Seán Fleming (Laois, Fianna Fail)
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We are joined today by representatives of the Department of Defence, including Maurice Quinn, Secretary General; Des Dowling, assistant Secretary General; Robert Mooney, director; Michael O'Boyle, finance branch; Gerry Groarke, finance branch; John Hanney, contracts branch; and Ronan Mulhall, human resources manager. We are also joined by officials from the Department of Public Expenditure and Reform, Mary Austin and Peter Molloy.

I remind members, witnesses and those in the public gallery to turn off all mobile phones. I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee.

If they are directed by the committee to cease giving the evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of that evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members of the committee are reminded of the provisions of Standing Order 186 to the effect 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 a policy. Finally, members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable.

Today, we are discussing issues relating to the Department of Defence. I now invite the Comptroller and Auditor General to make his opening statement.

Mr. Seamus McCarthy:

The appropriation account for Defence recorded gross expenditure of over €670 million in 2015. Salaries and allowances for Defence Force personnel, including civilian support staff serving with the military, accounted for 67% of the expenditure. At the end of the year, just under 10,000 full-time equivalent personnel were employed and remunerated from Vote 36, including just under 9,200 Defence Force personnel. Expenditure of just over €176 million was incurred on equipment, supplies and other operational costs of the Defence Forces. Administration costs for the Department of just over €21 million were incurred in the year. The diagram which members can see now on the screen gives an indication of the relative amounts of expenditure in 2015. In contrast to other large Votes, the Defence Vote is presented as a single programme. The detail of spending in note 3 of the account is much the same as that always presented in the past, with the focus on spending by input type. Most other Votes have moved to output-based accounting, reporting costs for output programmes. As a result, the Vote account does not give a picture of the costs of particular services provided by the Defence Forces, such as peacekeeping or aid to the civil power.

The appropriation account for Vote 35, Army Pensions, recorded gross expenditure of €227 million in 2015. Over 99% of the expenditure related to payment of pensions and gratuities to former members of the Defence Forces or to surviving dependants. At the end of the year, just over 12,000 pensions were in payment. The two appropriation accounts associated with the Defence Forces received clear audit opinions in respect of 2015.

Chapter 8 of the report on the accounts of the public services 2015 concerns the circumstances that gave rise to a decision in August 2014 to dispose of the Air Corps' Gulfstream IV jet. The 14-seater jet was used in the past to provide air transport for the President, members of the Government and accompanying officials undertaking official engagements at home and abroad. The Air Corps now provides a more limited service using its remaining seven-seater Learjet 45 aircraft. The Gulfstream jet had been in service since 1992. The total cost of acquiring the aircraft was approximately €45 million. It was sold in January 2015 for €418,000. I asked for an examination of the transaction because of the unusual circumstances in which it occurred and the accounting adjustments it entailed.

Following a ministerial direction in 2010, an annual total maintenance cost of €400,000 was deemed by the Department to represent the upper limit that should be incurred on the Gulfstream jet. Costs significantly in excess of this threshold were incurred in 2013 due to necessary repairs and to treat corrosion. A memorandum to Government in July 2014 noted that the aircraft would require an overhaul of both engines by 2018-2019 at an estimated cost of €2.5 million and that retention of the aircraft beyond that date would be unsustainable given its age. Government approval was obtained for increased maintenance expenditure in 2014, up to a total of €750,000, including a provision of €250,000 for an overhaul of the landing gear during the annual maintenance to be carried out by Gulfstream in the USA.

Significant additional repairs were identified during the inspection in July-early August 2014, which increased the total estimated cost for repairs and maintenance on the jet to €1.34 million. On foot of the escalating costs, the Department sought the views of senior officials within the Air Corps who, while noting the age of the aircraft and the risk of further corrosion or fatigue issues, recommended that it should be repaired and returned to service. Informal contact was also made by the Department with an Irish aviation consultant company at this time, which advised that an immediate sale of the jet would probably yield less than €750,000 at the prevailing exchange rates. Gulfstream advised the Department that estimated additional costs to put the aircraft into a serviceable condition prior to a sale would bring the maintenance bill for the year to €1.8 million. In mid-August 2014, the Minister directed that no further work should be carried out on the aircraft and it should be disposed of for the best possible price. The Department considered the most viable option at that point was to dispose of the aircraft for salvage and that a public tender competition or auction was not possible because the jet was in a stripped down state in the Gulfstream facility where very high standards of security apply. Prospective buyers in a sales competition would not have been allowed access to view the aircraft at those premises.

In early December 2014, the Department received a letter, via Gulfstream, from a USA based company who offered €418,000 to purchase the aircraft "as seen". This offer was accepted by the Department in January 2015. The Air Corps also had 87 spare parts for the jet in stock with an original acquisition cost of €1.4 million. At the end of October 2014, the Air Corps estimated the value of the parts was €405,000. Ultimately, the parts were sold to the purchaser of the aircraft for €53,000 in February 2015. The amounts received and the losses on disposal were reflected in the 2015 appropriation account. I understand the purchaser has further invested in the jet and has returned it to use. In the absence of a competitive sales process for the Gulfstream jet and the spare parts, it is difficult to conclude whether best value was obtained by the Department.

An inter-departmental group has been charged with preparing a report for submission to Government on the future provision of the ministerial air transport service. The Accounting Officer will be able to update the committee in that regard.

Seán Fleming (Laois, Fianna Fail)
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I thank Mr. McCarthy for his opening statement and I now invite Mr. Maurice Quinn to make his opening statement.

Mr. Maurice Quinn:

I thank the committee for the opportunity to discuss the 2015 appropriation accounts for the Defence and Army Pensions Votes. The Defence sector is made up of two Votes,  Vote 35, Army Pensions, and Vote 36, Defence. The high level goal of both Votes is to provide for the military defence of the State, contribute to national and international peace and security and fulfil all other roles assigned by Government. This is achieved across three strategic dimensions: defence policy, ensuring the capacity to deliver and Defence Forces operational outputs. The Government's defence policy for the next decade has been set out in the White Paper on Defence, which was published in August 2015.

Some 68% of the Defence Vote in 2015 provided for the pay and allowances of the Permanent Defence Force, civilian employees and civil servants, as well as the Reserve Defence Force. The non-pay allocation provided addresses capability development and operational outputs and includes both current and capital elements. Non-pay current expenditure of €123 million in 2015 provided mainly for essential and ongoing Defence Forces standing and operational costs such as utilities, fuel, catering, maintenance, information technology and training.  Capital expenditure of €89 million provided for equipment purchase and renewal and the ongoing upgrade and refurbishment of military barracks and facilities across the country. Significant operational outputs include Ireland's contribution to international peace and security, and at home, aid to the civil power.  The commitment of personnel to the international domain comprehends peace support operations, under a UN mandate, principally the UNIFIL and UNDOF missions in Lebanon and the Golan Heights, respectively.  Ireland now holds the position of Force Commander of UNIFIL. 

Deputies will also be familiar with the humanitarian mission in the Mediterranean, Operation Pontus, undertaken by the Naval Service.

At home and on a daily basis, the Defence Forces provide a range of supports to the civil power, mainly to An Garda Síochána, in addition to assistance to the principal response agencies in dealing with major emergencies, including the severe weather response, missing persons, fishery protection by the Naval Service and emergency aeromedical support missions by the Air Corps.

The Reserve Defence Force, RDF, plays an important role in supporting the Permanent Defence Force, PDF, mainly through the provision of a capability to be able to augment the PDF in crisis situations. The 2015 White Paper acknowledged the excellent levels of voluntary service provided by members of the Army and Naval Service reserves.

The Defence Vote contributes funding to the Civil Defence, channelled to local authorities. Throughout 2015, the Civil Defence was involved in a wide range of activities throughout the country, including a prominent support role in dealing with the flooding in December 2015. In response to the impact of severe flooding on businesses in late 2015, the Government established a one-off humanitarian payment arrangement for small businesses that could not obtain flood insurance but subsequently suffered flood damage to their premises in the period from December 2015 to January 2016. An allocation of €5 million was provided to the Irish Red Cross from the Defence Vote to administer the scheme in 2015.

Vote 35 - Army Pensions - provides for pensions benefits for former members of the Defence Forces and the dependants of deceased members. The expenditure, in its nature, is demand-driven and non-discretionary. It has increased considerably over recent years, principally in line with the increase in the number of pensioners. In 2015, 12,128 army pensioners were paid from Vote 35, compared with 11,322 in 2010, an increase of 806 or 7%. This Vote also provides pensions to widows of veterans of the War of Independence.

A Supplementary Estimate of €6.5 million required in 2015 was met by savings on the Defence Vote. A distinctive aspect of Army pension administration is that military personnel can retire voluntarily at a time of their own choosing rather than at the normal retirement age. This is usually with pension benefits that are payable immediately. This is in contrast to most pensions in the public service which are payable on retirement which, in itself, is normally highly predictable at ages over 60 and for which the cost and timing of liabilities can be estimated with much greater accuracy.

I would now like to refer to Chapter 8 of Volume 2 of the Comptroller and Auditor General’s report which deals with the disposal of the Government jet. As recommended by the Comptroller and Auditor General, it is the normal practice of the Department to carry out a formal cost-benefit analysis and a discounted cashflow analysis of life cycle costs which are part of the decision-making process. It is also established practice to dispose of State assets through a competitive sales process. In the case of the Government jet, the circumstances were entirely exceptional and decisive action was necessary to assess the relevant options quickly and proceed on the most cost-effective and prudent approach. The Gulfstream GIV aircraft had been in service since 1992 and was fully depreciated by 2012. An overhaul of both engines by 2018 or 2019 at an estimate of €2.5 million was going to be required. The Government noted in July 2014 that retention of the aircraft beyond that would not be sustainable, given its age. The decision in July 2014 that the jet should be disposed of for the best possible price was triggered by the unexpected estimate for repair and maintenance of €1.34 million. Disposal for salvage was considered to be the only viable option, given the estimated cost of €1.34 million to repair to a serviceable condition, the absence of any guarantee of future serviceability even after incurring repair costs, the depressed executive jet market conditions and the charges that were accumulating on the service line in the US.

There is no disagreement with the report of the Comptroller and Auditor that an assessment of costs was necessary. This was undertaken but conditioned in its approach by the exceptional circumstances. The assessment, governed by the policy approach limiting further financial outlay, together with the uncertainty relating to future serviceability of the aircraft, meant that there was only one course of action available rather than a set of options. The decision to dispose of the aircraft flowed from this assessment. The approach to the disposal of the aircraft was necessarily heavily constrained by the circumstances whereby the aircraft was in a stripped-down state in Gulfstream’s facility in Savannah, Georgia in the US. The normal circumstances in which an asset is under the control of the Department and Defence Forces did not apply and additional costs could only arise the longer disposal took. In January 2015, the Department accepted an offer of €418,000 to purchase the aircraft "as seen" from Journey Aviation, a US-based company. In February, the spare parts which were now redundant were sold to the company for €53,000. While this differs from their historical value on inventory, it was considered reasonable given that, for the Air Corps, these parts were now redundant and taking account of the nature and age of the parts and the "as seen" sales condition.

As Accounting Officer for the Department of Defence, I am satisfied with the value achieved in the sale of the aircraft and spares, given the policy parameters set and the exceptional circumstances involved. There was considerable risk of additional Exchequer costs if appropriate and timely action was not taken. Our priority at all times is the best use of the funds available and application of these to provide necessary defence capabilities having regard to Government policy, business requirements and safety considerations.

Seán Fleming (Laois, Fianna Fail)
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I thank Mr. Quinn and now call our first speaker, Deputy Alan Kelly, to be followed by Deputies Noel Rock and David Cullinane. Deputies Bobby Aylward and Catherine Connolly have also indicated their desire to speak. The opening speakers will have 20 minutes, the second speakers will have 15 minutes and everyone else will have ten minutes. I ask members to stick to the timetable in order that we can get through our business in an efficient manner.

Alan Kelly (Tipperary, Labour)
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I welcome the witnesses to the meeting. My first questions will relate to the disposal of the Government jet. I will then ask about Vote 36, to be followed by questions on Vote 35.

The Comptroller and Auditor General's report on the sale of the Government jet points out that since 1992 the jet had been maintained in accordance with the original manufacturer's recommended maintenance and overhaul cycle. Why then, in July 2014, did it become apparent that the servicing and repair costs would be significantly higher, at €1.34 million, than originally anticipated? Was this a sudden shock?

Mr. Maurice Quinn:

Is it okay for me to answer that question now?

Seán Fleming (Laois, Fianna Fail)
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Yes, once the Deputy is happy.

Mr. Maurice Quinn:

When we are dealing with the Government jet, we have what we call "anticipated" and "unanticipated" maintenance costs. We were aware, coming into 2014, of what the anticipated maintenance costs were-----

Alan Kelly (Tipperary, Labour)
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What is the difference between the two?

Mr. Maurice Quinn:

When one has a jet or any highly sophisticated piece of equipment, it comes with service intervals. We knew, for example, that in 2018 or 2019 we would have a major job to do on the engines. There are certain jobs that have to be done every year and certain jobs that come up to be done, on a timely basis, based on things like the number of landings, number of flight hours and so on. One knows the jobs that have to be done and therefore, one can cast ahead. Unanticipated maintenance costs emerge when something arises with the aircraft which would not, in the normal course, arise through general use. We knew that the amount of unanticipated maintenance work required would increase the older the jet got and that is what transpired in terms of the corrosion and so forth.

Alan Kelly (Tipperary, Labour)
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Presumably the unanticipated costs were based on the fact that the jet was so old. Those costs were growing. Was that not something that would be scoped? How did the Department arrive at the figure of €400,000 that was allowed for? It had to be surpassed on one occasion. Was there any point in having that figure in the first place if it had to be surpassed and the Department knew it had to be surpassed?

Mr. Maurice Quinn:

The guidelines we were working under were that we were to maintain the service with the Air Corps if at all possible but that it had to be within a reasonable cost level. The €400,000 was based on our assessment of the costs that had arisen in the previous period. We worked out what the anticipated costs arising were going to be and we set that in consultation with the Minister at that time in 2010. On a monthly and yearly basis, we kept track of what the expenditure was against that. Obviously, all of the estimates are indicative. An interesting thing is that in the year in which it was exceeded, if one added the two years together, 2012 and 2013, it evened out. It it a question of movement in the costs as well.

