Thursday, 7 February 2019
Ceisteanna Eile - Other Questions
Infrastructure and Capital Investment Programme
15. To ask the Minister for Public Expenditure and Reform the way in which his Department monitors expenditure on large national capital projects; the way in which spending controls in relation to procurement and construction of these projects compare to other EU and OECD jurisdictions; and if he will make a statement on the matter. [1098/19]
The Minister, Deputy Donohoe, might remember a few months ago I asked him about procurement systems from the Department. We had been talking about the chief procurement officer in earlier questions. I note that in the previous Government, in May 2014, the National Paediatric Hospital Development Board recommended a derogation, in other words, a different two-stage approach to procurement. This is the context.
There is a budget oversight unit in the Department and there seems to have been a formal approach about that to the effect that there would have to be a two-stage procurement process.
Then there was another circular in January of 2016, also in the lifetime of the previous Fine Gael-Labour Party Government, and then, subsequently, a date in early 2017. Given the dangers of two-stage procurement, was this poor oversight and a crazy performance by the Department?
It does. I asked how does the conduct procurement for large projects. We were talking about the metro last week, for example. I am asking about two-stage procurement. The Minister already provided me with a short written answer about two-stage procurement, given that we know about building contracts in the past.
The role of my Department is in respect of the monitoring of overall expenditure by Departments. Of course, individual Departments play a key role in individual projects. The management and delivery of individual projects within the overall capital allocation is primarily the responsibility of the relevant sponsoring Department and Minister.
A public investment management assessment, PIMA, mission to Ireland was undertaken by the IMF in July 2017, which assessed our management of public capital resources compared with what would be expected in an advanced economy. Its final report was published on my Department's website on 10 November 2017.
The PIMA report concluded that, overall, Ireland manages its public infrastructure relatively well.
It highlights both strengths and weaknesses and contains a number of recommendations to improve future performance in terms of the efficiency of public capital investment. The national development plan, published in February 2018, sets out planned improvements for the management of capital spend, drawing in particular on the 2017 PIMA report.
More generally, in the context of the ongoing review of the public spending code, I will be giving consideration to how the current arrangements for procurement and management of major capital works contracts can be further refined and enhanced, with a view to maintaining and strengthening the focus upon value for money.
The Minister was asked how he monitors major procurement contracts. I looked at the agendas for the management board meetings and it appears that every quarter, there is an agenda item for high-level risks. During all the time the Minister, Deputy Donohoe, has been the Minister, surely there was feedback through the Department of Health that there was a high-level risk with the escalation and ballooning of costs for the national children's hospital. Surely this was brought to the Minister's attention way back in early 2018 or even in 2017 since the formation of the Varadkar Administration. Was the management committee not aware, for example, that there was a derogation on the two-stage procurement? Was the committee aware that a contractor would be doing the pile driving and so on but another contractor would be coming along with a totally separate bill for the building itself? Surely the management committee knew this was the case and that the procurement was not working. The Minister, Deputy Donohoe, has appeared before the Committee on Budgetary Oversight several times with regard to the budget. I have a motion down in the Dáil clár about this.
I have outlined to the House on a number of occasions the timeline upon which I and my Department became aware of the overspend. We have outlined the timing during which this happened from early November onwards and we have outlined the work the Department of Health has done to get to this point. Clearly there are learnings we have to look at in respect of the implementation of a two-stage procurement process. It appeared to be appropriate then for a project of this scale. Amidst the language the Deputy used, such as "grotesque failure", I hope he also would give recognition to all the projects, including within the Department of Health, that are built and that are making differences for communities and citizens at present, as well as those projects that are being built as we speak through procurement and tendering processes that have worked well.
Is it not the case that the Department of Health and the HSE knew in April 2018 at the latest that there was no figure for the guaranteed maximum price for the second stage of this procurement project? There was no figure and we did not know what figure we were facing. There seems to have been total disagreement between the national paediatric hospital's quantity surveyors and the building contractors, BAM. Surely we knew that the issue existed way back, possibly this time last year, and that we were facing some guaranteed maximum price the size of which we did not know. I recall the Taoiseach speaking first of putting €400 million to €650 million by for this project. Was it a mistake by the Government to put the Department of Public Expenditure and Reform back into the Department of Finance? Would it not have been better if the Minister, Deputy Donohoe, had simply been the Minister for Public Expenditure and Reform, and able to do his job-----
It was due to the integration of the Department of Finance and the Department of Public Expenditure and Reform that we have been able to move ahead on projects overall such as Project Ireland 2040. Because the two Departments are located under me as Minister, we are able to make integrated decisions on taxation and spending. We are able to look at the level of money we need to raise to deliver new projects or to continue to deliver on projects currently under way. We are able to make taxation decisions that fit into doing that. Deputy Broughan is quick enough to point to the failure of this project but I put it to the Deputy that we have many other projects across the State and many other decisions that have been made.
This project is a much-needed motorway. It can and will make a very big difference to commuters and citizens in the State. Other projects are going ahead successfully about which we never hear a word of recognition from Deputy Broughan.