We had to go back to students a number of times to get more documents or ensure documents came in. We had an amount of e-mailing to do as well. There was also the issue of integrating a range of systems, which cost more than we expected as well and we introduced an electronic document management system to ensure we were electronically recording everything received in Abtran.
Robert Dowds (Dublin Mid West, Labour)
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I have a question for Mr. Ó Foghlú and he may reply to both aspects. Did the Department of Education and Skills use the correct front-line organisation to take charge of this, given the problems with estimates and costs and so on. How did it decide on the City of Dublin Education and Training Board?
Mr. Seán Ó Foghlú:
I will come back to that. There are a number of different outsourced elements that were separately tendered by SUSI. Abtran, in the end, succeeded in four of those processes. We are talking about a different process being linked in cost terms, which is important. In the Comptroller and Auditor General's report, the costing refers to particulars. It was the most expensive for one of the four processes, which was document management. The call centre was the other major element, and those two were combined into a single relationship with Abtran. It was not necessarily the most expensive overall but the document management area was signalled in the Comptroller and Auditor General's report.
The other elements for which Abtran was contracted was insourcing. When it was recognised that there was not sufficient staffing coming in, an emergency procurement was undertaken by SUSI and Abtran won that contract. A fully appropriate non-emergency tender was put in place for the insourcing and Abtran came through that as well. That insourcing of staff was not envisaged as being something to be outsourced. Insourcing occurs when one employs a company to provide staff to work in one's own offices. There were a number of different elements in that respect but I wanted to provide that clarification on the relationship with Abtran and the number of different relationships in the outsourcing process. There were a number of different relationships.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will you go through those again? There was insourcing.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What was the cost of each?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No, I mean for each element.
Mr. Seán Ó Foghlú:
I can read the set of figures. The outsourced contract, which was combined, was a total of €3.6 million in 2012, approximately €5.5 million in 2013 and €3.6 million in 2014. The insourcing, combined, was €874,000 in 2012, €672,000 in 2013 and €638,000 in 2014. There were a number of different parts.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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You said there were four elements.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There were two contracts for insourcing.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Okay. Both of those were €874,000.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What about the outsourcing?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That was €3.6 million.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What about the call centre?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What includes that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Ó Foghlú is saying that it is only one of these that refers to the Comptroller and Auditor General's report.
Mr. Seán Ó Foghlú:
Section 4.22 of the Comptroller and Auditor General's report states: "The discount including in [the] Abtran tender submission was applied to the document management, as a result of which [sorry, I gave wrong information there] it became the highest scoring tenderer ...". It was not until that stage when the discount was applied to the document management that it became the highest scoring tenderer to come through the tendering process.
Robert Dowds (Dublin Mid West, Labour)
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My final general point is that Abtran as a service provider is obviously very successful at procuring. From my investigations, as well as providing outsourced services to SUSI, it seems to provide such services for eFlow, Irish Water, the Revenue Commissioners, the ESB, Electric Ireland, the National Transport Authority and the Road Safety Authority. It is an unlimited company and its parent is based in the British Virgin Islands. I wonder if official Ireland has any problem in dealing with a company like that? Are the witnesses satisfied, for example, that it pays tax within Ireland?
Robert Dowds (Dublin Mid West, Labour)
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It does not publish accounts, as far as I know.
Robert Dowds (Dublin Mid West, Labour)
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I will leave at that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call Deputy Collins.
Mr. Seán Ó Foghlú:
Deputy Dowds asked me a question that I have not answered yet and I will answer now if he would like. It was about the process we went through to decide on going with the City of Dublin Education and Training Board. We put in place a selection panel in November 2010 to agree procedures and carry out the selection process to identify a suitable public body. The members of the selection panel, of whose names I have a note, were Pat McLoughlin, who was the chief executive of Irish Payment Services Organisation, Jim Duffy, a former assistant secretary in the Department of Finance with the responsibility the Centre for Management and Organisation Development, CMOD, Gerry Kearney, a former Secretary General in the Department of Community, Rural and Gaeltacht Affairs with significant experience in programme management, and also an assistant secretary in the Revenue Commissioners. They were chosen by reference to their knowledge and their significant experience in the various elements.
In January 2011, we issued an expressions of interest invitation and we offered it to vocational education committees, VECs, local authorities an other public bodies. We had got legal advice when the relevant legislation was under consideration that we could not legislate to outsource it completely and, therefore, we had to do this through a public body, but the public body could outsource elements of it. We received ten proposals. We looked at those proposals and they were evaluated against a number of headings - organisational capacity to perform the function, experience in dealing with comparable schemes and services, existing core management expertise and resources available to be deployed to the function, capacity to deliver strong cost and efficiency benefits, and overall quality of the proposal for delivery of a central student grants function. On the basis of the review by the independent selection panel at the initial stage of the expressions of interest, four of the ten proposals were shortlisted for oral presentation. There was a question and answer session at the oral presentation and then they were assigned a ranking based on the relative strengths arising from that. The City of Dublin VEC came through that process ahead of the three others, which were Pobal, Waterford County and City Councils and Dún Laoghaire-Rathdown County Council. They were assessed as being the best in the each of the five categories for that.
Robert Dowds (Dublin Mid West, Labour)
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I thank Mr. Ó Foghlú for that. I offer my apologies as I will have to leave as I am supposed to be speaking at this time in the Chamber.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call Deputy Áine Collins.
Áine Collins (Cork North West, Fine Gael)
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I welcome all the witnesses. It is important we get clarity on the cost involved with respect to Abtran. Section 4.21 of the Comptroller and Auditor General's report states:
Abtran received maximum points for each of the tender criteria, except for ultimate cost which was significantly higher in both tenders than the next best candidate. However, Abtran indicated in its submission that it would be willing to apply a discount if it received both contracts. Abtran ultimate cost proposal for the contract call centre was 43% higher than the second placed candidate and 84% higher for document management than the second placed candidate.