Alan Kelly (Tipperary, Labour)
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Is there a correlation between the intensity of use and the level of maintenance and repairs? Is there a correlation between those two?

Mr. Maurice Quinn:

I beg your pardon.

Alan Kelly (Tipperary, Labour)
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Is there a correlation between the intensity of use of the aircraft and the level of maintenance?

Mr. Maurice Quinn:

Absolutely.

Alan Kelly (Tipperary, Labour)
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Mr. Quinn said that he does not agree that the recommended discount cash flow analysis of life cycle costs should have been undertaken in this case because of particular and extenuating circumstances. While it seems that the Department was somewhat over a barrel given the situation that it found itself in with regard to the jet's condition and where it was located in this case, could Mr. Quinn detail for the committee what those circumstances were?

Mr. Maurice Quinn:

We had dispatched the jet for its normal anticipated service to the Gulfstream facility in Savannah, Georgia. What Gulfstream does there is strip the jet down quite considerably in order to conduct all of the maintenance necessary. In effect, the jet was spread out on the workshop floor. Only at that time when the jet was in that stripped-down state was the further work that was required identified. We had an ongoing conversation with Gulfstream about the likely cost arising from that. We bottomed out on the extra cost that it was going to be.

We then had a situation in which we had contracted quite considerable costs with Gulfstream. Those costs were potentially going to continue to accrue. We then put together the case and received the decision from the Minister that no further costs were to be incurred. We then dispatched a team over to Savannah to discuss and negotiate this with Gulfstream. The team succeeded in limiting the costs that were accruing to us to around €73,000, which was a very good piece of work. It gave us the space to work out very quickly what the best option for the disposal of the jet was. Once the decision was taken that no further money was going to be spent on it, the next question was what were the most effective means to dispose of the jet.

Alan Kelly (Tipperary, Labour)
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The witness stated that the cost-benefit analysis was carried out in an informal manner. Can he detail how informal that was?

Mr. Maurice Quinn:

The benefits of having a jet were set in 1992, when the decision was taken that we should have a Government jet. It was reasonably straightforward. We knew it would cost €1.34 million to put the jet back together again to fly for us. We also knew-----

Alan Kelly (Tipperary, Labour)
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For possibly just two years.

Mr. Maurice Quinn:

A maximum of two years. By 2018 or 2019, it would be clear-----

Alan Kelly (Tipperary, Labour)
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So effectively, we would have had to spend €1.34 million to get the jet back in the air for two years.

Mr. Maurice Quinn:

Or €1.8 million to get it onto the civil register in the US to sell it. As I said, while we had a very good relationship with Gulfstream, one of the key drivers for us was that there was a limit to how long the jet could be sitting on the workshop floor.

Alan Kelly (Tipperary, Labour)
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The jet was taken to Savannah and opened up. It was realised that the repair costs of it were not worth it, given the amount of time it was going to be available to the State, or furthermore, given the cost it would take to actually get it airborne in the US, which were costs of €1.34 million or €1.8 million respectively, as the witness said. The Department was left to make the best of a situation in which the jet was opened up on the floor in Savannah. The Department had to get the best value possible out of those circumstances. Is that an executive summary of events?

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
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I accept that the Department was caught in a very difficult situation, given perceived value versus actual value and given that the jet had been opened up. I am interested, though, in the actual sale because the process by which the sale went through is not out there in the public. There is a very closed environment. I can understand that because of the nature of who the Department was dealing with, the security of it, etc. How did the buyers actually become aware of the sale? How was it marketed and put out there? How do we know that all possible purchasers were made aware of its availability? I know it was in a certain condition and there would only be a limited amount of buyers, but how do we know that they all, or as many as possible, looked at it or assessed it? Do we know that?

Mr. Maurice Quinn:

Normally, we would put it out to tender.

Alan Kelly (Tipperary, Labour)
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Of course.

Mr. Maurice Quinn:

That is our normal process. Secondly, we had to look at the possibility of actually recruiting a broker in the US who would go through a more formal process. We decided against that because of the potential costs arising from that and the length-----

Alan Kelly (Tipperary, Labour)
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What were they? Were they serious costs?

Mr. Maurice Quinn:

I do not know. I do not have the costs to hand. I will have to get back to the Deputy on what were those costs.

Alan Kelly (Tipperary, Labour)
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Okay.

Mr. Maurice Quinn:

It was as much about time and the accumulating costs of having it-----

Alan Kelly (Tipperary, Labour)
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Of course. The witness is saying that, effectively, this had to be sold quickly.

Mr. Maurice Quinn:

Very much so. It was an emergency that we had to sell it as quickly as we possibly could. What happened was that Gulfstream went out to its customer base and to the market on our behalf.

Alan Kelly (Tipperary, Labour)
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Gulfstream put it out to all purchasers of its equipment-----

Mr. Maurice Quinn:

It put it into the Gulfstream network on our behalf.

Alan Kelly (Tipperary, Labour)
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Were there any other bids?

Mr. Maurice Quinn:

No.

Alan Kelly (Tipperary, Labour)
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Only one?

Mr. Maurice Quinn:

One.

Alan Kelly (Tipperary, Labour)
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Is Mr. Quinn satisfied, given the Department's relationship with Gulfstream, that it definitely put it out to its full network of people?

Mr. Maurice Quinn:

I am happy with the relationship that we have with Gulfstream. We have been a customer of Gulfstream for many years. From its point of view, we are a potential return customer. I am happy with the relationship we had with Gulfstream and the process the jet went through.

Alan Kelly (Tipperary, Labour)
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Has anything changed as a result of this-----

Mr. Maurice Quinn:

Sorry.

Alan Kelly (Tipperary, Labour)
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Go ahead, if there is something to add.

Mr. Maurice Quinn:

Mr. Des Dowling was saying to me that the assumption on the part of Gulfstream and on our part was that, given the state of the aircraft, it would most likely be broken down for parts. We went back to Rolls Royce, the original equipment manufacturers of the engines, which would be the most valuable part of the jet, to see if it was interested in it. However, it was not interested in taking the engines either.

Alan Kelly (Tipperary, Labour)
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So the Department tried that as well?

Mr. Maurice Quinn:

Yes. That would have been a means of us breaking it down and selling it in parts.

Alan Kelly (Tipperary, Labour)
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I know there were extenuating circumstances and the Department was left, for want of a better phrase, over a barrel. Given the scale of the losses incurred, an interdepartmental group was set up to review all potential future uses and requirements in 2014. It was to report on the requirements for such a service. Has this report come out?

Mr. Maurice Quinn:

Not yet, no. Work is still ongoing on that.

Alan Kelly (Tipperary, Labour)
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When will it come out?

Mr. Maurice Quinn:

At the moment, we are going out to the market to get external aviation advice on the material that has been brought forward by the interdepartmental committee.

Alan Kelly (Tipperary, Labour)
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How often has it met?

Mr. Maurice Quinn:

It met five times. The last time it met was in February 2016.

Alan Kelly (Tipperary, Labour)
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It does not seem to have much urgency, really. Does it?

Mr. Maurice Quinn:

It was not top of our priority list during 2016. The same team that look after the Government jet also did the whole decade of commemorations and the 2016 celebrations. That is why we have a lot of stuff to catch up on after the fantastic year we had last year.

Alan Kelly (Tipperary, Labour)
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After two and a half years, the interdepartmental group of which the witness is a member is now going out tendering for advice and help on making a decision on future requirements for this former service.

Mr. Maurice Quinn:

The interdepartmental group, which was chaired by us, looked at the nature of the service that is required. The expertise we are looking for is on what are the best means by which to actually provide that capability, whether that is purchase, rental or whatever it might be.

The next stage for us is to get market advice.

Alan Kelly (Tipperary, Labour)
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What progress was made in the first two and half years?

Mr. Maurice Quinn:

What we have is the evaluation of the service that has been provided since 1992, including the level of demand and various different uses that were made of the GIV, how the ongoing transport service is working and so forth.

Alan Kelly (Tipperary, Labour)
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Has an analysis been done or defined decisions been made on future uses and requirements? Do we know how many jets are needed? Have these matters been decided?

Mr. Maurice Quinn:

No. That is something that I will submit to the Minister in due course.

Alan Kelly (Tipperary, Labour)
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There seems to be a lack of urgency in doing this work. I will move on because I have only nine minutes left.

My next comments are on the two Votes and I will commence with the Defence Vote. In 2015 there was a write-off of €8.2 million worth of obsolete stock compared with €4.9 million in 2014, which is an increase of 67%. I am concerned about the increase as it looks like a huge volume of obsolete stock was discovered.

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
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What is the reason for the spike?

Mr. Maurice Quinn:

At a senior level, going back four or five years, we have put a huge amount of work into our inventory management for a number of reasons. We have the biggest inventory stockholding in the public service. When one thinks about what it is - weapons, ammunition as well as a lot of military equipment - the priority for us all along always was that I could be assured that we had systems in place where we knew where everything was, how much we had and that we minded it properly. However, going back four or five years, we started focusing very seriously on driving out inefficiencies from within our inventory. We tried to prioritise funding into our equipment replacement programmes and so forth to fully equip the Defence Forces. We got an external review done of our systems around inventory management and stock control. That is why one can see a gradual reduction in inventory levels. We also had some recoding to do when our management information system was implemented in 2005. We have done a huge amount of work on that and it is reflected in the gradual reduction.

Alan Kelly (Tipperary, Labour)
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I understand. Is there a trend or was 2015 a unique year? Has the Department a work programme for the next number of years to conduct a similar amount of work that took place in 2015 due to the state of the inherited stock and lack of funding down through the years? It is fair enough if the work is necessary. Was there a spike in 2015 or is it a trend? It is fine if it is a trend.

Mr. Maurice Quinn:

No. It was a process that we had gone through. In the future, in terms of our civil-military high level planning and procurement group, one will see a movement, a levelling out and a slight increase in our inventory stock holdings because we have to get our strategic stockholding sorted.

Alan Kelly (Tipperary, Labour)
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Is the Secretary General saying it was a spike?

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
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I would like quick replies to my last five questions.

Mr. Maurice Quinn:

Okay.

Alan Kelly (Tipperary, Labour)
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A significant saving of €27.7 million was made on the Permanent Defence Forces, PDF, and a saving of €8 million was made on the PDF civil support. Why? Was there a higher than predicted number of retirements and lower than predicted number of recruitment in 2015? Is there a reason the number of civilian employees was less than provided in the estimate?

Mr. Maurice Quinn:

I will answer the questions separately because they are two different issues. With regard to the PDF-----

Alan Kelly (Tipperary, Labour)
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The trend is similar as there were savings in both units.

Mr. Maurice Quinn:

Correct, but for different reasons.

Alan Kelly (Tipperary, Labour)
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Yes.

Mr. Maurice Quinn:

With regard to the Permanent Defence Forces, let us look at the quality of the Defence Forces, their training and the very attractive outside employment. We have had a higher level of turnover than previously, which one can see from the trend in numbers. We are fully funded for Defence Forces of 9,500 personnel. We are putting a huge amount of work, with the Chief of Staff, at getting to 9,500 personnel. That is the one on the Defence Forces side.

I will give the Deputy some statistics on the turnover rates. We certainly have a higher level of retirements than anticipated. On the civilian employee side, one loses a lot of people on retirement and age grounds. At the same time we are looking at how we provide some of the services and capabilities that those civilian employees had in the past through outsourcing. What one is talking about are State industrial employees, such as plumbers and so forth, who keep our military installations right. There is a move towards a bit more outsourcing as well. That partially explains the underspend on civilian employees.

Alan Kelly (Tipperary, Labour)
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My next question is on receipts from banks and other organisations. There has been a shortfall of €1.3 million due to the reduction in the number of cash-in-transit escorts provided by the PDF. What is the reason for the shortfall?

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
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Have institutions changed their policy?

Mr. Maurice Quinn:

Yes. The banks decided, and communicated it to the Garda, as it would be done, that they would no longer use the military.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Has the trend continued?

Mr. Maurice Quinn:

It is stopped. It is gone completely.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Is it totally gone?

Mr. Maurice Quinn:

Yes, since November 2014.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

That explains that.

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
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I am intrigued by the fact that €1.8 million in 2015 was realised from sales of lands and premises while the estimate was €2.2 million. Property is an interesting topic given the volume of lands located around the country that the Department manages. How are property assets identified for sale? What are the details of the sales process? In particular, is there scope for more sales?

Mr. Maurice Quinn:

We have increased significantly our sales process in recent years-----

Alan Kelly (Tipperary, Labour)
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I welcome that.

Mr. Maurice Quinn:

-----as a result of our interaction with the CSSO. For us, we have to keep the priority on equipment, installations and people for the Defence Forces that are current. Anything that is no longer relevant for use or redundant for use by the Defence Forces-----

Alan Kelly (Tipperary, Labour)
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Does the Department regularly receive inquiries from State organisations to access or purchase land?

Mr. Maurice Quinn:

The way the process works is, when we identify something that is ready for disposal, we put the word out into the governmental system, across the board, to see if there is any interest because that is the first port of call.

Alan Kelly (Tipperary, Labour)
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Has the Department received inquiries from local authorities about its land in any part of the country for housing purposes, for instance?

Mr. Maurice Quinn:

The Deputy will know about Clonmel Barracks.

Alan Kelly (Tipperary, Labour)
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I am aware of the project.

Mr. Maurice Quinn:

That was one where we had an arrangement with a local authority.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

The project worked out pretty well.

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Is there anywhere else?

Mr. Maurice Quinn:

We have an ongoing process. If the Deputy asks me for specifics-----

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

The Secretary General can supply the details to the committee or to me subsequently.

Mr. Maurice Quinn:

I certainly can.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I want to find out if this is an ongoing engagement that happens with local authorities.

Mr. Maurice Quinn:

Absolutely, it is. Either we put the word out or they come to us.

Alan Kelly (Tipperary, Labour)
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Yes.

Mr. Maurice Quinn:

The Cavan Barracks went to the VEC, for example.

