Wednesday, 7 March 2012
Public Service Contracts
Question 5: To ask the Minister for Communications; Energy and Natural Resources if he has received a report on the safety record of Balfour Beatty which has been awarded the maintenance contract for Bord Gáis; and if he will make a statement on the matter. [13108/12]
I have received two reports on the safety aspects of Bord Gáis's award of a contract to the Balfour Beatty-CLG joint venture. As I have no direct role or responsibility in a tender process or contract award by a commercial semi-State company, the focus of my scrutiny in this instance is to ensure both BGE and the Commission for Energy Regulation have carried out their duties appropriately and effectively and that their respective assessment processes have been robust.
I have received a report from Bord Gáis whose management and board have a legal and fiduciary responsibility to ensure compliance with both procurement and safety requirements. I have also received a report from the regulator which has the statutory responsibility of regulating the activities of natural gas undertakings with respect to safety. The Bord Gáis report advises that the safety incidents previously highlighted by the Deputy, some of which date back ten to 15 years, should be seen in the context of the scale of the Balfour Beatty Group which employs over 270,000 people and has 163 subsidiary companies. The report provides safety statistics for Balfour Beatty Utility Solutions and CLG Developments Limited which are the partner companies in the joint venture. Bord Gáis considers that these compare favourably to UK and Irish construction industry statistics. The report advises that following a rigorous assessment process, Bord Gáis is satisfied that the Balfour Beatty-CLG joint venture is fully qualified to undertake its obligations to the high safety standards demanded by Bord Gáis Networks.
The regulator's report advises that, following a detailed evaluation of the change to the Bord Gáis safety case on foot of the new network services and works contract, the regulator has accepted the change and that a further verification process is in place, including audits and inspections by the regulator, to ensure the change is managed effectively.
My officials are assessing both reports together, with additional clarifications subsequently received, and will forward their own assessment to me shortly. In the interim and as I have no direct responsibility in the award of the contract in this instance, I have asked Bord Gáis to write directly to the Deputy on the issues he has raised.
The last time I raised this issue with the Minister, he asked that I forward the evidence I had available, which I did. The Minister of State, Deputy O'Dowd, asked that I do the same and I also forwarded it to him and the regulator. I am not certain that enough attention has been given to the safety aspect of the matter. The Minister has mentioned that the issues I have raised date back ten years; some of them do, but I refer, in particular, to issues which arose in 2008 and 2009. In 2008 Balfour Beatty was fined £2.25 million sterling after it had been charged by the British Serious Fraud Squad and found guilty of false accounting. In 2009 it was fined £5.2 million sterling by the Office of Fair Trading for engaging in corrupt practices in securing construction contracts.
In the light of this how can Balfour Beatty be deemed to be in compliance when it is not in compliance with paragraph 3.9 of the Department of Finance's guidelines which reads: "Candidates or tenderers who have been convicted of involvement in organised crime, fraud, corruption or money laundering must be excluded from performing a public [service]"? How can Balfour Beatty be deemed to be in compliance in light of the convictions in 2008 and 2009?
We are talking about the serious issue of safety in the gas system. I have set out for the House the statutory responsibilities in that regard. I take the allegations made by the Deputy very seriously and acted on them after he had brought them to my attention when I last answered questions at Question Time. I have since received the two reports to which I referred, one from Bord Gáis and the other from the regulator whom I am not in a position to second guess. I have indicated why the regulator is satisfied that the company, despite the blemishes on its record, to which the Deputy referred, is competent, qualified and has a track record to deal with the functions allocated to it in this contract. It is a company which has 270,000 employees and 163 subsidiary companies. It operates and provides these services across Europe. That is the advice available to me and I have no reason to second guess the regulator in that regard.
I refer to the criminal conviction guidelines of the Department of Finance which provide that if somebody has been convicted of fraud, that person is precluded from participating in a public contract. It is clear that Balfour Beatty was fined £2.25 million sterling in 2008 after it had been charged by the British Serious Fraud Squad and found guilty of false accounting, yet it has now been awarded this contract. I understand all of this is the subject of a court case that is pending, but the guidelines of the Department of Finance do not allow a company with a fraud conviction to be awarded a public contract. Therefore, the awarding of the contract contradicts the guidelines. The Minister referred to safety and the number of employees in this group, but it has these convictions against it. There are convictions dating back ten or 12 years, but these were made in 2008 and 2009. I, therefore, ask the Minister to investigate the matter.
I do not know about the allegation of false accounting, but if the matter is still before the courts, we should let it make its decision. I repeat this is a transnational company which has 163 subsidiaries. I do not know if any of the persons involved in the false accounting alleged has anything to do with the company involved in the joint venture in the provision of services here, but on the question of false accounting - I have written to the Deputy about the other matters he raised with me-----