Also, it was indicated that the original cost of this process would be €1.8 million per year for both document management and outsourcing of staff. I appreciate that there was a huge increase, that the planning process may not have been as good as it should have been, or that the foresight in terms of what was projected should have been better, and obviously there were problems from everyone's point of view, but in 2014 it cost €3.6 million and €638,000 in outsourcing, which adds up to approximately €4.2 million. Therefore, it is still running at more than double the projected cost. I ask the witnesses in the Department and in the public procurement area why that is the case.
Áine Collins (Cork North West, Fine Gael)
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With the greatest respect, I am reading from the report that we have.
Áine Collins (Cork North West, Fine Gael)
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Therefore, there is an issue in terms of what the Comptroller and Auditor General has.
Áine Collins (Cork North West, Fine Gael)
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Obviously, there are comparisons there that are not accurate, which is not helpful for any of us.
Ms Jacinta Stewart:
Okay. In terms of the cost now, as opposed to what was forecast, one aspect that is very clear in terms of grants is how short the timeframe is in terms of ensuring the students get their grants. That forecast was indicative rather than based on baseline data, which we did not have. In effect, we were trying to make a judgment call on that. It has gone from a cost of €118 per application to a cost of €83 currently, so there has been a fall in the cost.
Áine Collins (Cork North West, Fine Gael)
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What was the original projected cost? Was it €58 or €55?
Áine Collins (Cork North West, Fine Gael)
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We all know that since third level education grants were introduced, there is always a peak in September. I would have thought that would have been part of the initial forecasting and planning process. I do not accept Ms. Stewart's point. The timing should have indicated that the costs have doubled or even trebled in some cases.
Áine Collins (Cork North West, Fine Gael)
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I am not sure if there are greater numbers or other issues, but I do not accept that point.
Áine Collins (Cork North West, Fine Gael)
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To be fair, we find that to be the case in our offices in that we are not getting as many calls. In 2012, as other Deputies said, we received calls about this all the time and we found it difficult to get through on the system. Ms Stewart is saying we are sharing all the documentation and that now there is not as much document management. In 2012 we were not connected with the other Departments.
Áine Collins (Cork North West, Fine Gael)
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Therefore, there was more document management, but the cost is at the level of €4.2 million as opposed to €1.8 million. Why is it still so high?
Áine Collins (Cork North West, Fine Gael)
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Okay.
Ms Jacinta Stewart:
There are 48 pages. There is a whole range of rules and regulations governing the scheme, as the Deputy will be aware, and that is a very complicated process to assess. As I said, we have streamlined that process and we have put quality control measures in place.
The team leaders and a high-quality team are trying to ensure that the right assessments are made. All of that costs money.
Áine Collins (Cork North West, Fine Gael)
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Does Abtran do that work?
Áine Collins (Cork North West, Fine Gael)
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I am trying to find out why we pay Abtran €4.2 million when an assessment showed that the work would cost €1.8 million. There is now integration of documentation.
Áine Collins (Cork North West, Fine Gael)
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The cost should be less with integrated documentation.
Mr. Alan Murphy:
There are two parts to the business, so to speak, that were difficult to quantify when they were distributed across 66 bodies: first, the number of calls and contacts that students made with the individual authorities; and second, the scale of the documentation. The Department really was only able to quantify staff, plus a nominal overhead. What we have seen since we set up this authority is that there is a much larger demand for call contact with our call centre. That scenario simply was not foreseen, and basically accounts for the forecasting error on our part at the outset. That was a driver of calls.
Since we opened, and since we started to manage the system, in the first year, as the Deputy said, the documents represented a very heavy cost, because we collected documents for everything. We have minimised that now by only requiring, on average, two documents per student. The cost of document management has decreased dramatically within the overall cost of outsourcing.
Áine Collins (Cork North West, Fine Gael)
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Can Mr. Murphy give me the figure?
Mr. Alan Murphy:
In the first year the cost of document management was €2 million. The figure rose in the second year - I am talking about financial years - to €2.7 million, and for the last year it cost €979,000.
Apart from the factor of forecasting and the decline in the number of documents, what has really driven increasing costs is the fact that we are dealing with more students. In our first year we dealt with 70,000 and in this coming year we will deal with 115,000. All of those students will call. Having managed to reduce documents in our first year, and continuing to do so year-on-year, we must take on the challenge of reducing the requirement for students to call us. The increasing number of students - handling their calls and dealing with the work involved - is a driver of cost. Also, there are things we can do to provide them with information through other channels in order to make sure they do not need to call us - through our website, through outreach services and so on.
Áine Collins (Cork North West, Fine Gael)
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What is the main reason people call at the moment?
Mr. Alan Murphy:
We have a pie chart of each day's calls and can see that they are of the nature of comfort calls. People want to know how their applications are doing. We have provided an online tracker for students which enables them to go into their account and see the date on which their application was received and what we have done with it. The main driver of calls are queries on application status. Later in the year there are calls about payments. There are questions such as, "Will I receive a payment?" and "When is the next payment run?". I regard those calls as ones that we can make go away if we provide students with information through the other channels.
As well as a tracker for the application stage, we have provided a payments card so that students can see when payments are scheduled. We have peaks around that. Having collapsed the documents part of our business, we are working very hard to do the same for the calls side. They were an unforeseeable scale of business.
Áine Collins (Cork North West, Fine Gael)
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I appreciate that. Why is the system still so expensive if all of these measures have been implemented?
Áine Collins (Cork North West, Fine Gael)
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Can Mr. Murphy give me the figures?
Mr. Alan Murphy:
I can, and the Secretary General has already given them. For the first year it was €3.6 million, which is the calendar year cost. For the second year, it was €5.5 million, and for the third year it was €3.6 million again. That shows that we have got back to the first year's cost, but with an increased number of students being processed-----
Áine Collins (Cork North West, Fine Gael)
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The original cost forecast was €1.8 million.