Alan Kelly (Tipperary, Labour)
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Yes. I have a question on PDF allowances, a subject that the public will be very interested in. Border duty allowances worth a total of €2.8 million were paid to 710 recipients. In 2017 why in the name of God are we paying Border duty allowances to 710 recipients? Unfortunately, with Brexit there may be a requirement for us to pay these allowances in the future. The allowance is an historical one. Paying the allowance will seem like madness to the general public.

Mr. Maurice Quinn:

In 2009 we put a lot of effort into removing Border duty allowance from payment. An arbitration report was done at the time, which said that people should hold this on a personal to holder basis so that as these people left the Defence Forces the payment would work its way through. Nobody, since 2009, has gone on to or is in receipt of the Border duty allowance. As part of the Haddington Road agreement, we made another approach on the Border duty allowance.

There is a formula in the Haddington Road agreement to buy out such allowances and that process is ongoing. I stress that where a person is in receipt of a Border duty allowance-----

Alan Kelly (Tipperary, Labour)
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What does a person do for the allowance?

Mr. Maurice Quinn:

Let us consider the position of a member of the Defences Forces who is not in receipt of the Border duty allowance - they account for the vast majority - if he or she is rostered for security duty at the weekend, to protect the Central Bank or whatever else, he or she will receive a security duty allowance, which is a 24-hour payment. Staff in receipt of the Border duty allowance also engage in security duties, but they do not receive other payments; therefore, one is offset against the others.

Alan Kelly (Tipperary, Labour)
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Is it fair to say there are members of the Permanent Defence Force based in counties Cork and Kerry and other places not within 200 miles of the Border who are receiving the Border duty allowance?

Mr. Maurice Quinn:

That goes back to the original decision-----

Alan Kelly (Tipperary, Labour)
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It is true?

Mr. Maurice Quinn:

Yes. Let me explain. There are a small number of staff who worked on the Border. We could not take back the allowance from them and had to have a process to buy it out.

Alan Kelly (Tipperary, Labour)
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I would have thought it would be integrated with other payments over time, but that did not happen.

Mr. Maurice Quinn:

We had to abide by the terms of the arbitration report in 2009.

Alan Kelly (Tipperary, Labour)
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It was the case that non-commissioned officers could retire on pension after 20 years service, irrespective of age. Is that still the case? If so, are changes to length of service being considered such as setting a minimum age of retirement? Generally, in regard to the pension scheme, is there indexation in the context of how the scheme is operated versus the schemes for defence force members operated in other European jurisdictions?

Mr. Maurice Quinn:

Up to 2004, the length of service required for receipt of a pension was 12 years for a commissioned officer and 21 for enlisted personnel. Following the changes made in 2004, minimum pension age was 50 years, regardless of rank. If a person retired before the age of 50 years, the preserved benefits came into play at 60 years. We should not forget that there is accelerated accrual after 20 years' service. In a single pension scheme the concept of career average earnings applies to everybody in the public service, but there are some distinct aspects in the Defence Forces.

Alan Kelly (Tipperary, Labour)
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Are changes to length of service being considered?

Mr. Maurice Quinn:

On the retirement age, one must consider that service in the Defence Forces for non-commissioned officers, NCOs, is very demanding physically. Therefore, pension policy is driven by HR policy to ensure we will have the correct age profile and people capable of lifting heavy loads and doing all of the things demanded of them.

Alan Kelly (Tipperary, Labour)
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That is understandable.

Mr. Maurice Quinn:

That feeds into the Defence Forces' consideration of age.

Alan Kelly (Tipperary, Labour)
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Has it been benchmarked against requirements in other European countries?

Mr. Maurice Quinn:

Is the Deputy asking about age requirements or pension provisions?

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Both.

Mr. Maurice Quinn:

On pension provisions, the last time there was a benchmarking exercise was in 2004 when the Pensions Commission examined military pensions. When one is comparing pensions in Ireland with those in other countries, one must take into account integration with the social welfare system or other benefits available. It is not that straightforward in trying to work it out.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

In benchmarking the age requirements.

Mr. Maurice Quinn:

Consideration is being given to retirement ages generally.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

Therefore, the issue is being considered.

Mr. Maurice Quinn:

Yes.

Alan Kelly (Tipperary, Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Quinn.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Mr. Quinn might forward a copy of the note he read to the committee secretariat in order that it can be circulated.

Noel Rock (Dublin North West, Fine Gael)
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I will focus on the disposal of the State aircraft and pick up from where Deputy Alan Kelly left off. In the opinion of Mr. Quinn, why was the advice of the Air Corps that the jet be repaired in the first instance disregarded?

Mr. Maurice Quinn:

The Air Corps provided a fantastic service and we were enormously proud of the way it provided it. It was part of the diplomatic mission when the jet arrived at the apron to transport the Head of Government or Head of State. In his statement the General Officer Commanding, GOC, of the Air Corps references the fact that there would be increased overheads for servicing and so forth. This was trumped by the financial decision at the end of the day.

Noel Rock (Dublin North West, Fine Gael)
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Given the known maintenance costs cap of €400,000 per annum and that it was known that engine work would be needed in 2018 or 2019, was consideration given to selling the Gulf Stream prior to flying it to Georgia, or were we, in effect, forced into a corner?

Mr. Maurice Quinn:

The policy parameters were to keep the aircraft viable for as long as possible within the €400,000 annual service limit. Anytime there was an exception, we signed off on it on an annual basis. We were driven by the policy imperative that the service be kept going. There was no formal process of evaluation at that stage.

Noel Rock (Dublin North West, Fine Gael)
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On the more expensive unforeseen works, particularly the figure of €2.5 million cited in 2016 as the estimated cost of overhaul of the engine, how was it derived? Typically repair costs tend to be in a range such that one would carry out repairs to have a further two or five years of flying time? What further flying time would one expect to have in spending €2.5 million on repairs?

Mr. Maurice Quinn:

They were all estimates of the cost of repairs. In spending €2.5 million on repairs the Department would have achieved no more than the continued certification of the engines to enable the aircraft to continue flying. Technically, they are stripped down and put back together with updates and spare parts. It is flying time, mileage and landing issues that drive the need for a full service.

Noel Rock (Dublin North West, Fine Gael)
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At that stage what would the remaining life of the aircraft deemed to have been?

Mr. Maurice Quinn:

Is the Deputy asking me about the remaining life of the aircraft if we had spent the money on the engines?

Noel Rock (Dublin North West, Fine Gael)
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Yes.

Mr. Maurice Quinn:

To be candid, 20 years was considered to be the nominal life of the aircraft and it was beyond that age at that stage.

Noel Rock (Dublin North West, Fine Gael)
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Nevertheless, the company that bought it is flying it. Is it fair to say it deemed it to be of investment value?

Mr. Maurice Quinn:

I am not sure I would go so far to say it had an investment value. I understand the person who bought it has a number of Gulf Stream jets and could cannibalise parts. Although I do not have any insight into the quality of the service provided, I certainly would not equate the level of service the Air Corps provided for years with a State aircraft with that provided by a private operator in the United States.

Noel Rock (Dublin North West, Fine Gael)
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The replacement parts were sold to the person who had bought the aircraft. Is that correct?

Mr. Maurice Quinn:

Yes.

Noel Rock (Dublin North West, Fine Gael)
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Obviously, the Department had been backed into a corner because the aircraft was sold as seen on the workshop floor but presumably the portfolio of parts did not necessarily have to be sold as seen. From the figures I have, the parts were sold at 3.7% of the acquisition cost, but, of course, that value would have been downgraded over time. Even at the estimated value at the time, they were sold at a figure that equated to 12.5% of their value. Was putting them out to tender ever considered to enable people to bid for them?

Mr. Maurice Quinn:

There are a number of aspects to be considered. When we sell a major platform - for example, during the years we have sold helicopters and so on - the parts are included. Parts are only valuable to us if they are in the aircraft. The parts were held in an inventory at the original purchase price; some of them were 20 years old. They are not a normal part of the inventory in the commercial sense which is turned over in the course of a year. It was very important for us to have these parts. Many of them were second hand, while some were new.

It would be fairly normal practice to include the spares. Additionally, there was no guarantee of any market abroad for those from Ireland. There was no certification with them that that was where they came from. Every single nut and bolt in an aircraft must be certified either by a military or civil authority, depending on where the aircraft is. There was none of that. This was a block of parts in the Air Corps. Unfortunately, they had that original cost but they were redundant and have no value to us. It was a question of moving those on as quickly as possible.

Noel Rock (Dublin North West, Fine Gael)
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Could spare parts receive certification? Forgive me for asking that basic defence question.

Mr. Maurice Quinn:

Yes. It was very expensive. We can go back to the jet in the US getting to €1.8 million to get it back on the road. Part of that is certifying all the individual bits and parts.

Noel Rock (Dublin North West, Fine Gael)
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Fair enough. That accounts for the discrepancy between the cost of acquiring the parts versus the cost at which the parts were sold. It does not necessarily explain the difference between the estimated value one would receive for the parts and the ultimate value received for the parts. There is still a major discrepancy between those two figures not necessarily explained by the witness's accounting of residual value. How is residual value calculated in this case? Was the €400,000 as calculated way too high or is there simply no expertise in calculating residual value, which is understandable given that we do not sell aircraft parts regularly? Did we receive below what we should have received for those parts?

Mr. Maurice Quinn:

There are three figures to consider. These are €1.4 million, €400,000 and the €53,000 that was realised. The €1.4 million was the original cost and that is how they were held on inventory. The €400,000 was an Air Corps estimate of putting those parts into use on the aircraft, so there was an assumption of the aircraft flying at that stage. The third figure is what was realised on the sale. None of these is necessarily a valuation of the parts.

Noel Rock (Dublin North West, Fine Gael)
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I accept that. Going back to the engines, they would not have suddenly started to corrode. What kind of maintenance programme would they have been on? Normally airplanes would have semi-annual checks, I suppose, for eight or 12 years. This theoretical potential cost would not have come out of the blue. Were measures ever put in place for preventative maintenance? Military aircraft rules may be a little more loose than civil aircraft rules, as I understand it. Generally, there would be compliance with international aviation safety assessment programme standards to preserve value if the plane had to be sold, as it was in this case, for example. What kind of maintenance programme was their to preserve the value?

Mr. Maurice Quinn:

The safety standards exercised by the Air Corps are absolutely at the highest possible level.

Noel Rock (Dublin North West, Fine Gael)
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I do not mean to mislead but the rules for civil assessments tend to be tighter than those for the military. That is not to say anything about the record of the Air Corps.

Mr. Maurice Quinn:

The Air Corps would apply civil aviation standards to the greatest degree. It is only in certain military aviation cases, where there are no civil aviation standards, that they cannot or would not apply. We get as close to it as possible and we follow civil aviation standards. The Air Corps put much work into that.

With regard to the engines issue, the corrosion issue was in the superstructure of the aircraft rather than the engines. There is a Rolls-Royce maintenance cycle and if the engines are on a jet, tight records are kept of flight hours, landings and so forth. There is a set cycle and we knew that was coming. The timing of it could move, depending on the extent of use of the jet. In other words, once the jet tipped over a certain number of hours, the engines had to go for the service.

Noel Rock (Dublin North West, Fine Gael)
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Okay. Deputy Kelly touched on some of the following but I am interested in Mr. Quinn's opinion, given the acquisition cost of €45 million of the Gulfstream jet in 1992 in the first instance.

Mr. Maurice Quinn:

Yes.

Noel Rock (Dublin North West, Fine Gael)
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It was in service for 22 years, give or take. The asset cost per annum was €2 million, without taking into account maintenance, service or fuel. Going forward in the interdepartmental group, does the witness consider it value for money to buy another jet or would options like leasing be more viable and a better spend of taxpayers' money?

Mr. Maurice Quinn:

In the first instance, what we do next would be a decision for the Government or the Minister, so I could not speculate on it. What I could observe, having operated the service on behalf of the State, is the flexibility that is available in having that flexibility for the State, whether it is for a Minister's use or an occasion to use it as an air ambulance. It affords the capacity to get off the island and back under one's own steam. This flexibility would factor into any future decision.

Noel Rock (Dublin North West, Fine Gael)
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Given the potential burden that it places on the State for issues like maintenance, and we have seen in this instance the road that it can lead us, would it be fair to say leasing would provide us with some of that flexibility without the responsibility? Perhaps it could be recommended in future.

Mr. Maurice Quinn:

I do not wish to be defensive but we have gone to the market to test the indications and options of that. That is what we do in the normal course of action, as we take a whole-of-life view on any platform or asset we procure.

Noel Rock (Dublin North West, Fine Gael)
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Given that the group is chaired by the Department, as the witness said earlier, do we have any information or leaning towards the current thinking? Having had five meetings already, is there any preferred option emerging or are we still in the tentative stages?

Mr. Maurice Quinn:

We have not got into meeting the service. What we have looked at is the nature and extent of the service. For example, we have the Learjet currently. How many of the capitals of the European Union, EU, are beyond the range of the Learjet? What happens if we need to do a transatlantic flight? How many of the forthcoming EU presidencies do not have a direct commercial service from Dublin? We are taking into account the tempo of international business with which the Government is involved and the places one might need to go, as well as the regularity of trips. We also consider other uses of the jet, such as use as an air ambulance. We are looking to capture that scope of usage in order that when we go to the market, we can overlay the various options, from leasing to outright purchase. There are a range of them that we have not got into. We know what they are but we certainly have not got into expressing preferences on them. I have statistics on the use of the jet. The number of ministerial air transport missions has fallen off since the GIV is no longer available. It is between 60 and 70 for the past three years.

Noel Rock (Dublin North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is that 60 or 70 per annum for the past three years?

Mr. Maurice Quinn:

Yes.

Noel Rock (Dublin North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

That is enough about the aircraft. I have one or two other questions relating to receipts in particular. I do not know if they will be answered by Mr. Quinn. Why were there no receipts from the EU in respect of fisheries protection costs in 2015 and will that be the case going forward?

Mr. Maurice Quinn:

They are not standing costs. These are periodic returns, for example, where we buy a piece of kit that will be used in fisheries protection.

Noel Rock (Dublin North West, Fine Gael)
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Okay. From the same area of the report, the sale of lands and premises realised €1.8 million in 2015 compared with an estimated €2.2 million. How were these assets identified for sale?

