John Gormley (Dublin South East, Green Party)
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Question 136: To ask the Tánaiste and Minister for Health and Children the basis of the PPARS and FISP contracts; if she was advised of difficulties with these systems when she first took office; the steps she took to deal with these issues; and if she will make a statement on the matter. [28963/05]

Liz McManus (Wicklow, Labour)
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Question 199: To ask the Tánaiste and Minister for Health and Children the steps she will take to establish responsibility for the huge waste of public money involved with the PPARS and FISP computer system; if she is satisfied with the level of supervision exercised by her Department over the project; the measures she will take to ensure that taxpayers get better value for the money spent by her; and if she will make a statement on the matter. [28779/05]

Mary Harney (Dublin Mid West, Progressive Democrats)
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I propose to take Questions Nos. 136 and 199 together.

In 1995 a steering group composed of representatives of the health boards was formed to modernise and reform payroll and personnel systems. In 1997, the CEO group sought funding from the Department of Health and Children to support work on the project and to proceed with the implementation of a new system. In 1998, a sum of £7 million was provided to assist with the implementation of the system during the years 1998-2000. In addition, the Department requested the health boards to supplement new capital where necessary with their existing resources, including locally generated funds from the sale of surplus assets.

In 2001, following shared concerns between the CEO group and the Department, a quality assurance review and investment appraisal was commissioned on the project. This was carried out by Hay Management Consultants and it stated that the project should proceed but that the original costing had been understated. In March 2002 it set the revised costs at €107 million and underlined the need to manage the risks of the project by the health boards. In May 2002, the Department wrote to the health boards indicating that national coverage was an essential element and, given the escalation in costs, that the project would have to have assertive negotiations with suppliers and ensure vigorous project management arrangements.

In 2004, due to concerns regarding the consultancy and staff costs, an independent review was commissioned and carried out by Gartner. While this concluded that the costs were within industry norms, it was nevertheless a very high and significant cost. The Department raised those issues with the health boards and urged all parties involved to ensure best value for project expenditure and indicated that significant discounts should apply on such a large project. In reply the health boards indicated that significant discounts had been obtained and that factors such as the scale of the programme, organisational complexity, level of variances between agencies and so forth significantly contributed to the cost of PPARS.

The basis of the PPARS and FISP contracts are as follows: PPARS — SAP Software licences and annual maintenance; IBM — managed service contract, technical consulting contract — these two contracts also covered the FISP project; Deloitte Consulting UK — programme management, business process design, change management — this contract was the per diem rates — no fixed overall contract price.

The FISP contract is based on fixed price with payment by results, that is, production of project deliverables at defined milestone date. Deloitte is the primary contractor. IBM is the technical implementation partner — subcontractors to Deloitte.

In January 2005, the HSE became a statutory authority with its own vote, with new governance structures and arrangements. As soon as major difficulties with the project were brought to my attention, the Secretary General of my Department met with the HSE and the Department of Finance. This meeting led to the establishment of a review of the system by the HSE and to the decision of the HSE of 6 October 2005.

The roll out of the PPARS project to other areas of the country has been suspended by the HSE pending further examination. The HSE is setting up a group to establish the long-term value of PPARS by developing a business case to show the full lifetime costs of the project over the next five years, to evaluate any other options to deliver on the HSE's requirement of an integrated payroll/HR management system and to determine the most cost effective and efficient option for the HSE. The Comptroller and Auditor General is carrying out a value for money examination of the PPARS project, which is expected to look at issues such as the development, governance and management of the project.

The appropriate steps have, therefore, been taken at this stage. With regard to the financial information systems project, FISP, the HSE has also decided to pause this project and evaluate it further. Unlike PPARS, this project is at a much earlier stage of development.

The Government has decided on a number of new measures to improve the management of consultancies. The level of engagement of consultancies in any Department/agency will necessarily reflect their specific circumstances and the following measures have now been approved. In the context of the formulation of the 2006 Estimates, Ministers will review the financial provisions for consultancy and, in that context, will confirm that the guidelines are being applied in their Departments and that proposed expenditure is necessary. The Department of Finance has been asked to review existing guidelines on the commissioning and management of consultancies to ensure that they accord with best practice and the Government is instructing Secretaries General/Accounting Officers to certify compliance with the terms of the guidelines in respect of major projects.