Mr. Seán Ó Foghlú:
It might be useful to clarify overall costs as well. We estimated that the cost in the local authorities and VECs, as they were at the time, was around about €10.5 million per annum. There was also a big demand for development of their computer systems. The key aim has been to get these costs down. SUSI has taken nearly all of the renewals from the local authorities and ETBs, although not all. The operating cost of SUSI is now €8.9 million. That means there has been a reduction from €10.5 million to €8.9 million. Yes, there has been investment in the interim. We hope, over a number of years, to get the €8.9 million figure lower. The aim was to move from a cost of €10.5 million, with a demand for extra resources, down to a running cost below €8.9 million a year. That is our aim over a number of years. Obviously additional investment was needed in the first year. Some of that investment was needed for systems, and we need more investment in systems. Some of it was a result of the way in which the processes were set up, the particular peak in applications and documents and all that happened in the October-November-December period of the first year.
Áine Collins (Cork North West, Fine Gael)
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What has the Department of Public Expenditure and Reform learned? Does it deem the process to be successful? Have lessons been learned in terms of planning and outsourcing of public services?
Mr. John Burke:
The Deputy will appreciate that a set of procurement guidelines have been issued by the Office of Government Procurement. All Government Departments and State agencies are aware of it, so it is well documented what the procedures should be. In regard to this particular case, it is clear that there was probably an underestimate of the level of costs in the beginning, in terms of staff costs and the document management piece, which I think was referred to as a forecast error. The issue was compounded by the fact that there was a significant increase in the number of student applications. That is just the harsh reality of what actually happened. I take comfort from the fact that there has been a significant improvement. There is a piece of work that local authorities did that they no longer have to do, and that is outside of the costings here. We are trying to get a handle on the matter ourselves within DPER.
Lessons have been learned. The report compiled by the Centre for Effective Services is very useful. It is an acknowledgement that this is part of the political world. There came a point at which my Department had to give sanction to increase costs, because it simply had to. We had to acknowledge the fact that there were errors by both Departments in terms of what the appropriate cost should be. We had to react to that situation. It does mean that there is a level of flexibility required in these situations.
Áine Collins (Cork North West, Fine Gael)
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I accept that. We all accept and understand that situation. If other Departments engage in a similar process, does DPER think it would be better managed as a result of this case and will lessons have been learned?
Mr. Seán Ó Foghlú:
I might comment, if that is okay. There are a number of elements from which we have learned a lot. We are implementing it in terms of the major shared services projects that we have at the moment. The one that is most advanced is the shared payroll service for the education and training boards. The first thing that involves is putting a full project management arrangement in place and then having a full baselining as we work it through. Those are operating in line with revised guidelines which have come from the Department of Public Expenditure and Reform. We have two or three major projects like that. That is the most advanced one, and the next most advanced is our own financial services project for the ETBs. We have a similar project which is at an earlier stage: potentially, shared service payroll in the higher education sector. It means that we have to get all the information first, understand fully what is happening and then move on to see what the options are and what the cost aims would be. In terms of the figures I gave earlier on cost savings, we have those for those projects so that we know what the intended eventual spend is. On this project, we did not have an opportunity to do a baseline because there was a need to advance quickly with it. We assumed that the processing that the City of Dublin VEC was doing, which was among the best in the sector, could just be multiplied, but we did not realise the impact of having a single national service and the impact of all the services coming together. Some of our external reviews identified that we did not recognise the impact of scaling up. We have learned a lot of lessons in that regard.
Áine Collins (Cork North West, Fine Gael)
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Good. Let us move on. What happens when students are paid their grants twice or when people receive grants they should not have received? I am happy to see that the interlinking with different Departments has eradicated a lot of cases in which people received grants they should not have received. How is this matter progressing? Will people be fined if they receive a grant erroneously? Are grants recouped? Are students asked to return the grant? What is the situation?
Ms Jacinta Stewart:
Those are two separate issues in regard to that matter. In 2012-13, there were three particular overpayment issues. One was the back-to-education allowance, which is a social welfare allowance that students received up until 2010 as well as their maintenance grant. In fact, some students who were in college in 2013 would have continued to receive that allowance.
In 2012-13, students should only have been paid either a maintenance grant or the back-to-education allowance. When they applied for the grant in the early stages, they may not have been clear about whether they were going to get the back-to-education allowance or not. We identified that as an area of high risk, and after the event we went back to look at this because it was an area of high risk. It was very unclear in the documents coming in and out what the status of students was in relation to the back-to-education allowance. We made a number of errors in identifying that. The result is that there were a number of overpayments in this area. That cannot occur now because of the direct links with the Department of Social Protection. In the cases in question, we now know who is in receipt of the back-to-education allowance and who is not. The only possibility - I never want to say we might never have something - is that there might be a time lag between our process and that of the Department of Social Protection, but it would be very short by comparison with what happened in 2012-13.
We also had a group of postgraduate students who were asked whether they were independent. They were independent at that time but we should have made sure that they were independent at the time of their entry to college rather than at the time they were commencing their postgraduate studies.
The third group in respect of which there was a difficulty comprised non-Irish or non-EU nationals. There is a set of grant eligibility rules for six distinct categories for people coming into the country who have the right — for example, a humanitarian right — to remain. They may be refugees or may be married to an Irish citizen. They are entitled to a grant but there are other groups that are not entitled to a grant. In the first year, individuals in some of those groups were given the grant. We found it righted itself in the sense that a number of them became eligible during the year in that they became Irish citizens or their situation was regularised, although it was not at the time of the grant.