Mr. Maurice Quinn:

We have an ongoing interaction between ourselves and the Defence Forces. If a barracks is closed and has no further use within the defence context, it would be identified for sale. It would pop up itself for sale.

Noel Rock (Dublin North West, Fine Gael)
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Is there scope for further sales? There seems to quite a landbank, according to the report.

Mr. Maurice Quinn:

Yes. We are very careful to ensure the landbank we have is fully developed and appropriate for use by our military colleagues.

We have been selling former RDF barracks - a lot of small properties we had that were a drain on us and that we were no longer using. We have one or two other larger barracks or larger properties that may come on the market in due course.

Noel Rock (Dublin North West, Fine Gael)
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Which are they?

Mr. Maurice Quinn:

There is an ongoing debate about Mullingar barracks. The Deputy would probably be aware of that.

Noel Rock (Dublin North West, Fine Gael)
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Finally, I note there were some write-offs in the report, including a €4 million write-off in respect of an aircraft unfortunately damaged in an incident. What is the background to that?

Mr. Maurice Quinn:

The background to that is a tragic accident that happened in October 2009 where we lost two members of the Air Corps in a training accident in Connemara in Galway. On the reason it was not until 2015 that the value was written off, it was written off the asset register immediately in 2009 but we had an internal investigation with the Government's air accident investigation report and we had an inquest. It took that time.

Noel Rock (Dublin North West, Fine Gael)
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It took that time to work through.

Mr. Maurice Quinn:

That was our priority and that is why it came out in 2015.

Noel Rock (Dublin North West, Fine Gael)
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I am very sorry to hear that.

Finally, in terms of personal injuries and employment case claims, there were 117 settled. What was the value of these settlements?

Mr. Maurice Quinn:

In 2015, the value of the employment cases was €289,000.

Noel Rock (Dublin North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has there been any work done to compare the experience since the takeover of these claims by the SCA, in terms of cost savings and the efficiency of processing the claims?

Mr. Maurice Quinn:

We have not conducted a specific study of it. Anecdotally, our experience has been positive in terms of our working relationship with the State Claims Agency and the expertise that it can bring in managing our whole range of litigation.

Noel Rock (Dublin North West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am glad to hear that. I thank Mr. Quinn for his answers. I really appreciate it.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I welcome Mr. Quinn. I will confine my remarks to the sale of the Government jet. I want to deal, not in policy because the merits of the Government jet are not what we are here to examine, with the policy on value for money. All of my comments are geared toward those objectives.

Mr. Quinn is the chief Accounting Officer for the Department, is that right?

Mr. Maurice Quinn:

Yes.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I am reading Mr. Quinn's opening statement. Stripping away the middle part of it, in terms of Mr. Quinn's response to the sale of the Government jet it is somewhat extraordinary. Mr. Quinn states that, "There is no disagreement with the report of the Comptroller and Auditor General that an assessment of costs was necessary.", but goes on to state at the end, "As Accounting Officer for the Department of Defence, I am satisfied with the value achieved in the sale of the aircraft and spares ...". Essentially, Mr. Quinn is saying that the end justifies the means. Could Mr. Quinn comment on that first?

Mr. Maurice Quinn:

In all of the circumstances in which we found ourselves, with the jet stripped down in Savannah and the state of the executive jet market, and having had a decision that no further money was to be spent on the aircraft, I am satisfied that the value that we derived was as good as could be achieved.

David Cullinane (Waterford, Sinn Fein)
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That is not my question. The value that was arrived at is not the issue here. In terms of process, Mr. Quinn states in his opening speech that he accepts the point made by the Comptroller and Auditor General in his report "that an assessment of costs was necessary". Is Mr. Quinn accepting that it was wrong not to carry out an assessment?

Mr. Maurice Quinn:

I am not sure of the point. We assessed costs in terms of the costs arising. We did not assess costs in terms of an alternative service.

David Cullinane (Waterford, Sinn Fein)
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Sorry, Mr. Quinn will bear with me. The Comptroller and Auditor General is clear. It is very simple. The Comptroller and Auditor General states that in process terms, an assessment of costs should have been carried out. Mr. Quinn accepts that it was necessary, but there was no assessment of costs carried out. I am asking Mr. Quinn whether he accepts that he did not do what was required of him. I do not want to hear about extenuating circumstances. I am talking about the process here. If Mr. Quinn accepts what the Comptroller and Auditor General states on which Mr. Quinn states there is no disagreement, that, to me, is accepting that what should have been done was not done. Is that a fair comment?

Mr. Maurice Quinn:

Can I clarify in what terms, in terms of costs?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Please.

Mr. Maurice Quinn:

We knew the costs. We did evaluate the costs that were arising.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

No, there was no cost analysis done. That is the Comptroller and Auditor General's point. Let us go to his report where he says that. It is not only the cost analysis but the life-cycle analysis as well. The Comptroller and Auditor General cites in his report that there were failures in carrying out the cost analysis.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Paragraph 8.40.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Yes.

The report of the Comptroller and Auditor General, at paragraph 8.12, states: "The Department is of the view that it would have been highly speculative to produce contingency cost projections that might arise from unidentified or unforeseen problems." Is Mr. Quinn essentially saying here that we should not plan for the unexpected in case the unexpected happens?

Mr. Maurice Quinn:

In terms of anticipated costs and unanticipated costs, as I explained, we knew what the anticipated costs were for maintenance of the jet, and the point on unanticipated costs would be they are of their nature only going to arise when an asset like a jet is stripped down and when the difficulties were found with it.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What I seem to be getting from Mr. Quinn, everything I have seen in his opening remarks and also the responses to the Comptroller and Auditor General is that Mr. Quinn believes a cost analysis is not needed to inform, but only to validate, a decision. In any sale, one should do a cost analysis. I would imagine the company, Journey Aviation, that bought the jet carried out a cost analysis because it was prudent for it to do so. There were basic requirements here to conduct a full cost analysis and that was not done.

I will come to the decision-making process, on page 101 of the Comptroller and Auditor General's report. This refers back to an earlier question that was asked where the general officer commanding of the Air Corps recommended that the aircraft should be repaired. The report states:

He recommended that the aircraft should be repaired. The Deputy Chief of Staff (Operations) also recommended that the aircraft be returned to service.

That was on 8 August 2014.

I also ask Mr. Quinn to clarify the following because it is remarkable. Paragraph 8.15 of the Comptroller and Auditor General's report states: "The Department made informal contact with an Irish aviation consultant company .. ." What does "informal" mean and how is informal contact different from formal contact? Will Mr. Quinn explain what exactly this informal contact was, who from the Department contacted whom, who this person was and what level of expertise the person had?

Mr. Maurice Quinn:

Going back to the general officer commanding the Air Corps and the deputy chief of staff (operations), in any key decision that we are taking, we would also get the views of our military staff.

David Cullinane (Waterford, Sinn Fein)
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I noted the Department got their views. That is not the question I asked. Mr. Quinn should stick to the questions. I noted that they gave their recommendation.

Mr. Maurice Quinn:

Yes.

David Cullinane (Waterford, Sinn Fein)
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I understand their role and Mr. Quinn has accepted their role. That is fine. I am talking about this informal contact from the Department with an aviation consultant company which then went on to make a number of observations, which I will get to. What does "informal" mean?

Mr. Maurice Quinn:

With regard to the Air Corps one, if I could just finish out that point, ultimately, it was a ministerial decision that was required on the jet. It took into account the military advice-----

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I accept that.

Mr. Maurice Quinn:

-----but also the costs.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What does "informal" mean?

Mr. Maurice Quinn:

Pardon?

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

"Informal", I have asked it three times now. What does "informal contact" mean?

Mr. Maurice Quinn:

Informal contact means that we did not go and tender. It means that we were aware of an individual in Ireland with aviation expertise and that we paid the person to give us advice.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

What form did that take? I am trying to-----

Mr. Maurice Quinn:

It was written.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Specifically, when Mr. Quinn says "informal", was it phone calls? Was it communication? Was it e-mail? What was it?

Mr. Maurice Quinn:

He was contacted by phone.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay.

Mr. Maurice Quinn:

He was met. We also corresponded by e-mail. We then got an invoice and paid the individual.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

How much was that?

Mr. Maurice Quinn:

Under €1,000. I think, around €900. I can get the Deputy the exact amount.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Sorry, how much?

Mr. Maurice Quinn:

Circa €900.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The informal contact advised that the necessary repairs could be carried out and the aircraft kept for another few years but that it seemed to have had its day. He said an immediate sale would likely be to a parts dealer, which conjures up the thought that the aircraft would be sold for scrap. Mr. Quinn described the aircraft in the Savannah plant, broken down into parts and that image is in my head. The contact also stated the likely sale value would be approximately $1 million, or €750,000, but a decision was made to sell for €416,000. Is that what happened?

Mr. Maurice Quinn:

Yes.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

It was sold to Journey Aviation. We have an image of a jet stripped down in a hangar in Savannah and are being told that an informal contact who was paid just €900 and whose expertise in this area we know nothing about advised that it should be sold for scrap because it had had its day. It is still flying. On 23 November 2016 it flew from Paris to New York; on 28 November it flew from Allentown to New York; and on 3 December it flew from New York to Barbados. It is being advertised here and can be leased. The advert mentions its amenities - a split cabin for privacy, a full service gallery, a full lavatory, a flight phone, an SAT phone, video monitors and stereo system speakers. There are nice pictures of the inside of the jet. I was in contact with the company which had bought it and I am waiting for it to get back to me, but I received a copy of the insurance certificate which I have given to the clerk. It was reregistered as N297PJ and is insured at a value of $5 million. That seems to be a far cry from the image of a jet in pieces and which had had its day in a hangar in Savannah. It is being flown around the world making money for a company which did make a cost-benefit analysis. That is why I say I have a problem with the lack of due process on the part of the Department.

Mr. Maurice Quinn:

In line with the policy parameters within which we were working, we were to keep the jet flying if we could but the limit on what we had permission to spend was €400,000. The minimum cost of repair was €1.34 million. It is an aged jet and while I will not comment on the service provided by an independent party, we have to deal with the requirements of serviceability for a Government jet. There were known accumulated costs as it was sitting on the production line, although they were to be negotiated downwards. It was going to cost a minimum of €1.34 million to keep it flying. In addition, we would have to spend €2.5 million in 2018 and 2019 on the engines. We had to take all of these factors into account. I am not aware of the commercial operation which is flying the aircraft.

David Cullinane (Waterford, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I was able to make myself aware of it very quickly and easily as I was conducting research for this meeting. As the Accounting Officer who signed off on the sale for €418,000, Mr. Quinn should be aware of it. The same company that bought the parts that were worth €800,000 bought them for €40,000 and used them to get the aircraft back into circulation. I imagine that it is making money because the jet is travelling all over the world. How can Mr. Quinn say we can just put aside proper process and what we need to do - make a proper cost analysis of the disposal of very significant pieces of equipment and assets - on the basis of exceptional circumstances? Will he talk us through the question of who makes these decisions? On what basis are they made and can the Department cast aside proper accountancy processes? Did Mr. Quinn make the decision in the first instance?

Mr. Maurice Quinn:

There was a political decision that the jet was to be used no further. The question thereafter was how we could get the best value in the disposal of the jet. We knew that it would cost €1.34 million to repair it and that we were accumulating costs up to a potential €500,000 to Gulfstream for the work that was ongoing at that stage. In those circumstances and with the advice we had received-----

David Cullinane (Waterford, Sinn Fein)
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That is Mr. Quinn's analysis, but we have a completely different analysis from the Comptroller and Auditor General, whose job it is to make sure proper processes are in place and that they are followed. His report is very clear and there is no disagreement about it, yet Mr. Quinn is now justifying why these things were not done. That is completely unsatisfactory. It has happened on a number of occasions and there are shades of a different process on which we held very lengthy meetings to determine whether we had obtained value for money for something. In the end we got what we had looked for, but what we have heard today is not good enough from the point of view of ensuring proper due process.

Mr. Maurice Quinn:

W certainly agree with the report of the Comptroller and Auditor General. I have a list of all the things we have sold over many years and every one has been sold by a normal tender competition or public auction in order to derive the full value the market could deliver. The difference in this case was there were exceptional circumstances.

Catherine Connolly (Galway West, Independent)
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Mr. Quinn accepts that, as the Comptroller and Auditor General said, an analysis of costs and the benefits associated with different potential courses of action is key in decision making. However, he disagrees with the finding of the Comptroller and Auditor General that, in the case of the Gulfstream jet, the Department did not formally appraise the economic case for increased maintenance costs. He says the Department was under pressure. Is that right?

Mr. Maurice Quinn:

We effectively had no options.

Catherine Connolly (Galway West, Independent)
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The Comptroller and Auditor General said the Department had failed to do this in 2013, as well as in 2014. It was not under pressure in 2013.

Mr. Maurice Quinn:

No. In 2013 we were working to our instructions from the Government.

Catherine Connolly (Galway West, Independent)
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The Comptroller and Auditor General has said the Department did not carry out a formal analysis of the costs and benefits in 2013 either.

Mr. Maurice Quinn:

We spoke about the benefits of the Government jet earlier which could be analysed at two levels. One was to work out the cost of taking the commercial option, but that would not take into account the decision taken in 1992 which had been based on the fact that wider benefits were available and these benefits would not have been factored in in a benefits analysis.

Catherine Connolly (Galway West, Independent)
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I do not find that reply helpful. I am faced with what the Comptroller and Auditor General is saying. I accept, at face value, the argument that the Department was in a corner in 2014 but that did not apply in 2013 and the Comptroller and Auditor General made the same finding for that year. I do not find Mr. Quinn's answer satisfactory.

On personal injuries, Mr. Quinn gave a sum for employment cases, but what is the total figure? Were there savings as a result of the establishment of the State Claims Agency? If Mr. Quinn cannot give us an answer to that question, where does responsibility lie for telling us?

Mr. Maurice Quinn:

Our total expenditure is €3.9 million.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Perhaps Mr. Quinn might come back to me with the figures.

Mr. Maurice Quinn:

I am after giving the 2016 figures. Can I just go back to 2015?

Mr. Seamus McCarthy:

The figures for 2015 are actually on screen. It is a note to the appropriation accounts legal costs. I think that might be helpful. It is also €3.9 million in 2015.

