Written answers

Tuesday, 19 June 2012

Department of Finance

Public Procurement Contracts

8:00 pm

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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Question 192: To ask the Minister for Finance if he will provide the procurement process that was followed by his Department in the selection of Deloitte to undertake the external review of the €3.6 billion accounting error in his Department. [29043/12]

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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Question 193: To ask the Minister for Finance if he will confirm if any oral instructions were given to Deloitte when they were awarded the contract to complete the external review of his Department's €3.6 billion accounting error; if he will publish the terms of reference, engagement letter, brief provided to Deloitte. [29044/12]

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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Question 194: To ask the Minister for Finance if he will provide a breakdown of the total cost of the Deloitte external review into the Department €3.6 billion accounting error; and in addition to provide the hourly rate charged by the senior partner working on the external review. [29045/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 192 to 194, inclusive, together.

The Deputy will recall that when the matter of the EUR 3.6 bn statistical error was discussed in the Dáil on 2nd November of last year, I indicated that an external review of systems in the Department of Finance, the National Treasury Management Agency and the Central Statistics Office would be undertaken. It was envisaged that this external review would be separate, but related, to a review of the issue to be conducted internally by the Department of Finance. Given the urgency of this investigation, combined with the specialised nature of the matters to be covered by the review, the Department did not publicly advertise by tender. Instead, as provided under the 2004 National Procurement Guidelines - Competitive Process, the direct invitation to tender approach was used where an invitation is made directly to suppliers deemed appropriately qualified for a particular project.

As provided under this approach, contact was made with a number of individuals who were deemed to have the necessary expertise to conduct the work covered by the Terms of Reference on an urgent basis. It was not possible to secure quotations from these individuals apart from the person contacted in Deloitte who indicated that their preference would be to undertake the work on foot of a contract with the firm. Deloitte submitted an initial estimate for the work at a fee of EUR 135,050 (excluding expenses and VAT) which was subsequently reduced through negotiations to EUR 50,000, excluding expenses and VAT, provided that expenses cannot exceed 10% (EUR 5,000) of the cost quoted for the work which constituted a fixed price paid on completion.

Deloitte undertook the work in accordance with Terms of Reference which are attached. I understand that separate oral instructions were not given to Deloitte when they were awarded the contract. I am informed that because the engagement with Deloitte was not a 'time and rates' contract, but rather a fixed fee arrangement irrespective of how long the work took to complete, the question of an hourly rate does not arise.

The final cost of the work undertaken by Deloitte comes to EUR 61,552.77 which consists of the agreed fixed fee of EUR 50,000 plus miscellaneous expenses of EUR 42.90 giving a total net fee of EUR 50,042.90 which comes to EUR 61,552.77 with the addition of 23% VAT of EUR 11,509.87. The invoice for this work is currently in the process of being paid by my Department.

Terms of Reference for External Review

· review the respective roles of the Department of Finance, the CSO and the NTMA in the compilation of the General Government Debt figures;

· review the inter-action between all three organisations, including communications;

· drawing on the findings of the Internal Review, this process should summarise the reasons for the error with regard to processes, systems, staffing, and control issues; (Individual personal performance is excluded from scope), and

· making recommendations, if any, to (for example ):

o improve the inter-action between the three organisations, including the development of a communications protocol for all three organisations;

o clarify and, if appropriate, reallocate the responsibilities for the compilation and reporting of the General Government Debt;

o restructure the systems and work flows/responsibilities within the relevant areas of each of the three organisations;

o identify system wide issues in this regard for more general applicability; and

o recommend appropriate checks and balances to enable mistakes to be picked up in the system.

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