We have made a proposal to the Department. We obviously stop payments but we have made a proposal to the Department on overpayments in the cases in question. The issue was identified a year later. We then had to go in and look at every single student and everything that had happened with every student in question. We had to talk to the students and get information back from them. We have made a proposal in those particular cases that we would not recoup the payments that were made. In normal circumstances, we recoup payments. In the usual circumstances, we have managed to reduce that to a very small number of students for 2014-15, but we continually keep an eye on it. We have a system in place. If, for example, somebody is assessed and is very close to the limit, there is a red flag attached to him or her so that he or she may be reassessed in the following year.
Áine Collins (Cork North West, Fine Gael)
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Is there a fine? If somebody received a grant for whatever reason and was not entitled to it, is there an onus on him or her to pay it back? I accept the circumstances Ms Stewart has just outlined.
Ms Jacinta Stewart:
A particular set of circumstances. We hold and examine the data. We have quality control - a quality unit. We also carry out internal audits ourselves aside from the internal audits of City of Dublin ETB and the Comptroller and Auditor General. We continuously examine error rates. We continuously look at what is happening in that regard, and where overpayments arise we ask the students for the money back.
Áine Collins (Cork North West, Fine Gael)
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So it is retrieved.
Áine Collins (Cork North West, Fine Gael)
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How much success is there in getting it back?
Ms Jacinta Stewart:
At the moment, it runs between 10% and about 14%; it is not huge. One of the things about student grants is that if one is with the Department of Social Protection and one is overpaid, there is a way in which one is directly related to the body one is dealing with and, effectively, the money can be got back. We lose a lot of students after the first year so we are not in a continuous relationship with them. That causes some difficulty in getting the money back.
Áine Collins (Cork North West, Fine Gael)
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Are there any plans to determine how more progress could be made-----
Mr. Seán Ó Foghlú:
May I respond more broadly on the particular set of issues in 2012-13? We have received a submission from City of Dublin ETB and we have sought clarity on whether there was any fraud. It has confirmed that there was not and that it was not a case of error on behalf of the applicant but more a case of error in the SUSI processes. Also, the board has asserted that it was a once-off occurrence. We are looking at the legal issues involved and we are obviously concerned with the impact across the public sector, so we have to look at those issues. If we were to come to a view - we have not - that any of the sums should be written off, we would have to agree it with the Department of Public Expenditure and Reform. However, we are looking at those issues at the moment in relation to those first years. Ms Stewart has referred to the subsequent years.
We have got to remember that quite a low proportion of students are in receipt of a maintenance grant so, quite often, these are partial or full payments for fees. In a sense, there is a slight difference. However, anywhere a mistake was made there has been a correction going forward. Even if SUSI has a continuing relationship with somebody, that individual is not actually given any cash if SUSI is only paying his or her fees. It is only paying the student charge, which is €2,750 at the moment.
Áine Collins (Cork North West, Fine Gael)
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I have one last question. Does Ms Stewart's organisation have a policy on training and development?
Ms Jacinta Stewart:
Yes. Obviously we learned a huge amount from 2012-13. We have subject matter experts. We have people who have expertise in particular areas of the grant. We have moved towards a higher proportion of more permanent staff so that we have a continuous staff with a lot of experience. We have particular areas where we might have difficulty. In the first year, we had 100% of people to train from the beginning. Even with our seasonal build-up, that would now be running at around 30%. Therefore, the balance is a more experienced staff. In terms of our training, people get individual training, hands-on training and mentoring. They are part of a team, and they have a team captain and a team leader. About 40% of all assessment work is quality-assessed. There is a whole range of supports in place, largely built out of that initial experience, again with a view to trying to get it right.
Áine Collins (Cork North West, Fine Gael)
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Are the management and leadership getting continuous training and development?
Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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I thank the witnesses for their time this morning. Many of my questions have already been asked. One point on which I would like to focus is appeals. Deputy Collins referred to the set-up situation. I am a little bothered by the responses. Was no research done before all this started? When this was just an idea - was no research done? Was no forecasting done? Did we not know how many students would come into the system in the future? Did we look at how many staff were working in the various VECs around the country that were dealing with this situation prior to the takeover? Was the call situation not examined in advance? Why were there so many calls all of a sudden? There were not that many when responsibility was with the VECs. I appreciate that there are larger numbers of students coming through. Was no forecasting done? If it had been a private business, we would have looked at that in advance. Why were the expectations regarding what was going to come out of the process so wrong? I cannot get my head around that. Was it always planned to outsource all of the activities? Was that never costed? It seems Dublin City ETB decided it was the best man for the job and would put in for it, say whatever it took to get the job and then worry about how to do it afterwards. That is how it looked to me. I was on a VEC and I was not happy at the time that responsibility was taken from the individual VECs. I make no bones about that; I said it at the time. There is an awful lot to be said for local knowledge and having somebody local at the end of a telephone line when a situation arises for a student.
That brings me to the appeals process. I would like to know how the appeals process is run.
I have a situation, for example, in which a person applied and was turned down. He appealed the decision, was turned down again, and then appealed it to the Department of Education and Skills. He had mental health issues at the time, which is why he was not able to do it. He was told his appeal was outside whatever length of time he had, and that was why he was turned down, yet he was outside the time because he had mental health issues. The guy is trying to get himself to a better place and is being refused. That is wrong. There should be somebody who can help that gentleman and get him through this instead of giving him a flat "no". I will make no bones about it: if the case had been with Westmeath VEC, now called Longford and Westmeath ETB, somebody would have looked at the situation and said, "this guy deserves a chance".
I would like someone to go through the appeals process with me. Mr. Burke said earlier that there has to be a level of flexibility in different situations. To my mind, that is not just true for the different departments but also for the student. This guy is trying to make good for himself and is being turned down.