Catherine Connolly (Galway West, Independent)
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There are claims by employees, to which Mr. Quinn referred, and then there are claims by members of the public, presumably as a result of accidents.

Mr. Maurice Quinn:

Yes - usually road traffic accidents.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Did that involve military personnel and vehicles? Is that what is being set out there?

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
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Regarding Army involvement in Shannon Airport, where can I discover the cost to the taxpayer of protecting aircraft in Shannon Airport? What aircraft are involved? What are the criteria?

Mr. Maurice Quinn:

We can extract out the costs that we have incurred. If I do not have them at hand, I will certainly forward them on to the committee.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Why is that not there? That is obviously backing up a civil power. Is that right?

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It comes under that heading. Therefore it should set out what it costs the taxpayer to protect and the criteria for when the Army is sent in.

Mr. Maurice Quinn:

I can confirm that it is €181,669 for the costs of our military colleagues being deployed.

Catherine Connolly (Galway West, Independent)
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What period of time does that cover?

Mr. Maurice Quinn:

The year. Actually it is the year 2016 - the latest figures we have.

Catherine Connolly (Galway West, Independent)
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Is that the total cost for the Army's involvement at Shannon Airport?

Mr. Maurice Quinn:

When one is costing the military and the Defence Forces, one is dealing with a contingent capacity available to the State, which can be used for a whole myriad of things when not in training. As the Deputy can see they are being used for ceremonial, disaster relief and everything else. We do not separate out individual pieces of it unless it is specifically sought. We would not present them as separate reports because we are using the capacity of the Defence Forces. In this case what we are extracting out to give the committee, is the additional cost in terms of, for example, security duty payments to members of the Defence Forces, fuel and so forth.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It includes security duty payments, fuel-----

Mr. Maurice Quinn:

It is extra payments to the members of the Defence Forces when they are on duty.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

What criteria are used when deploying them there? Which aircraft does the Army protect?

Mr. Maurice Quinn:

We answer the call of the civil power; so it is in response to An Garda Síochána, which has primary responsibility.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

The Garda Síochána will ring the Army and ask it to send personnel the following day.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Does the Garda outline why?

Mr. Maurice Quinn:

No.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It does not. Therefore it simply rings up and says, "We require your assistance tomorrow", and the Army is sent down, although not by Mr. Quinn.

Mr. Maurice Quinn:

There is obviously ongoing contact between An Garda Síochána and the Defence Forces nationally. There is obviously ongoing assessment. I am in very close contact with them in terms of nature of threats and so on and so forth. That would be factored in; that would be known.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Is Mr. Quinn familiar with the criteria used by the Army for deploying personnel?

Mr. Maurice Quinn:

We respond to An Garda Síochána, when it requests the Army to-----

Catherine Connolly (Galway West, Independent)
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I would like to go into it further detail but I am stuck for time. I wish to ask about a few other things.

I believe our contribution to the EU is in excess of €1 million.

Mr. Maurice Quinn:

That is right.

Catherine Connolly (Galway West, Independent)
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Is that the total contribution to the part we play in the joint defence in Europe or is there other funding?

Mr. Maurice Quinn:

For example, we have staff in the European Union - military staff and civil staff. What is in the account is specific payments to the European Union institutions like the satellite centre and that kind of thing.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

They are specific payments-----

Mr. Maurice Quinn:

They are specific payments, precisely.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

----- to the EU institutions, as outlined there.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Then there are separate-----

Mr. Maurice Quinn:

There are separate costs arising, if one wants to call it that, because we have staff there and that. That is-----

Catherine Connolly (Galway West, Independent)
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I may come back to that at the end.

While I did not agree with it, in the Lisbon treaty we committed to progressively increasing our expenditure on military. Where does that appear?

Mr. Maurice Quinn:

We are dealing with defence from an Irish perspective. In the annual Estimates round, the money that is voted by the Exchequer for defence encompasses everything we do, including our interaction with the European Union.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I will come back to it separately because I am under pressure to be somewhere else.

I have two final questions. One is the money given to the Red Cross for flood defence. Is there a breakdown of how much of it went to the Red Cross for administration expenses or did all that money go for flood victims?

My second specific question is on the spare parts. Mr. Quinn will forgive me for thinking that somebody had to be flying high - excuse the bad pun - with public money. On spare parts there has been a valuation of €1.4 million. Mr. Quinn mentioned three figures - €405,000 and then within a few months it is down to €53,000. I do not think he flippantly said it, but he said that a lot of them were second-hand. Actually almost half of the spare parts were not second-hand. Why was no analysis done of the spare parts to see which were not second-hand, which were new? There is a question about no certification for the parts. I will leave questions about the jet, as it has been asked by other people. On the spare parts, how can we go from a valuation of €1.4 million down to €410,000 and within a matter of months to €53,000 and a flippant comment that they are second-hand, when practically 50% are not?

Mr. Maurice Quinn:

I will first deal with the Red Cross. Five million euro was allocated to our Vote and we passed that on to the Red Cross. A lot of this will come up in the 2016 account because that is when a lot of that was paid out. A total of €3.1 million was paid to 357 successful applicants. That is broken down between businesses and community-----

Catherine Connolly (Galway West, Independent)
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That is okay. It is €3.1 million of how much that was allocated to the Red Cross?

Mr. Maurice Quinn:

Of €5 million. So we have retrieved the rest. There was also a payment to the Red Cross for administration.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Separately.

Mr. Maurice Quinn:

Yes. I will get that to the Deputy. I am sorry; there are two different things here. We make an annual grant in aid to the Red Cross for its administration - that is part of the Government's. I do not think that is what the Deputy is talking about. I think she is talking about-----

Catherine Connolly (Galway West, Independent)
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I am talking about what appears in the Comptroller and Auditor General's report of the money given to flood victims to be administered through the Red Cross.

Mr. Maurice Quinn:

That is a different thing. There was a payment made for administration. I apologise I do not have it here, but I will get it for the Deputy. It is in the region of €60,000.

Catherine Connolly (Galway West, Independent)
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That is okay. Of the money that appears here in the Comptroller and Auditor General's report, it is €4 million or €5 million. Did that specifically go to flood victims?

Mr. Maurice Quinn:

To clarify, €5 million was put into our account. We gave the full €5 million to the Red Cross. It spent €3.1 million. We got back the rest, so that was the net amount.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

All right.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was that in 2016? When did it return?

Mr. Maurice Quinn:

We made the first payments in 2015 because it was urgent, but the rest of it was in January 2016. Is that okay?

Catherine Connolly (Galway West, Independent)
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I want to clarify if any of it went on administration. That is the main question. The second question arises from Mr. Quinn's answer. Why was money that was allocated by the Government returned and not given out? That amount was allocated by the Government to give to the victims of flooding.

Mr. Maurice Quinn:

The total amount of applicants who were eligible were paid. So the number of eligible people did not match €5 million.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Okay.

Mr. Maurice Quinn:

The Government put €5 million down in the hope that it would cover everything and it did.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I ask Mr. Quinn to answer the question on the spare parts.

Mr. Maurice Quinn:

There were 87 spare parts; 46% were purchased prior to 2000; 47% were purchased in the period from 2000 to 2010; and 7% were purchased in the period from 2011.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

I have that. My question is: why was there no analysis of that? How could the Department sell the spare parts off for €53,000 if almost 50% of them were not second-hand? Where was the certification? Why was there no certification? Why did the Gulfstream people come back and say there was no certification?

Mr. Maurice Quinn:

It was the purchaser who came back looking for the certification and not Gulfstream.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

It was through Gulfstream.

Mr. Maurice Quinn:

One certifies these parts as one needs them because it incurs a lot of cost having them certified and doing whatever work is necessary to certify them. One would not constantly keep them certified.

Catherine Connolly (Galway West, Independent)
Link to this: Individually | In context | Oireachtas source

Can Mr. Quinn justify €53,000? This question was asked by a previous Deputy. The Department was not under pressure regarding the spare parts. Unfortunately, I will have to come back to Mr. Quinn at the end. He is getting off the hook regarding that. I will come back to him.

Seán Fleming (Laois, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I know Deputy Connolly has to go to the Dáil Chamber.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I have to comment on the Government jet because everyone seems to be fixated on it today. It is poor value for money to think that we only realised €471,000, particularly in view of the fact that it originally cost €48 million. It is poor management to say that it was sold to the one buyer left. It was stripped down in Savannah and the only option was to sell it to one person, but that does not seem right to me. It was not value for money. If the jet had been repaired at whatever cost and put back into commission, would it have realised more money? As my colleague said, it is now being used for commercial purposes, so I presume they would not have spent the money unless it was of commercial value. Did taxpayers here lose money as a result of the jet not being repaired and then sold off? If so, we could have had several different bidders from all over the world.

Mr. Maurice Quinn:

To an extent, it is speculative because the decision was taken by the Minister-----

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

It makes commercial sense though.

Mr. Maurice Quinn:

-----at a point when the costs were exceeding €1 million. For example, we do not know if the original engines are on the jet at present. It is such a complex matter.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There is a person or company who bought that jet. They did not invest to lose money but, rather, to make it. If we had at least got it flying, it could have been sold off with a few more bidders interested. Instead, our hands were tied. The aircraft was stripped down in Savannah, with one bidder coming in for spare parts. We realised €471,000 but could we have made €4 million or €5 million on the jet if it had been repaired?

Mr. Maurice Quinn:

We know for sure that it was a minimum of €1.8 million to make it capable of flying and for sale to a civilian buyer.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

If we had done that, how much would it have realised on the open market?

Mr. Maurice Quinn:

We do not have that figure because we were not in that space.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Does Mr. Quinn have any estimates? Did anyone look at that, as a commercial proposition, on behalf of the taxpayers of this country? Did anyone say: "We should have done that and we could have made money on it"?

Mr. Maurice Quinn:

The policy decision had already been made that no further money was to be expended on it, so that was the parameter within which we were working.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Okay, but it still does not seem sound. If I were a commercial manager in business, it would not sound right to me. It sounds like just getting rid of it and moving on. It was not value for money.

I wish to ask a question about obsolete stock and the reduced weight by €2 million to €4.9 million. What is obsolete stock? Is Mr. Quinn talking about armour, uniforms, vehicles or ammunition? What was written off involving that kind of money?

Mr. Maurice Quinn:

I will get some specifics for the Deputy. It is potentially clothing, vehicles and weapons. Once things are no longer required for use by the Defence Forces, as they are currently constructed, they become obsolete stock.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are they sold off or destroyed?

Mr. Maurice Quinn:

There are different means, so it depends. If one is selling weapons, one has to go back. If it is a State sale, one can sell weapons, otherwise one has to go back to the original equipment manufacturer. The bulk of ours go to Hammond Lane to be cut down. We are reluctant to sell clothing, much of which will be used as rags. There are different ways of moving obsolete stock. One of the challenges we have in the military world is that because we operate in a contingent capacity, there will always be something on the inventory that is never used, but it has to be there if required. Therefore, the challenge is always to get the right stock policy statements and levels, so that everything the Defence Forces need for whatever reason is available to them. However, one does not have too much or too little.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What does it cost to keep up the stock - for example, to buy armour, rifles, ammunition, uniforms, boots and socks - each year? What does it cost annually to maintain stock?

Mr. Maurice Quinn:

That is encompassed within the Vote. I will have to go back on the figures. For 2015, it was in or around €42 million.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Per annum?

Mr. Maurice Quinn:

Yes. That was in 2015, but it can vary depending on what is required.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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For comparison, what percentage of that would be written off as obsolete every year?

Mr. Maurice Quinn:

We have written off on an ongoing basis. I will get the figures for the Deputy. There are issues during the year.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The question I am asking is about going from €8.2 million to €4.9 million, which is a big discrepancy, in one year. Why was there such a big discrepancy?

Mr. Maurice Quinn:

That depends on what it was that we were writing off from one year to the next.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Would that be an average figure?

Mr. Maurice Quinn:

I go back to the point I made earlier. We put a huge amount of work into it and resourced a team to work on this and to move stock on so that we would not have the overhead of minding and managing it. That is why the Deputy sees a movement. It was as a result of a lot of effort and work to move obsolete stock out of our stores, rationalising it.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Was it a one-off?

Mr. Maurice Quinn:

It will vary from year to year, but 2016 will be something similar.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Is most of the Defence Forces' property barracks, or is there land also? I am a farmer so when I use the term "land", I mean do the Defence Forces have acreage or is it all buildings, including barracks?

Mr. Maurice Quinn:

The big ones would be the Glen of Imaal, the Curragh and Kilworth in Cork.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is this land?

Mr. Maurice Quinn:

Yes, land.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What kind of acreage are we talking about?

Mr. Maurice Quinn:

Hectares.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Hectares.

Mr. Maurice Quinn:

They are all the barracks on the screen.

Mr. Seamus McCarthy:

There is a schedule at the end of the appropriation account which lists all of them. It is on screen in front of the Deputy. Normally, property that is owned would be valued and is on the balance sheet of the Department. However, where there are no valuations on it, because it is not held for trade, a schedule is provided of the quantity of land.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Clonmel Barracks, which was sold off, was mentioned. Nearly every town had a barracks at one time. There were barracks all over the country. Have all the older ones been closed down? If so, have they been sold off or do the Defence Forces still have them?

Mr. Maurice Quinn:

We still have Mullingar.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Is that in use?

Mr. Maurice Quinn:

It is being prepared for sale and is being used by a small number of community groups at the moment.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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And the land?

Mr. Maurice Quinn:

There are 1,900 ha in the Curragh for which we are responsible. Kilworth Camp comprises 1,377 ha.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I would like to have that for a farm.

Mr. Maurice Quinn:

It is not great farming land. Finner Camp in Bundoran, County Donegal, comprises 339 ha and the Glen of Imaal covers 2,600 ha. It is important that we take care of our land holdings because the Defence Forces must be able to train.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I understand that. I am asking about this in light of our housing situation. If unused land or property could be used to combat the crisis we are experiencing, would Mr. Quinn be willing to look at that?

Mr. Maurice Quinn:

Once it is surplus to our requirements, it is an overhead and I want to keep the focus on the day job of defence. We would, therefore, always put it into the public system. Many of our properties would not be in fantastic locations but we would certainly put them into the public system immediately.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes, especially in towns where it would be value to local authorities, or whoever, to build on it.

