Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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50. To ask the Minister for Public Expenditure and Reform his views on whether public procurement processes are fit for purpose in view of the cost overruns at the national children’s hospital; and if he will make a statement on the matter. [10581/19]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I also want to discuss public procurement and the lessons that we may learn from the debacle of the national children's hospital. Has the debacle of going from an initial estimate of €400 million to an initial bid agreed for just over €600 million, all the way up to €1.7 billion or is it €1.4 billion or €2 billion, given the Minister pause for thought about the procurement process and whether we know how to scrutinise bids and how to do public procurement? Has it given him pause for thought, God forbid, that we might consider setting up something like a State construction company that might do this in a better, cheaper and more efficient way?

Paschal Donohoe (Dublin Central, Fine Gael)
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The latest review of the public sector spending code is currently under way in my Department. The technical economic parameters for use and appraisal have already been updated. Work is ongoing in updating the requirements as to the different stages involved in the process of selection, appraisal, approval and delivery of capital investment projects. This work will be done with the end of this quarter.

I already have outlined to the House and to the Deputy the different changes that I want to see happen with regard to procurement policy for very large projects. It is the case that the majority of projects we deliver within the State, all the way up to large projects, are delivered on budget and on time.

The Deputy made the point to me about a State construction agency. We already have in different parts of our economy or by policy area, bodies that are charged with the delivery of infrastructure projects. Transport Infrastructure Ireland, the National Transport Authority, NTA and Irish Water are semi-State bodies. There is a whole variety of different Government bodies, all of which deliver the majority of projects well inside their particular policy areas. That is why I am so frustrated with where we ended up on the national children's hospital.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Can I ask a simple question? Is profit included in the bid process? I presume BAM or anybody else would require a profit margin. Are these things examined? Does the Minister look at how its bid might compare with what the Government would do if the State did this work directly and did not require the taking of a profit and whether that would work out cheaper and better?

When bids come in and, as in this case, the lowest bid is €170 million less than the next bid, does anyone say that perhaps we should probably take a look at this? If it was a difference of €10 million, €15 million or €20 million, one might think there was not too much to look at but when the difference between the lowest and the next highest bid is €170 million, somebody might suggest scrutinising in detail all the line items to see whether this bid was credible.

Paschal Donohoe (Dublin Central, Fine Gael)
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One point on which I am absolutely certain is that if we had found ourselves in a position where we had accepted a more expensive bid for the national children's hospital, we would now be facing many different charges regarding why that happened. Had the National Paediatric Hospital Development Board, the body that made the decision, decided to go ahead with a bid that was not the cheapest, I would now be facing questions about that as well. I am well aware of the public anger and disappointment with what went wrong with this hospital and we will do better on projects of that scale like that in the future, because we do very well on many other infrastructure projects for which we are responsible.

If I am going to take credit for what I believe we can do well, I will take responsibility for what goes wrong as well. That is the way I have handled this. I am under no illusion that if we had gone ahead with a project tender that was more expensive than the lowest one, then the Deputy would be raising that with me here today.

Pat Gallagher (Donegal, Fianna Fail)
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I am anxious to facilitate others. I call Deputy Boyd Barrett.

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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That is not the question the Minister was asked.

Paschal Donohoe (Dublin Central, Fine Gael)
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I answered the Deputy's question.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I find it interesting that when doing this, it is completely outside the realms of consideration for the Minister to contemplate whether the State should do things directly itself. It would not require a profit motive, potentially would be able to get things cheaply in bulk and would be able to borrow money more cheaply. There are all sorts of possibilities as to why the State, when directly constructing projects might end up with a considerably cheaper cost. Moreover, there might be better oversight of it because there are layers upon layers when dealing with outsourced projects to the private sector.

Somebody who worked in industry, not particularly a socialist incidentally, made another point to me. He said that in his experience, the main contractor gives a certain price but is getting a much cheaper price from the subcontractor and is loading on the profit margin for the job. If one went to the subcontractor, who ends up doing the work in any event, before the main contractor went directly to them, one would find a much better price.

Then there are issues such as quality. How forensic is the comparison between tenders?

Pat Gallagher (Donegal, Fianna Fail)
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I am allowing Deputy O'Brien a short supplementary question.

Jonathan O'Brien (Cork North Central, Sinn Fein)
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I disagree with the Minister's point that if he did not go with the lowest price, he would be criticised. If we had followed the legislation and had analysed the lowest bid and could prove that it was unable to fulfil the contractual obligations for that price and if the bidder was disqualified on the basis, I do not see how anybody could have criticised the Minister in such a scenario.

Paschal Donohoe (Dublin Central, Fine Gael)
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We will have to agree to differ as to what might have happened. I have not come across a case yet where if a Government body had been involved in not selecting the lowest price option, that this would not have been a cause of scrutiny and questions here. I believe that would have happened in respect of this project as well.

As to what Deputy Boyd Barrett has put to me and the early part of his question that I did not have the opportunity to answer, we have many situations in which the State directly builds projects itself. He should look at local authorities that are directly involved in building houses and our commercial semi-State sector that is directly involved in delivering infrastructure projects and the Office of Public Works, which is directly involved in building flood relief programmes.

I am unsure of where the Deputy is getting the view-----

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The housing projects are not built directly.

Paschal Donohoe (Dublin Central, Fine Gael)
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-----from that we have ruled out the State delivering projects, given that it does and we are supportive of doing that. I remind the Deputy that the one time we tried to set up a new State body whose only job it was to deliver infrastructure, that being Irish Water, he fiercely opposed it.

Patrick O'Donovan (Limerick County, Fine Gael)
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The Deputy opposed it.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The councils were already doing that work.