Mr. Seán Ó Foghlú:
I will come in first on the Deputy's initial points. Yes, we did significant work, but we did not do sufficient work in terms of looking in advance of actually engaging City of Dublin ETB to undertake the work. There was business process re-engineering work and we looked at student grants as one of the areas. We looked at possible business improvement techniques that could be undertaken. There was some work done but, unfortunately, with all of the cutbacks, that unit in the Department of Finance was actually closed down and its work diminished. There were difficulties and it was a very difficult time.
We did trial an online application facility with a number of the VECs, which was rolled out to 24 of them by the 2011-2012 academic year. That aspect was working well. Similarly, we trialled payment by electronic funds transfer but, when we were looking at what public body would undertake the process, we made the decision, building on the information we had, that they would look at having experience themselves or, talking to others with experience, that they would make a call to develop a proposal. That is why we worked it through with City of Dublin ETB. We would recognise that was deficient, and that is one of the lessons we have learned. We were overly optimistic about the potential for that to realise the scale of the system.
When we look at the different evaluations that have been undertaken, such as those by the Comptroller and Auditor General and the Centre for Effective Services, they identify that we did not put sufficient resources into the management of SUSI initially, into communicating with stakeholders about expectations. There was an expectation of a really effective service, but it was never the intention to be providing a perfect service in year one. It was very much building on the previous services that were in place.
As I have outlined already to Deputy Collins, we do think there will be significant cost savings over a number of years with a centralised system. There is a huge number of benefits in having standard application of processes and so on, in that we can be much more confident that decisions are being made in a consistent manner across all applications. We can also have much better management information to help decide and advise on possible changes in the future. We are confident that we are on the right track with this but we fully accept that there were deficiencies in the planning processes.
Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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Standard application processes are great but they do not help everybody. Not everybody in this world fits into a standard box. One cannot generalise or categorise people. What happens to someone who falls outside of the standard applications process, such as the guy I am talking about? That is where I am coming from and is why I believe that having this in the Dublin city ETB instead of a local situation was wrong from the beginning. I accept it is where it is now but there has to be some other way of looking at it instead of just standardised applications, because not everybody fits that.
Mr. Seán Ó Foghlú:
Again, we do need standardised means testing. I think that is very important and that is what I am referring to, the standardised means testing. The system of entry to higher education is a matter for the institutions and we do have a separate fund which we give the institutions, which is for discretionary use in particular cases. We do not think that any discretion should be exercised centrally and nationally. We believe discretion should be exercised in the local case where somebody is in dire need of financial support. That helped a lot in the initial year of SUSI and we are aware of that.
It is very difficult to have room for discretion in the application of a means test but there are always areas where it is difficult and challenging for SUSI to make calls. The independence issue, for example, is one of those.
Ms Jacinta Stewart:
There is a humanity in SUSI and we would be anxious that all students are served as well as they can be. We have a section that deals with exceptional circumstances. We have a particular subject matter expert. We are willing to talk to Deputy McFadden afterwards about that individual case in terms of the detail. We are conscious that, in dealing with a large organisation, people can feel that they might get lost. We do not always know everything that happens. We also have a complaints section and we try to deal with the individuals. We are very conscious that there is a separate story for everybody in SUSI.
To be fair to us, we would in City of Dublin VEC, like the other VECs around the country, share the belief in students and in doing as well as we can for them. We do have an exceptional circumstances expert. One of the problems sometimes is we do not always know what the problem might be or somebody might not tell us. We have identified that there-----
Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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Is there a timeframe outside of which one cannot appeal or do anything?
Ms Jacinta Stewart:
We try to be flexible around the timeframe on appeals. We try not to go into the formal appeals process if there is a problem arising and we think we can sort it out. I mentioned the internal review earlier on. I am not sure why that suddenly appears to be so rigid. There is also the student grants appeals board and the Ombudsman. We do not hold people really tightly to the appeals deadline but maybe there was an exception or something happened in that case. I do not know the answer but we will revert to the Deputy.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will take the witnesses back to the beginning. I am finding it difficult to comprehend the explanations that are being given this morning, relative to what I perceive to be the reality.
This started in 2005 and I can go back prior to that because things had to be established before they started taking off. Stakeholders were consulted. There was preparation of a proposal for the Minister. This is all leading to policy, I know, but the fact is that it did not drop out of the sky in 2011. In preparing for the legislation, people were getting signals that there was going to be a huge change. It was obvious. In 2006 and 2007 there was a review of resource requirements and business processes through the joint-departmental system, the Irish Vocational Educational Association, IVEA, the steering group and so on. There were more consultations, partners and stakeholders were involved and I am sure alarm bells were ringing for lots of people, especially members of the VECs, that change was about to happen. Then we had the Student Support Bill in 2008 and, in 2009, the pilot migration of student grant payments to electronic funds transfer. In 2010 the decision was made to centralise the student grant administration. At that point, this was an operation being set about by the Department. What role had the Department of Public Expenditure and Reform in it at that stage?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Was this the Department of Education and Skills operating in 2010 on the outcome of a policy, or was it being driven partly by the Department of Public Expenditure and Reform?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was a joint venture.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was a joint venture.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department of Education and Skills was driving and the Department of Finance was assisting. Is that right? When was the panel that set about the selection process formed? Who was on that panel?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Pat McLoughlin was the chair. What was his qualification?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What organisation?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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He is, therefore, pretty familiar with the Civil Service and public service. Who else is on it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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He is another insider. Who else?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Another insider.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Three.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Okay.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That was their responsibility. By whom were they appointed?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department of Education and Skills?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did the Department of Finance or the Department of Public Expenditure and Reform agree with this at that time?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What was this panel then told to do?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How was that call made? Was an ad put in the paper or did everyone just apply?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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They went through the various interviews and so on, leading to the appointment of the Dublin VEC, or whatever it was at the time.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There were, therefore, three insiders interviewing a group of insiders and they arrive at the final interview process. What analysis did the three insiders do in relation to what they believed was required of the applicant insider? What were they looking for?