As regards retirement, one can get a pension after 20 years' service. As a result of the fact that people are living and working longer, is Mr. Quinn going to examine the position in that regard? Does he agree with the 20 years' service after which anyone can retire or will it be moved out to 25 years? The Government is doing that in extending the retirement age to 67 and 68 by 2022. Does the army have the same policy on retirement - that is, the length of time one must serve before getting a full pension?

Mr. Maurice Quinn:

There are three parts to that question. Currently, the average age in the Defence Forces is 36 years. We have a human resources objective to have young men and women in the Defence Forces.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I understand the reason for that.

Mr. Maurice Quinn:

Second, we have had a lot of retirements.

The single pension scheme, which was brought introduced in 2013, sets the new standard for people who have entered more recently. The third point is that with regard to the ages, it is in the White Paper and it is something we will look at to make sure we keep the military capability at the level it needs to be and support the Defence Forces in that, while looking at the changes in the population generally. That is something that is on our radar.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are people allowed to remain in the Army after 20 years' service or is retirement compulsory after 20 years?

Mr. Maurice Quinn:

The Deputy is referring to enlisted personnel, I assume-----

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Yes.

Mr. Maurice Quinn:

-----or the bulk of enlisted personnel. It is slightly complicated as it depends. Those who achieve a certain rank can stay on. A private who is providing a technical service, so a technician, can stay on until the age of 50.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Certain categories of personnel can stay on?

Mr. Maurice Quinn:

Yes, it comes back to the bulk of men and women in the Defence Forces. If they have not advanced up the ranks and they are doing all the heavy lifting, we need them to be young and fit. It is a balance that we have to strike.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The €3.9 million cost of claims is a cost to the Defence Forces. Most people have insurance cover for accidents and so forth. Could that type of insurance not be used to cover claims, rather than having the Defence Forces pay for them from its funding?

Mr. Maurice Quinn:

The State is its own insurer and carries its own insurance. What we do to try to minimise the overhead on the defence Vote is put a huge amount of work into health and safety, risk management and that kind of thing. We do this together with the Defence Forces. That is where we try to minimise the costs but the State carries its own insurance.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Could the Defence Forces not get an insurance company to insure them against all accidents in 2017? The Defence Forces would then pay a premium, as we all do, and have the insurance company pay for claims.

Mr. Maurice Quinn:

No, Government policy is that the State carries its own insurance.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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When Defence Forces personnel are deployed to the Mediterranean or on United Nations missions, are the Defence Forces costs refunded by the relevant body, for example, the European Union? Can we claim back the costs we incur or do the Defence Forces and taxpayers bear them?

Mr. Maurice Quinn:

We got receipts in 2015 from the United Nations of €10.4 million. We also got €5 million from the banks, which we discussed earlier. The UN receipts are only in respect of UNIFIL in Lebanon and UNDOF in the Golan Heights in Syria. Those are our main active missions.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Do those moneys cover all costs?

Mr. Maurice Quinn:

No, they are a contribution to costs. There is a scale set with the United Nations and that scale is impacted by the service one is providing to the United Nations, for example, the equipment and the numbers of people one has deployed. An interesting thing is that the United Nations makes the payments as regularly as it can but it sometimes has to be in funds before it can make the payments.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I have read a few times that millions have been owed and we have been unable to get the money back. Is that still the case?

Mr. Maurice Quinn:

We are very up to date with the United Nations at the moment. It sometimes needs funding from all the membership of the United Nations to be in funds. It is something we put a huge amount of work into to make sure we get back what we are due.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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What about fishing patrol costs and so forth? Are they our own costs? The Naval Service has been deployed to the Mediterranean. Do we receive moneys from the EU for this deployment?

Mr. Maurice Quinn:

Every other mission is at our own costs. If one is on an EU mission like the mission in Mali, the principle that is followed is called nation borne costs. "Costs lie where they fall" is the term that is used, so in other words one carries one's own costs and there are no reimbursements or refunds.

Seán Fleming (Laois, Fianna Fail)
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The next speaker is Deputy Cassells, followed by Deputy Farrell.

Shane Cassells (Meath West, Fianna Fail)
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I welcome Mr. Quinn and his team. I will refer to the Government jet given that everyone else has spoken about it. Deputy Cullinane referred to its new owners, Journey Aviation, its destinations, including Paris, and its home base of Palm Beach. I wish the new owners well. I looked at the flight history of the Government jet, in particular, the number of times it broke down. Deputy Cullinane stated the jet flew from New York to Paris under Journey Aviation. In 1997, only five years after it commenced operations for the State, the Government jet broke down en route to Paris leaving the then Taoiseach, Mr. John Bruton, on the tarmac. It also famously broke down in Mexico and the United States where it blocked Air Force One on one occasion and had to be taxied out of the way. In 2003, it failed to get off the tarmac at Baldonnel Aerodrome when the then Taoiseach was about to fly to Prague for a meeting and an air taxi had to be hired at short notice at a cost of €36,000. I wish Journey Aviation the best and wish its customers well. Deputy Cullinane referred to various fancy paraphernalia. I wonder if the number of times the Government jet broke down was advertised because we are as well shot of that particular aircraft. As an aside, I know Donald is selling Air Force One and buying a new one. Perhaps we may avail of that opportunity at a knock-down price.

To address Vote 36 of the appropriation accounts, there was a slight excess in the outturn for the purchase of military transport. I note the excess arose due to requirements to purchase additional military vehicles. I also note that the replacement of heavy armoured cars and troop transporters is planned by the Department. Before Christmas, I asked the Taoiseach a question on this matter. Will Mr. Quinn take me through this process because there is disenchantment with the tender competitions run by the Department? Timoney Technology, an Irish company, is one of the world's leading companies in designing and developing light armoured vehicles, yet it cannot secure a simple engagement with the Department to enable it to illustrate how it could serve our armed forces and the nation. It is a leading manufacturer and I mention it because we are a small nation and this Irish company is engaged by the Australian military and other military forces elsewhere. I would appreciate if Mr. Quinn could make a statement on a tender process that would allow for simple engagement to have this company illustrate how it could best serve our nation.

Mr. Maurice Quinn:The normal process that we follow in the Department of Defence for procurement is open tender. That is standard practice. We are also doing a lot of work on supporting enterprise arising out of the White Paper and decisions that were taken earlier. There is a whole range of vehicles that we are procuring in the period ahead. I will come to the Mowags. There are the armoured logistical vehicles and armoured utility vehicles. Not to labour the point, but the nature of our overseas deployments is such that where troops are deployed in armoured personnel carriers, the vehicles supporting them also need to be armoured so we are doing a lot of work on that at the moment.

With regard to the upgrade of the 80 armoured personnel carriers we have, which is original equipment provided by Mowag, there was a very long process followed within the organisation to bottom out on what was the most appropriate way of ensuring that armoured capability was available to the Defence Forces into the future. We had 80 of these vehicles starting back in 2003 I think and the outcome of all of that was that the nature of the work that was required to be done on the vehicles meant that we needed to deal, on a sole source basis, with the original equipment provider. That was the contract that we awarded shortly before Christmas to GDELS for the work to be done on our armoured personnel carriers.

Shane Cassells (Meath West, Fianna Fail)
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I mentioned a particular company. As Ireland is a small country there are not many companies of this type engaged here in these particular services. Mr. Quinn referenced the White Paper on Defence. Deputy Coveney, when Minister for Defence, visited the company I mentioned, as did Deputy Bruton in his then capacity as Minister for Jobs, Enterprise and Innovation. It is recognised as a world leader in the supply of the suspension systems for armoured vehicles. What I am asking Mr. Quinn is how a company can illustrate and demonstrate to the Department of Defence that it is capable of meeting the criteria set out. In a previous response to me on this issue the Taoiseach said that there is constant monitoring to ensure the availability of proper equipment for the Defence Forces, that he had discussed the issue of resources with the Department of Defence and that it had been agreed with the Minister for Public Expenditure and Reform that the matter would be carefully examined. He also said that he hoped the Defence Forces would never be sent out with inadequate or inferior equipment. That was a hell of a statement by the Taoiseach. As I said, the company based in Navan in County Meath is supplying hundreds of vehicles to the Australian Army, the US Army and to other armies across the Continent. I should point out that the Taoiseach later clarified his statement. Perhaps Mr. Quinn would comment on the willingness of the Department to engage with Irish companies on the process surrounding the purchase of equipment.

Mr. Maurice Quinn:

We were aware of the company in question.

Shane Cassells (Meath West, Fianna Fail)
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It had previously worked with the Department dating back to the 1970s.

Mr. Maurice Quinn:

That is correct. When it came to the specific contract about which we are speaking, the first task was to establish the scope of works required to extend the life of our armoured personnel carrier fleet. What we are doing is up-armouring them, improving the protections against explosive ordinands, changing the weapon station and improving the manoeuvrability of them.

Shane Cassells (Meath West, Fianna Fail)
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Which would require alterations to suspensions as well.

Mr. Maurice Quinn:

As it transpired, in the scope of work for the tender there is no change to the drive train or the suspensions. The warranty required when the job is completed and the nature of the work that was required is what led us back to the original equipment manufacturer and a sole source contract. That is the basis on which the process went through.

Shane Cassells (Meath West, Fianna Fail)
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Notwithstanding an open tender process, is there a willingness in the Department to engage with Irish firms on what they can do ahead of the tendering process?

Mr. Maurice Quinn:

Yes.

Shane Cassells (Meath West, Fianna Fail)
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I thank Mr. Quinn.

Alan Farrell (Dublin Fingal, Fine Gael)
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I welcome our guests. Deputy Cassells made a number of statements in his opening remarks before moving on to a particular a line of questioning. As Mr. Quinn did not get an opportunity to respond to those statements, would he like to do so now?

Mr. Maurice Quinn:

The Air Corps did a fantastic job with the jet, whatever its limitations at the time. We are proud of the work that it did and the service it provided. I accept there were issues with it along the way but that is always the case with any aircraft. When we got the Learjet, it provided a lesser support - but nonetheless a support - to the service as well.

Alan Farrell (Dublin Fingal, Fine Gael)
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That was not a pointed remark, I might add. It just appeared that Mr. Quinn wanted to say something. I have a couple of questions on recruitment and associated costs. Has the Department struggled to achieve the targeted recruitment it has been attempting to achieve over the past few years?

Mr. Maurice Quinn:

Yes. However, we had a historic high of recruitment - over 600 - in 2016. We now have the biggest cadet class in the history of the State.

Alan Farrell (Dublin Fingal, Fine Gael)
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What is the reason for that?

Mr. Maurice Quinn:

It relates to turnover. The Defence----

Alan Farrell (Dublin Fingal, Fine Gael)
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Sorry, I am asking why recruitment was so high last year compared with previous years. Was exposure a factor?

Mr. Maurice Quinn:

It is perhaps related two issues: the fantastic commemorations during 2016 and the amount of work, led by the Chief of Staff, being done on the gender issue in terms of encouraging more women to join the Defence Forces. There is also the general campaign to get people to join the Defence Forces. Recruitment is a factor of turnover in terms of the increased rate of loss of members of the Defence Forces, both officers and enlisted, that we are experiencing. Some 690 people were inducted in 2016. Recruitment has been ongoing since 2008. While the numbers have adjusted we are still at the stage of having to run to keep pace with the losses in order to retain the coherence of the force.

Alan Farrell (Dublin Fingal, Fine Gael)
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I understand that 6% of Defence Forces personnel are female? I accept that percentage may be related to recruitment in previous years. What percentage of those recruited in 2016 were women?

Mr. Maurice Quinn:

In terms of induction in 2016, of the 690 inducted into the Defence Forces 47 were women and 643 were men. A huge amount of work, in terms of best practice and recruitment, has been done to attract more women into the Defence Forces. It is important in the Irish Defence Forces that every promotion option and so forth is open to everybody equally. That has not always been the case. In this regard, the Chief of Staff has appointed a gender adviser. As I said, there is a huge amount of work being done in that area. Also, 15% of applications for 2016 were from women. It is a question of increasing the number of applicants such that more women are recruited.

Alan Farrell (Dublin Fingal, Fine Gael)
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Do the Defence Forces employ any tactic in terms of seeking additional professionalisation, technician or specialist roles? Do such roles exist in the Defence Forces and, if so, what can be done to make more those particular positions more attractive to women? Has that been considered? I am not sure if such specialists roles exist. Perhaps Mr. Quinn, as the expert, would tell us if they do.

Mr. Maurice Quinn:

The focus on gender and equality means that every position is open to everybody.

Alan Farrell (Dublin Fingal, Fine Gael)
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Of course.

Mr. Maurice Quinn:

That is probably-----

Alan Farrell (Dublin Fingal, Fine Gael)
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I am asking more about specialist roles that might be dominated in civilian life by women.

Mr. Maurice Quinn:

Defence Forces personnel comprise all types of individuals, from plumbers to pilots. The bulk of the members are front-line troops. We also have an Army nursing service but they are not service personnel, they are separate. There are also a range of professionals across the Defence Forces engaged in other roles. I would have to reflect on whether or not there is scope to specialise particular roles.

Alan Farrell (Dublin Fingal, Fine Gael)
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I understand. It is an very broad question and gives rise to much food for thought. In regard to seconded personnel and the refunds in respect of those positions, how many personnel are on secondment and, in broad terms, where are they?

Mr. Maurice Quinn:

Some personnel have been seconded to the European Union military staff and one is on secondment in the cyber unit in the Department of Communications, Climate Action and the Environment. We also have civil servants who have been seconded to the Department of Foreign Affairs and Trade and are working in Brussels.

Alan Farrell (Dublin Fingal, Fine Gael)
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Deputy Aylward spoke earlier about landbanks and their potential usage. In Mr. Quinn's opinion - I appreciate he may not have expertise in this area - are any of the existing barracks or land banks in the trust of the Defence Forces on behalf of the State in areas that he would deem appropriate for the development of housing.

That is, are they sufficiently close to urban centres to be used for such purposes, or are they still in active use by the Defence Forces for training, ordnance or other purposes?

Mr. Maurice Quinn:

I approach it from a different angle, as the Deputy might expect. We prioritise military training and accommodation. We would always maintain ongoing oversight of our land bank. We do not wish to have any extra because it is an overhead for us. In those circumstances I would not draw a conclusion that there is any land that is more suitable for other use.