Mr. Seán Ó Foghlú:
They were looking for the criteria they used for organisational capacity to perform the function, experience in dealing with comparable schemes and services, existing core management expertise and resources available to be deployed up to the function, capacity to deliver, strong cost and efficiency benefits and overall quality of the proposal for the delivery of a central student grants function.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Mr. Ó Foghlú think they had in their mind that they were looking for a body with those qualifications and experience of dealing with X number of applicants, which may then be able to scale up to ten times that?
Mr. Seán Ó Foghlú:
They would be looking for somebody with experience. Not necessarily somebody with experience of student grants, because one of the organisations involved was Pobal, which was not running student grants, but with experience of operating on a certain scale and the potential to scale up.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did they have an idea in their heads of just how much scaling up was necessary when they were dealing with Dublin VEC? Did they realise in their selection process that they needed someone to be able to scale up to a completely different level, perhaps with outside expertise, and in a short period of time?
Mr. Seán Ó Foghlú:
Yes, they would have had the experience in the operation of big systems and they would have realised the needs and the demands that were there. I do not want to distance the Department from the process, to be fair to the three people who assisted us in this regard, because the Department would have been the secretariat of that process. We would have been working with them, but it was their call.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If they stepped out of line, the Department would have called them back into line pretty quickly.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department had the ability to do that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will go to the insider being interviewed by the insider. What was Dublin VEC's business plan? What did it envision happening? Did Ms Stewart realise when she went into the interview that she was looking at a process that was way beyond the numbers Dublin VEC was dealing with and was she satisfied in that interview that it could do that job?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I know what was to happen. I am asking Ms Stewart what she thought she could do in front of that interview board relative to the job at hand. Had she the information in her head as to what might be the figures and what might have been asked of her in terms of that job?
Ms Jacinta Stewart:
We had experience as City of Dublin VEC in dealing with grants. We had an IT infrastructure and a HR infrastructure in place. We had a capacity and capability in the assessment of grants and we had been involved in a number of pilot programmes, one an online programme, putting grants online. We had developed our own assessment system. We had developed an electronic funds transfer system as well. Up to that point, many grants were paid manually and by cheque. We also had ideas about how we would like to develop the system and the kind of things we would like to put in place. One of the huge benefits that is beginning to become very clear now is that if one is interested in equity of access and equality, there is a huge amount of information coming through in grants - who gets grants, where they get them, what kind of grants they are getting and what are the changes in grants. We were really interested and enthusiastic from that point of view.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Dublin VEC was interested and it was confident at that stage that it had all the wherewithal.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is fine. That is important for the interview.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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He is a public servant all his life, nearly, and he retired from the public service.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am just making a clarification as well. He is an insider, as are the other two. Ms Stewart's organisation convinced the panel and got the job. What happened then? Did the Department have to sanction or give permission-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No, in terms of the appointment first of all. Did Mr. Ó Foghlú have to satisfy himself in regard to this appointment that the panel was right and that Dublin VEC had what was necessary to do the job?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Therefore, it was the panel's fault.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Department made the decision, based on the panel, and appointed the VEC. In taking that step, did the Department rely solely on the panel, or did Mr. Ó Foghlú decide to do further investigation, check the references and make sure it was okay?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I suggest that what happened afterwards would show that further investigation was needed. In Ms Stewart's opening remarks, she said that 2011-12 was characterised by a series of delays and so on. It was part of what she said. Frankly, it was chaotic. I dealt with it on the other end, as did other public representatives. I know how the students and the parents felt.
I cannot get my head around what happened in respect of outsourcing and insourcing. This brings me back to the report of the Comptroller and Auditor General. Will the witnesses explain this to me once again? How was the company selected?
Ms Jacinta Stewart:
We had prepared an expression of interest which included forecasts, estimates for staffing and processing, and a plan for the outsourcing. I acknowledged earlier that we underestimated our forecasts. We also examined the Scottish grants model. There was preparation. In regard to outsourcing and Abtran, we knew that we wanted a call centre and that we needed document management. We also knew by November that we needed insourcing. We prepared tender documents on all of these issues and we carried out an assessment in the four areas I mentioned earlier.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Outsourcing cost €3.6 million in the first year.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In the second year, which partially refers to the first year, the cost was €5.5 million. The cost is now down to €3.6 million. Did the overpayment to students amount to €3.5 million?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It was €4.1 million. One can add that €4.1 million to the costs of outsourcing because the cost was incurred during that period. What were the other costs? We are only dealing with outsourcing now.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The outsourced services cost €3.6 million that year. What were the pay costs?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No, 2012.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What other costs were incurred?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How did the costs compare to the following year?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In what years were the €4.4 million in overpayments incurred?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The total is €22 million.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If I was running a shop or a small business, I would note that the first year cost me €7.2 million, the second year cost me €10.7 million and I made a mistake costing €4.1 million. That amounts to €22 million. I would also ask myself how I might recoup the €4.1 million. How much of that sum has SUSI recouped?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Ms Stewart know of any business in this country which would write off €4.1 million after two years? No business could afford it.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is what usually happens with an error. It is a particular time and a particular error. There are special circumstances but it still adds up to €4.1 million of taxpayers' money. Does Ms Stewart know how much turnover a company would require in order to make €4.1 million? The taxpayer is expected to carry that money with no questions asked.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Ms Stewart just admitted as much.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When was the proposal made?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In December 2014, Ms Stewart made a proposal to the Department to write off €4.1 million.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am speaking to Mr. Ó Foghlú. That was in December 2014. We are now half way through 2015. When does he think the decision will be made on the money?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What does Mr. Burke think?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Given that it is €4.1 million, I hope it will be discussed.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Burke has not seen the proposal.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Ó Foghlú has had it for six months.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When did the Department seek legal advice?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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From whom?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does it usually take that long to deal with such matters?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If this happened in a private business, it would no longer be in business. When we move on to 2014, the cost is €8.9 million. The first two years cost €22 million when the error is included. SUSI's costs amounted to €8.9 million, compared to an estimated cost of €10.5 million for the 66 agencies. After all that happened, we are still on the losing side. When will SUSI break even in terms of the €10.5 million figure?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would Mr. Ó Foghlú include it if it was a business?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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This would be known through the auditors.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Based on the audited figures for the 66 decision making bodies, can Mr. Ó Foghlú indicate to me the level of write off for grants paid incorrectly?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It would not have been €4.1 million.