Alan Farrell (Dublin Fingal, Fine Gael)
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I can give Mr. Quinn an example. I lived in Balbriggan for a number of years and it is close to Gormanston. Balbriggan is an enlarging community and over the next generation it is likely to expand beyond the boundary of Dublin and encroach in the direction of Gormanston, so at that point it will become unlikely that the Defence Forces will continue to use it for its current purposes. That is the type of land bank I mean. To be fair, the area between Balbriggan and Gormanston might be a little too far, but I am sure there are other examples in the country, not known to me as a Dubliner, that might possibly be considered in the future as lands that are not being utilised to their full potential by the Defence Forces. That is the origin of the question.

Mr. Maurice Quinn:

Gormanston is quite an important part of the Air Corps training regime, so that would have a value and priority for us. We have a joint civil and military team that looks at our land holdings and we are very careful to ensure that we always prioritise the needs of the Defence Forces in the first instance.

Alan Farrell (Dublin Fingal, Fine Gael)
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Deputy Cassells mentioned the issue of breakdowns and Mr. Quinn quite rightly responded by mentioning how proud he is of the service provided through the ministerial air transport service, MATS, as he should be. However, was there a higher than normal or expected rate of breakdown for this aircraft historically?

Mr. Maurice Quinn:

Not to my knowledge, but the point is that when it happened it was high profile.

Alan Farrell (Dublin Fingal, Fine Gael)
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I understand. It would be, given the service it is providing. Can Mr. Quinn provide the total number of flying hours for that aircraft since its purchase? Was it purchased new?

Mr. Maurice Quinn:

Yes.

Alan Farrell (Dublin Fingal, Fine Gael)
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Can he provide the hours for the total use of the aircraft over its service with the Defence Forces? Obviously, I wish to compare the total cost and flight hours. I am not sure about aviation, but does it retain approximate distance or nautical miles travelled?

Mr. Maurice Quinn:

Everything is kept to the last detail.

Alan Farrell (Dublin Fingal, Fine Gael)
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I am sure there is a figure for cost per mile over its lifespan. It is probably not appropriate but it is easy to garner that figure.

Mr. Maurice Quinn:

We certainly can pass that on. The other figure we would have is the cost per hour, which moved with depreciation. We can provide the cost per hour figure as well.

Alan Farrell (Dublin Fingal, Fine Gael)
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That would be very helpful.

Mr. Maurice Quinn:

We can also do it for the Learjet. That is public information.

Alan Farrell (Dublin Fingal, Fine Gael)
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I accept the responses of the Defence Forces to the points the Comptroller and Auditor General made on the disposal of this asset. I have a serious problem regarding the parts. It is a fraction of a fraction of the total cost. I understand the parts going with the aircraft which was sold for parts, and thus one disposes of the parts. However, the total cost versus the estimated value versus the disposal cost receipt is quite poor, certainly from a casual observation. Was there a market for the items that were unused? Mr. Quinn mentioned that some of the parts were used but could be re-used in that aircraft. The estimated value of the parts in October 2014 was €405,000. Is that figure correct?

Mr. Maurice Quinn:

That was a valuation provided by the Air Corps.

Alan Farrell (Dublin Fingal, Fine Gael)
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Yes. I will take it on trust because I do not know what these parts are worth. The estimate was €405,000 in 2014 and they were sold for €53,000, as well documented in both the Comptroller and Auditor General's report and the Secretary General's response. Is there a market for the items that were unused, that is, still in the packaging? Is Mr. Quinn aware of the total number of these parts and whether there is a market for them? For example, if the Defence Forces had simply disposed of the items that had been used and retained the ones that were still in their packaging, is there a market for those items? Given the Department's research and the employment of relevant aviation experts, did Mr. Quinn ask that question? Could he determine for the committee whether better value might have been achieved for the unused parts?

Mr. Maurice Quinn:

With regard to the amounts, it is stark when the book value, original purchase price and so forth are available.

Alan Farrell (Dublin Fingal, Fine Gael)
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It makes easy headlines.

Mr. Maurice Quinn:

Over the history of our previous sales of helicopters, ships and so forth, the standard practice was that the spare parts were part of the sale. It would be done on that basis where something was sold from within our own property. It would be included. As I explained, the spare parts had no certification on them. They were sold as seen, so there was no come back on them. It was very important for us when they were sold that there was no liability or come back on the State from the sale. It was also important that, as they were redundant for us, they were not part of the Air Corps' inventory. It was done on those bases. Due to the nature of the way the thing evolved, we did not discuss spare parts with the external expert. He was focusing on the jet itself. The spare parts did not, and would not, enter into the conversation because they are after the fact.

Alan Farrell (Dublin Fingal, Fine Gael)
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I understand. I have two further questions. It is easy to ask this question but, retrospectively, is there regret in the Defence Forces about the Gulfstream IV inventory items they had in stock, which potentially had a value greater than the €53,000 or whatever proportion of the €53,000 that might have been attributable to them, and whether the Defence Forces should have, in making reasonable efforts to achieve the ministerial directive which was to get the best possible value, which included the parts, withheld those from disposal with the jet for the purpose of attempting to realise their greater value? Let us be honest, we are talking about €53,000. It is not a vast amount of money. If the €53,000 figure was not there and the parts were sold with the aircraft, I doubt that the committee would have spent a great deal of time querying the point. It would have queried the value of the disposal but not necessarily the €53,000, because it is a very small amount. However, if it was €20,000 and the Defence Forces made €100,000 on new, unused parts because there is a market for them in the Gulfstream IV market, retrospectively, and particularly when the Comptroller and Auditor General's report came across his desk, did Mr. Quinn not sit back and say that perhaps they should have considered this a little more carefully?

Mr. Maurice Quinn:

The other things that would cross one's mind is that when one has inventory that is redundant, it is an overhead. There was also the prospect of having a cost of disposal of spare parts.

All of this was factored in as well.

Alan Farrell (Dublin Fingal, Fine Gael)
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I see. My final question is on the storage costs, or potential storage costs, in Savannah, Georgia. Does Mr. Quinn have any idea, or could he estimate, the storage costs for the aircraft in the condition it was in, which he outlined quite clearly and illustrated earlier in response to Deputy Kelly's questions? The aircraft was in pieces on the floor, of a hangar presumably, in Savannah, Georgia. The Department found there were excessive expected costs and the decision was made not to exceed €400,000 and a decision was made to dispose of the aircraft. Clearly the Irish State was going to have costs associated with storage, but I am not sure Mr. Quinn attributed an approximate cost to this process. Were any other options available to the Defence Forces to return the aircraft to the Defence Forces?

Mr. Maurice Quinn:

We had contracted with Gulfstream. I will confirm the exact amount, but it was between €400,000 and €500,000. This was the contracted amount for work accumulating. It continued to accumulate. It was not a storage cost, it was actually the cost of the work that we were dealing with.

Alan Farrell (Dublin Fingal, Fine Gael)
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I apologise, perhaps I should have been more specific. I am speaking about when the Department instructed Gulfstream to stop-----

Mr. Maurice Quinn:

Yes.

Alan Farrell (Dublin Fingal, Fine Gael)
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-----on the basis it was going to exceed costs, even though it had sent over personnel who had done a very good deal, which is what Mr. Quinn effectively said earlier. My question is that at the point at which the Department instructed Gulfstream to stop work on the aircraft, clearly Gulfstream told the Department it needed to take the aircraft out of its warehouse or hangar.

Mr. Maurice Quinn:

Yes.

Alan Farrell (Dublin Fingal, Fine Gael)
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There had to have been a cost attributable to the aircraft being stored for the Defence Forces. Can Mr. Quinn put a figure on this? Was it discussed? Were any other options considered in terms of getting the aircraft back to Irish airspace or Baldonnel? Was how to do this considered given the aircraft was not in a flying condition?

Mr. Maurice Quinn:

The only option to get it back to Baldonnel was to put it back together again for the €1.34 million. Gulfstream was not charging us storage costs.

Alan Farrell (Dublin Fingal, Fine Gael)
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Okay.

Mr. Maurice Quinn:

It was a very dynamic situation and we had an ongoing conversation with Gulfstream. What I referred to was the value of the contract we had with it for the works. This is what we negotiated down to €75,000 from more than €400,000. This is where the figure comes from in the report of the Comptroller and Auditor General. This is just to clarify the point.

Alan Farrell (Dublin Fingal, Fine Gael)
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I appreciate that.

Mr. Maurice Quinn:

We never got to the stage of Gulfstream charging us for storage. It was the contracted works.

Alan Farrell (Dublin Fingal, Fine Gael)
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To get the aircraft off the ground in Savannah and get it back would have cost €1.34 million.

Mr. Maurice Quinn:

That was the estimated cost, but I emphasised from the start this was with no guarantees whatsoever that it would not encounter-----

Alan Farrell (Dublin Fingal, Fine Gael)
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And two years later the State was going to have to fork out approximately €2 million in rent, maintenance and upgrades.

Mr. Maurice Quinn:

Yes.

Seán Fleming (Laois, Fianna Fail)
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Deputy Cullinane wishes to get a quick point of clarification.

David Cullinane (Waterford, Sinn Fein)
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Clarification is needed on the process, notwithstanding the answers we have received from Mr. Quinn. Will Mr. Quinn give us the name of the person who gave the informal advice? Who in the Department made contact with this person who worked in the aviation industry? What is the name of the company for which the person worked? Was the person a board member, a CEO or a director? What level of expertise did this person have? Mr. Quinn stated e-mails were exchanged with this informal contact and adviser, which underpinned the decision made. I go back to the earlier exchanges where we had on differences of opinion between the GOC and the person who gave the conflicting advice, which is this informal contact.

There seems to be a more fundamental question, and to restate it for Mr. Quinn so he knows exactly and understands exactly what the Comptroller and Auditor General has stated, a cost-benefit analysis is important in the disposal of any asset or equipment. The Comptroller and Auditor General stated in the case of the Gulfstream jet the Department did not formally appraise the economic case for increased maintenance costs in 2013 or 2014 nor the cost of returning the jet to a serviceable position against the benefits that would accrue from this use. In response to earlier questions on why the Department did not cost getting the jet back to a workable position and getting it flying again, Mr. Quinn stated a decision had been made by the Minister to sell it. It strikes me there is a possibility the narrative here is that the exceptional circumstances spoken about by Mr. Quinn are political, whereby a decision was made by a Minister to sell and get rid of the jet and the Department then sought to get whatever information or scrap of paper it possibly could from somebody to justify selling it. A political decision was made to sell it and get what we could for it. The Department then sought whatever justification it could from an expert, which is what it got, and it seems the advice previously given by people in the Air Corps was dismissed. This is something that worries me. Will Mr. Quinn to respond to this potential narrative? Will he provide the committee with the specific information I have sought?

Mr. Maurice Quinn:

The person is Mr. Nick Fitzpatrick and the company is Atron, with which we have had dealings previously. Initial contact was made by an assistant contracts manager in the Department of Defence. All of the correspondence was available-----

David Cullinane (Waterford, Sinn Fein)
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What is his expertise? What is his role in the company?

Mr. Maurice Quinn:

I will have to get back to the Deputy. I think he is a director.

Seán Fleming (Laois, Fianna Fail)
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The Department will supply the documentation to the committee.

Mr. Maurice Quinn:

We supplied the relevant documentation to the Comptroller and Auditor General.

Seán Fleming (Laois, Fianna Fail)
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Will Mr. Quinn send to the committee a copy of the correspondence, documentation and communication?

Mr. Maurice Quinn:

No problem. On the point about an apparent contradiction between Mr. Fitzpatrick's advice and that of the Air Corps, in fact they are quite similar. The advice of the Air Corps, which I do not have in front of me to quote, was that given the age of the aircraft and the mileage on it, there was an increased likelihood that further significant maintenance would be required. Notwithstanding this, it made the request that the jet be retained.

David Cullinane (Waterford, Sinn Fein)
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Will Mr. Quinn provide the committee with the full transcripts of what it provided to the Department? Whatever about there being similarities, the judgment the Air Corps made, with respect, was to hold on to the aircraft and not to sell it. That is the point.

Mr. Maurice Quinn:

Yes, I was quoting from the-----

David Cullinane (Waterford, Sinn Fein)
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No contemporaneous cost-benefit analysis was carried out by the Department or the Defence Forces on the issue. That is the point. We want as much as possible of the information the Department and the Defence Forces had at the time. We probably should have had all this, but we want it now because we did not have it in advance of the meeting.

Seán Fleming (Laois, Fianna Fail)
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Will Mr. Quinn be able to supply the information to the committee in due course?

Mr. Maurice Quinn:

Whatever is required.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Did the Comptroller and Auditor General have the information?

Seán Fleming (Laois, Fianna Fail)
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Yes he did, but it is up to the Department to supply it directly to us and not through Comptroller and Auditor General. It would help our understanding.

Mr. Maurice Quinn:

We will have to look at the correspondence and apply normal rules to it-----

Seán Fleming (Laois, Fianna Fail)
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Of course the Department will have to see what is in the file.

Mr. Maurice Quinn:

-----but there should be no difficulty with it.

Seán Fleming (Laois, Fianna Fail)
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It would assist the Committee on Public Accounts to understand what went on if we had sight of the various views expressed on the matter.

Mr. Maurice Quinn:

To return to the point being made, I return to the circumstances in which we found ourselves, which was an emergency. We had an aircraft on the ground in the situation it was. We had the potential for significant costs. We had costs realised we had to negotiate downwards. All these circumstances informed the decision and the decision flowed from this.

Catherine Connolly (Galway West, Independent)
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I intended to ask a question about obsolete stocks tied in with the issue of spare parts. The figure for obsolete stocks jumped from €4.9 million to €8.2 million. Will Mr. Quinn talk to us about this?

I am caught on spare parts where the glib - I will take away that word - where there were new parts. It was nearly 50% of them. There was no certification. When I left in a hurry, Mr. Quinn was saying that certification costs money.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
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Can he elaborate on those two aspects for me? I will then come back to the interdepartmental report, very briefly.