Mr. Seán Ó Foghlú:
It would not have been €4.1 million. To answer the Chairman's question further, we have already reduced costs to €8.9 million and we will be seeking to reduce them further. That will require an estimated €1.7 million in additional capital investment in ICT systems. We will reduce our costs significantly by that means and SUSI will be retendering for the outsourcing, which I hope will further reduce costs. Costs will come down in a number of areas over time.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How does one contact SUSI's humanity section?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How would I contact the section? When Deputy Gabrielle McFadden raised an issue, Ms Stewart said she had a section that dealt with exceptional circumstances.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Ms Stewart give me the e-mail address and telephone number or tell me the name of the person we can contact?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How do I contact the service?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Mr. Ó Foghlú tell me about the process from 2012 onwards? He has the figures and is examining them and Mr. Burke is assisting. Has he identified where it all went wrong?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Has a section, an individual or a system that failed the service been identified?
Mr. Seán Ó Foghlú:
The report from the Centre for Effective Services was very good in identifying the processes we had not put in place and the expectations we had set and identified the reasons for which the difficulties which arose in the first year. It also identified some of the positive things that had happened since to ensure service delivery would be very effective.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. Ó Foghlú identify any one person, or group of persons, within the Department of Education and Skills or the VEC who should have at an early stage cried "Stop" and said the business plan would not stand up because it was not based on real figures and that there would be difficulties down the road? Is there any person or group that should have had responsibility to state the Department would not be able to do it?
Mr. Seán Ó Foghlú:
I am not convinced that we should have stopped. It is very easy in retrospect to decide that we should have stopped. While we did not have a benchmark against which to measure service performance in 2012 and 2013, we had a benchmark against which to measure performance in January 2013, which was slightly ahead of the combination of all of the VECs and local authorities at the time. We know what the performance was during September, October and November, while not knowing the baseline before then. The group involved would have been the people involved in the planning groups and we have been asking the question, as the Chairman has asked, whether we should have stopped and delayed by one year. However, we must consider the context of the time and the demand to save resources and reduce numbers in the public service. We needed to put a shared service in place with the aim of bringing that about. Therefore, the option of delaying by one year was not considered.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What about the three outsiders? Did they not spot the difficulties? They were very senior people.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Did they have the option of saying after they had interviewed everybody that they had not found a group that could do it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Has Mr. Ó Foghlú spoken to them recently about what has transpired?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Mr. Ó Foghlú think he should?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Were they paid for their work?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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They were given a very serious responsibility to make a selection and given the fact that they knew what was happening and as insiders would have known even more, they should be spoken to in order to learn where they believe they went wrong.
John Perry (Sligo-North Leitrim, Fine Gael)
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I wish to ask about the figures for the operational costs and the difficulty in the administration of the €366 million in the budget. Grants administered by SUSI account for a sum of €146 million. Is the Secretary General happy with how the remainder, €220 million, was administered?
John Perry (Sligo-North Leitrim, Fine Gael)
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The total Vote for the Department is €366 million.
John Perry (Sligo-North Leitrim, Fine Gael)
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Yes.
John Perry (Sligo-North Leitrim, Fine Gael)
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What percentage of the budget is SUSI administering?
John Perry (Sligo-North Leitrim, Fine Gael)
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Is the difference approximately €146 million?
John Perry (Sligo-North Leitrim, Fine Gael)
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SUSI administers a sum of €146 million.
John Perry (Sligo-North Leitrim, Fine Gael)
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Who administers the remainder?
John Perry (Sligo-North Leitrim, Fine Gael)
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According to the figures, the total was €366 million and SUSI's budget was €146 million.
John Perry (Sligo-North Leitrim, Fine Gael)
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What was it last year?
John Perry (Sligo-North Leitrim, Fine Gael)
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How many students are in receipt of grants from SUSI?
John Perry (Sligo-North Leitrim, Fine Gael)
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What is the average payment per student?
John Perry (Sligo-North Leitrim, Fine Gael)
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If we divide the figure of €280 million by the number of students, what is the average grant payment per student?
John Perry (Sligo-North Leitrim, Fine Gael)
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If ones take the ordinary student, what size of cheque is he or she getting?
John Perry (Sligo-North Leitrim, Fine Gael)
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If one divides the total payment by the number of students, what figure does one get?
John Perry (Sligo-North Leitrim, Fine Gael)
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The operational cost per applicant in 2012 was €119. This was the cost of processing the application. In 2013 it was €103 and in 2014 it was €83. If you divide the figure by the number of students you get a higher figure than the one you have given me.
Mr. Brian Power:
The average we are giving is over the entire student grant system. It is calculated by reference to all of the moneys paid for student grants against all the students being paid. The average per application is for SUSI students but there are other students in the overall system. We can work out the average grant payable.
John Perry (Sligo-North Leitrim, Fine Gael)
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Is that the absolute total, not just the total for SUSI students?
John Perry (Sligo-North Leitrim, Fine Gael)
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If you divide that into the total what figure do you get?
John Perry (Sligo-North Leitrim, Fine Gael)
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It states that for 2014-2015 it is €83. Is that correct?
John Perry (Sligo-North Leitrim, Fine Gael)
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I see that it has dropped. Does Mr. Murphy expect it to drop further?