Mr. Maurice Quinn:

We have a very significant inventory holding in the Department of Defence. It is the biggest in the State. Our main objective is to ensure that we have the right inventory for the Defence Forces at hand when they need it in an appropriate quantity, which means not too much and not too little. We have done a huge amount of work on that. Senior management resources and teams work on how we are managing our inventory to drive as many savings as we can to get the right levels. One will always have a situation in the military where there is inventory that is never used. That is because we are a contingent capacity on behalf of the State. There is a whole range of scenarios to which the military must be in a position to respond. As such, inventory is not managed like stocks in a commercial process where one is trying to move stuff off and make a return on it. We come at inventory from a very different space. Because of all the work we have been doing on that in recent years, one can see a spike in the inventory for 2015 in the amount of write-offs where we have had obsolete or slow-moving stock. That is an overhead on us.

Catherine Connolly (Galway West, Independent)
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What level of obsolete stock is that, or what percentage?

Mr. Maurice Quinn:

Our overall stock holding is €207 million at the moment. It is whatever that €5 million is as a percentage of €207 million.

Catherine Connolly (Galway West, Independent)
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It is €8.2 million.

Mr. Maurice Quinn:

I will just make sure I have the right figures. It is approximately 4%.

Catherine Connolly (Galway West, Independent)
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It is the big jump from 14 points to 15 points that is the problem. There is a big jump of four points.

Mr. Maurice Quinn:

Correct. We put together a team, mostly military, to focus on getting better management of our stores and to get stuff that was obsolete and there for a long time out and moved on. Really, it was about driving out ongoing savings to put into the current equipment of the Defence Forces. That was stuff that was in store which needed to be moved on.

Catherine Connolly (Galway West, Independent)
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Tying that to the spare parts, how can there be spare parts for which there is no certification? I note that 50% of them were bought new.

Mr. Maurice Quinn:

There was no intention to be glib earlier. The point I was trying to make was around the redundant nature of the spare parts.

Catherine Connolly (Galway West, Independent)
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At the point where the jet was being sold.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
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I am talking about spare parts that are there to the value of €1.4 million when that goes down to €53,000. We have said all this and I will not repeat it. What I am trying to get at is why there was no certification.

Mr. Maurice Quinn:

As I understand it, one has a part on an aircraft which is taken off and replaced. It even happens with engines sometimes where one has a loan engine on an aircraft. One takes the part off and it then has to be worked on to be brought up to a standard where it can be put back on the aircraft.

Catherine Connolly (Galway West, Independent)
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But 50% were new.

Mr. Maurice Quinn:

Correct, but the more minor ones were new.

Seán Fleming (Laois, Fianna Fail)
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When we say "new" does that mean "unused" or "new"?

Mr. Maurice Quinn:

That is my understanding.

Seán Fleming (Laois, Fianna Fail)
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Unused.

Mr. Maurice Quinn:

Unused, notwithstanding that it might have been bought eight or ten years earlier.

Seán Fleming (Laois, Fianna Fail)
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It could have been on the Defence Forces' shelves for eight or ten years.

Mr. Maurice Quinn:

Correct.

Seán Fleming (Laois, Fianna Fail)
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Mr. Quinn is calling them "new" because they were not used, but they could have been several years old. One could not just put them on an aircraft without testing them.

Mr. Maurice Quinn:

That is right.

Seán Fleming (Laois, Fianna Fail)
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A lot of this was old stock that had never been used and was sitting there.

Mr. Maurice Quinn:

The Chairman is right. Only a small percentage has been bought new since 2011.

Catherine Connolly (Galway West, Independent)
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So, the certification would have been there at some stage when it was bought originally. Mr. Quinn is saying ongoing certification is needed.

Mr. Maurice Quinn:

Yes. Again, I am not an aviation engineer-----

Catherine Connolly (Galway West, Independent)
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Somebody might be, of all the gentlemen over there.

Mr. Maurice Quinn:

-----but we have certainly done a huge amount of research on this in preparation for today's meeting. Before one puts a piece onto an aircraft, whatever work needs to be done must be done and it is done on a just-in-time basis. One would not do it on an ongoing basis. When we did not give certificates, we also did not want any liability attaching to the State for the parts. That is where there was an as-seen basis of sale.

Catherine Connolly (Galway West, Independent)
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At this point I think I will leave this theoretical €1.4 million in spare parts that just becomes €53,000 because we have gone through it. However, the point has been made. I am not happy with that. The interdepartmental group was established prior to the sale of the jet.

Mr. Maurice Quinn:

No.

Catherine Connolly (Galway West, Independent)
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Afterwards.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
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Was it set up in January 2014? It is over two years.

Mr. Maurice Quinn:

Yes.

Catherine Connolly (Galway West, Independent)
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It met five times and the last time was in February. I do not wish to prejudge anything we are going to say about Project Eagle, but it seems to be the same lack of analysis. I do not know whether there is something in the air in that we have Project Eagle and are now talking about a jet. The Department was under pressure and it sold the jet off. It had no other option. Separate from that we have a parallel issue. There is an interdepartmental group set up with no meetings since last February. I understand that Mr. Quinn says the Department was under pressure and that other things were happening last year, but it does not strike me that somebody is taking this seriously, learning from it and coming in to say "Sorry". In fact, Mr. Quinn is not quite saying "Sorry" because the Department disagrees with the Comptroller and Auditor General although it agrees it should have recorded this better. I appreciate that acknowledgement. In circumstances where there was no meeting since last February, however, we are not giving the person out there listening a sense that we have looked at this, we were under pressure, we have learned from it and we are changing. That is what people just want.

Mr. Maurice Quinn:

The ministerial air transport service has continued to be provided using the Learjet-----

Catherine Connolly (Galway West, Independent)
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We are talking about cost.

Mr. Maurice Quinn:

-----to the extent that can be managed. In terms of learning, I do not know if we will ever find ourselves in such an extraordinary set of circumstances again.

Catherine Connolly (Galway West, Independent)
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I am talking about the interdepartmental group meeting and coming up with a report.

Mr. Maurice Quinn:

I beg the Deputy's pardon.

Catherine Connolly (Galway West, Independent)
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There is no sense of urgency from last February.

Mr. Maurice Quinn:

That report is not looking at anything to do with the issue on which the Comptroller and Auditor General has reported. It is looking out into-----

Catherine Connolly (Galway West, Independent)
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It is looking at options for cost-effective transport for the State.

Mr. Maurice Quinn:

No. To clarify, the group is looking at the range of services that might be required. As I was saying, it is things like looking at European capitals, their distance from Dublin and all of that.

Catherine Connolly (Galway West, Independent)
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I understand that, but ultimately we are looking at the most cost-effective service for the State in terms of air transport for the Government. It is essential we find that out quickly so why are they not meeting?

Mr. Maurice Quinn:

We know the cost of the existing service provided by the Learjet.

Catherine Connolly (Galway West, Independent)
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What is it?

Mr. Maurice Quinn:

It costs an average of €3,700 per hour to fly the Learjet. We know that and it is all the sunk costs in the Learjet. What we are looking at for the future are the services that will be required by the State in the broadest context-----

Catherine Connolly (Galway West, Independent)
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What is the weekly cost?

Mr. Maurice Quinn:

-----and, if the Government decides it wishes to have an independent means to get on and off the island, what is the best means of doing it.

Catherine Connolly (Galway West, Independent)
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What is the annual cost of that €3,700 per hour?

Mr. Maurice Quinn:

I will have to------

Catherine Connolly (Galway West, Independent)
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That is fine. Mr. Quinn can come back to us.

Mr. Maurice Quinn:

It depends on the number of flying hours, of course.

Catherine Connolly (Galway West, Independent)
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The Department might give us the flying hours for 2016 or 2015.

Mr. Maurice Quinn:

I will get them out for 2015 and pass them on.

Seán Fleming (Laois, Fianna Fail)
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If the number of hours goes up, the cost per hour goes down.

Mr. Maurice Quinn:

Correct.

Seán Fleming (Laois, Fianna Fail)
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So for 2015, give us the range depending on the hours travelled. Give us the actual outturn for 2015 or 2016, as the case may be, but also provide us with the range, that is, had it flown an additional 500 hours, what the average cost would have been in that case.

Mr. Maurice Quinn:

Certainly.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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For information purposes, I seek information on recruitment to the Naval Service and the Army expressed as a percentage and in numbers. Can personnel in the Naval Service or the Army transfer from one to the other?

Mr. Maurice Quinn:

While the material is being prepared, I will answer the second question. There can be movement between the services and there is an element of that. It is managed within the military.

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I have a reason for asking this. I am trying to get one person transferred but I cannot. The person has asked to be transferred but it is not being done.

Mr. Maurice Quinn:

There is movement but it depends on the circumstances and I do not have all of the criteria. The other question is-----

Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Between Naval Service and Army personnel, what are the percentages and the absolute numbers? What way do they add up?

Mr. Maurice Quinn:

There are 7,453 in the Army, 714 in the Air Corps, and 1,061 in the Naval Service.

Alan Farrell (Dublin Fingal, Fine Gael)
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What is the expenditure limit on the maintenance of the Learjet 45?

Mr. Maurice Quinn:

I will have to revert to the Deputy with that.

Alan Farrell (Dublin Fingal, Fine Gael)
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What age is that aircraft and what is the life expectancy of such aircraft in the care of a military organisation?

Mr. Maurice Quinn:

It has a much lower range and lower capacity to carry people. It was put on the books in 2003 at a cost of €9.9 million. It now has an estimated nominal life of six years left.

Alan Farrell (Dublin Fingal, Fine Gael)
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In effect, in order for the Defence Forces to maintain the Ministerial Air Transport Service, MATS, this State, or rather the Minister and the Oireachtas has about four years to make a decision, and a couple years to acquire a suitable replacement for what the Defence Forces currently has. The Department of Defence is currently scoping the best option for the State to continue the MATS.

Mr. Maurice Quinn:

That is correct.

Noel Rock (Dublin North West, Fine Gael)
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I have a few questions following on from what came up in my own questioning and what came up from others. Is 60 hours to 70 hours the correct number for hours that were being flown in the final years of the Gulfstream jet?

Mr. Maurice Quinn:

That would be for ministerial air transport, but of course it would have other uses such as inter-hospital transfers, training and so on as well.

Seán Fleming (Laois, Fianna Fail)
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How many trips was that?

Mr. Maurice Quinn:

Sorry, that was the number of missions. It was 61 missions.

Noel Rock (Dublin North West, Fine Gael)
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Would the number of hours that were being accrued be sufficient to have an airworthiness certificate or would it have been the case that the plane was being used so sparsely that it would have had to have flown on its own, in effect, in order to reach the number of hours for an airworthiness certificate? That is to say, was it being used to its potential minimum utility as a vehicle?

Mr. Maurice Quinn:

Yes. The pilots themselves would have to have a minimum number of hours to stay rated on the aircraft as well.

Noel Rock (Dublin North West, Fine Gael)
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So there would have been extra hours to top them up to a minimum point. That would indicate that the jet was not being used a huge amount. I presume that would factor into future thinking too.

Mr. Maurice Quinn:

The Learjet 45 is being used significantly at the moment, because it is the only service that is available. I have the number of missions but I will send on the number of hours.

Seán Fleming (Laois, Fianna Fail)
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And the average hourly rate as well.

Mr. Maurice Quinn:

I will send the cost.

Noel Rock (Dublin North West, Fine Gael)
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I thank Mr. Quinn for that. I want to take a walk through the figures to give balance to the sensationalist insurance figure that is being presented to the committee with a flourish. Mr. Quinn might walk through them with me if he does not mind. The amount received is €418,000, plus the €53,000 for parts. That in itself comes to €471,000. The immediate maintenance cost was €1.34 million, and if I am not mistaken, it was €1.8 million with the relevant certifications to get it back out of there and up in the air again. Am I correct there?

Mr. Maurice Quinn:

The €1.34 million was to have it capable of flying on the State register as a State aircraft. The €1.8 million would be to have it certified on the American civil aviation registry.

Noel Rock (Dublin North West, Fine Gael)
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So it would cost €1.8 million if it were to be for sale, perhaps.

Mr. Maurice Quinn:

That would be for it to fly in the United States. There was certain military equipment that would have been taken off and the certification process in the United States is really expensive. Every single nut and bolt has to be gone through and tested and so forth.

Noel Rock (Dublin North West, Fine Gael)
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Let us take the Federal Aviation Administration figure of €1.8 million and we will add that to the amount received, so we come to €2.271 million. Then we have the engine repair in 2018 and 2019. The figure given to The Irish Timeswas €2.5 million or thereabouts, so we will add that to the €2.271. We come to €4.771 at this point. If we were to add the annual maintenance costs for 2015 and 2016, which comes to an average of about €300,000 to €350,000, but with a ceiling of €400,000 generally - let us take the €400,000 for the sake of fairness - that would come to a figure of €5.57 million. Compare and contrast that with the insurance certificate which was presented here with a flourish. The cost for that was $5 million, and we will subtract about 5% since the exchange rate is not great right now, so that is about €4.75 million. I have spoken to people in the aviation industry, and there would be two things in the insurance that would inflate the value of insurance on the certificate to take into account. One would be the lost profit element to the company and the other would be the slight inflation between the list price received for the aircraft and the insure price to the aircraft. Much like with insurance on a car there would be a discrepancy there. It tends to be about 5% as well. Ultimately, if I am not mistaken, the course of action that Mr. Quinn took saved the State money. Would that be a fair assessment?

Mr. Maurice Quinn:

I think it would, particularly within the policy parameters with which we were working. We definitely deflected further cost from the State.

Noel Rock (Dublin North West, Fine Gael)
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I completely agree. That insurance certificate, which was presented to the committee, was designed to generate an unfair headline in terms of financial figures. If one was to take a listed aircraft of the same specification - a newer aircraft from 1994 currently advertised online for example - with new engines, it would still come to below $5 million in sale price. Therefore, we need to be very careful in the comparisons and fair to Mr. Quinn in the comparisons, in that there were extremely extenuating circumstances, and he took a decision in real time, and I think that it should be reflected on the record that decision was fair and beneficial to the State. Would Mr. Quinn agree with that?

Mr. Maurice Quinn:

Yes.

Seán Fleming (Laois, Fianna Fail)
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That is fair enough.

Noel Rock (Dublin North West, Fine Gael)
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It is good to have balance in these things.