John Perry (Sligo-North Leitrim, Fine Gael)
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On what is that based?
Mr. Alan Murphy:
It is based on the fact that we are taking on an increasing number of students this year but will maintain staff levels, and on the fact that we will continue to drive down outsource cost levels and not significantly increase our investment in IT, which is the main driver of our costs. In short, we have stable costs but will process an increasing number of applications.
John Perry (Sligo-North Leitrim, Fine Gael)
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It seems you had a very difficult job at the start, but I recognise the transformation in recent times. The staff in my office tell me that the response times for feedback have been perfected in the past academic year. Do you have information that can be easily disseminated on merchandise for the student population? What happens in cases of force majeure? Many students are not familiar with filling out application forms and there has been a huge drop in the number of refusals, to 5%. Do you provide simplified material at the point of sale that explains to parents what they are entitled to and what they have to do?
Ms Jacinta Stewart:
We have developed a new website which has had some 56,000 hits per week for the past few weeks. We have tried to make it as simple and as clear as possible. We have subdivided the grants into the different sections, such as for undergraduates, postgraduates, non-nationals etc. That helps with filling in the forms. We also have a tracker system so one can follow through what is happening. We have a complaints system and also the Oireachtas helpdesk, and our call centre escalates to SUSI head office when there are particular issues.
John Perry (Sligo-North Leitrim, Fine Gael)
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A lot of students are very IT-literate but, for second level schools, would you not consider an A4 flyer?
Ms Jacinta Stewart:
We have that. We also have a very close relationship with guidance counsellors in all schools, and our communications officer works very closely with them so that students get the chance to fill in application forms in schools. We run outreach all across the country, in regional colleges, in universities, in PLC colleges and anywhere we are asked to. We also have in place supports in the community information centres for anybody who has particular difficulties, and an advisory group made up of students and parents who work with us to identify how we can make it simpler and ensure students get all the information.
John Perry (Sligo-North Leitrim, Fine Gael)
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Some people have difficulties arising from the fact that they are marginally above the threshold for benefits, sometimes by as little as €5. It is a centralised service and discretion was never shown by local authorities, but we have had a challenging time and some self-employed people may have no income or may be marginally above the limit, making them ineligible. Some students drop out after year one because of the costs of accommodation and other financial pressures. Parents are under immense pressure if they are educating four or five children at third level and it is important that young people get the opportunity to study. Could a student appeal a refusal under force majeure?
Mr. Alan Murphy:
Our scheme may seem rather rigid, but as we deepen our understanding of the student population and become more established in our role we realise that there are a number of things we can do to inform students of where they sit within the scheme, which we do through our website and other communications. We try to be positive when students approach us and to help them achieve their entitlement. It is not just about them passing through the scheme for better or worse. When we are assessing students we try to get them over the line. We can go back to them and ask for evidence that might get them over the line but that we would not ask for if it was not relevant. We had a look at where students fell in the final outcome, whether above or below the line. Within €20 of the threshold there were more people who lay over the line, at 52 students, than lay under it, at just three. The same applies at €50 either side of the threshold, and that indicates that people are being facilitated by the means available to us under the scheme and by the way we explore what allowances may be applicable to them or what income may be deductible. It shows that we are succeeding in giving students every chance to get over the line.
John Perry (Sligo-North Leitrim, Fine Gael)
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The service is centralised in Dublin, but have you used the network of local radio stations? This could be used to educate parents, more so than students. A lot of parents living in rural areas do not have broadband and local radio is good value for money when it comes to giving impartial information on how to avail of the grants that are available.
John Deasy (Waterford, Fine Gael)
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While Mr. Seán Ó Foghlú is here, I want to ask him about the report on Cork Institute of Technology and Waterford Institute of Technology and the issues surrounding potential amalgamation. I spoke to Mr. Kelly, as have others, and my understanding is that the report was to have been finalised in late April. There were issues about two governing bodies being changed and the change in the position of president of WIT. Can Mr. Ó Foghlú tell me where we are at with the report? When will it be published?
Mr. Seán Ó Foghlú:
My understanding is that Mr. Kelly is finalising the report, but still has to conclude another set of meetings the week after next with one of the institutions. In discussions with us, he judged it was best to take his time to complete the report given the turnover of the chairperson and president at WIT. He will come to us with the report, we hope, within a couple of weeks. The publication of the report is obviously a matter for the Minister to consider and decide. We hope it will be in the public domain in the near future.
John Deasy (Waterford, Fine Gael)
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I asked Mr. Kelly if he would come to the committee and answer questions when his report is finally published. Can Mr. Ó Foghlú come to the committee with him if or when he attends?
Mr. Seán Ó Foghlú:
I am back here again in four weeks and am happy to answer questions on that day. I have already had discussions with the secretariat about answering on that day. Mr. Kelly is not available in July and August as he will be on leave, but I am certainly happy to answer questions. Of course, if Deputy Deasy wishes, I understand Mr. Kelly has indicated a willingness to talk to him.
John Deasy (Waterford, Fine Gael)
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As such, we are not looking at any time before the end of August.
John Deasy (Waterford, Fine Gael)
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Does Mr. Ó Foghlú expect this to be finalised and dealt with by then? In fairness, we are hanging around here dealing with this for a long time. I accept Mr. Kelly's point. I spoke to him about the issues surrounding the changes in the governing bodies and presidential offices. That makes sense as it makes sense to delay and prolong the report. This has gone on for a very long time, however. Can we get this dealt with within that four-week period?
Mr. Seán Ó Foghlú:
I hope so. I have discussed it with the Minister and it is her intention to try to do that. Whether she manages will depend on the fact she must see what is in the report and come to an opinion. She may want to consult her colleagues in government in advance of publication. That is her call, not mine.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the witnesses. I will conclude this session as we have a second meeting to conduct. We will deal with the report at next week's meeting again.