COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 26 Jun 2003

Vol. 1 No. 24

Value for Money Examination - Purchasing of Tyres by the Garda Síochána (Resumed).

Mr. T. Dalton (Secretary General, Department of Justice, Equality and Law Reform) called and examined.

Chairman

I welcome everyone to the meeting. We are dealing with the Votes for the Department of Justice, Equality and Law Reform with particular reference to special report No. 5 on Garda interview recording systems and the value for money examination of the purchase of tyres by the Garda Síochána.

Witnesses should be aware that they do not enjoy absolute privilege and are apprised as follows: section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee's proceedings. These rights include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request the committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part, these rights may be exercised only with the consent of the committee. Persons invited to appear before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with the transcript of the relevant part of the committee's proceedings that the committee considers appropriate in the interests of justice.

Notwithstanding this provision in legislation, I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House, or an official, either by name or in such a way as to make him or her identifiable. They are also reminded that under Standing Order 156 the committee should refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policy or policies.

Mr. Dalton, will you, please, introduce your officials?

Mr. Tim Dalton

Thank you, Chairman. I am accompanied by Ms Sylda Langford, assistant secretary with responsibility for the child care, equality and disability unit of the Department; Mr. Ken Bruton, principal officer with responsibility for finance matters; Mr. Seán Aylward, Director General, Irish Prisons Service; Mr. Michael Culhane, Director of Finance of the Garda Síochána, and Mr. Noel Waters, Director, Reception and Integration Agency (Refugee Applicants).

Chairman

Will the officials from the Department of Finance, please, introduce themselves?

Mr. Michael Errity

I am a principal officer in the organisation and management division. I am accompanied by Mr. Cormac Carey, assistant principal, Mr. Billy Noone, assistant principal, and Ms Anne Keeley, assistant principal, from the public expenditure division.

Chairman

Mr. Ryan, with whom do you work?

Mr. Jim Ryan

I am from the Office of Public Works and work with the Government Supplies Agency.

Chairman

I ask the Comptroller and Auditor General to tell us about the value-for-money report on the purchase of tyres by the Garda Síochána.

Mr. John Purcell

The report sought to establish how the Garda Síochána had managed the purchasing of tyres in the period 1998-2000: if there had been a loss of economy in the purchasing arrangements; if the tendering and procurement procedures had accorded with best practice, and the level of control over payment for tyres. It recorded that there had been serious deficiencies in each of these three areas.

As regards economy, we established that the Garda had paid more than the contract price for tyres and that dearer tyres than those specified had been supplied on many occasions. The problem was compounded by the fact that there had been no checking of invoices against authorised price lists. This was against a backdrop where there had been inadequate evaluation of tenders which inevitably led to a situation where the State was not getting value for money for expenditure in this area.

Some members will recall that the committee last considered this report at its meeting on 8 January 2002 when it heard that the main supplier had been overpaid as a result of these deficiencies. Following an analysis of the available data, we estimated the overpayment at about £208,000. I stress that this is an estimate. It was acknowledged all around that it would be difficult to arrive at a precise figure. The internal audit unit of the Department has calculated its estimate at a higher figure while the company involved has calculated the amount at just over £100,000 but so far as I know the matter has not been finalised to date.

In large measure, the problem of securing closure is complicated by the fact that charges of preparing a false price list to support an analysis of tyre prices with intent to defraud have been brought by the Director of Public Prosecutions against a member of the Garda Síochána and two former employees of the main supplier. I note from the papers that the cases have been returned for trial to the Circuit Court.

On the last occasion the accounting officer referred to an investigation being carried out by the internal audit unit of the Department. At that stage it was hoped the unit's report would become available and shed further light on what had happened to enable the committee to conclude its examination but final clearance of the report is also affected by the court cases.

Aside from these outstanding matters, what has changed as a result of the report? Since the shortcomings were brought to light, tyres have been purchased more extensively from suppliers other than the main supplier, where prices are lower. I understand a new contract is expected to be signed soon, covering the supply and fitting of tyres to Garda vehicles on a fixed-price basis for a two year term. This follows an extensive tender competition and comprehensive technical evaluations. I can also confirm that the processing certification and payment of invoices are now subject to a much tighter control regime than was the case when the examination was undertaken and that there is much greater awareness within the Garda Síochána of the importance of managing the procurement process properly. From figures I received late from the Department, it is clear that there is one tangible benefit emanating from the examination - there was a significant reduction in both the volume of tyres purchased and expenditure in 2002 when compared with the figures for the three years 1998, 1999 and 2000.

Although some questions remain to be resolved, it is good to report that there have been positive outcomes in propriety and value for money terms.

Mr. Dalton

I gave the committee a prepared statement late last night for which I apologise. It was a little rushed. I would prefer to go through it as I know there are items on which I need to expand.

The Comptroller and Auditor General has outlined the background which we discussed at some length when I last appeared before the committee. Regarding what has happened since, a Garda sergeant and two people in the tyre company concerned are facing charges before the courts. This imposes certain constraints on what we can say in that it might be prejudicial. I merely mention this, I am not saying the committee should not discuss the matter. A total of 23 charges of breaches of discipline have been laid against five Garda members - a superintendent, two inspectors and two sergeants. My statement indicates that the case involving the superintendent has been decided but the others remain outstanding.

On the last occasion I appeared before the committee I suggested that the figures contained in the auditor's report might need further examination. I am glad he has acknowledged that the extent of use of tyres is reasonably acceptable; in other words, the figures included in the report probably understated the mileage the Garda was achieving from tyres. Over the period of use under consideration they were not far off the norm in respect of which we looked at figures from other jurisdictions. This is not to say the wrong tyres were not delivered. Tyres which were too expensive were delivered. It is not to say also contract prices were not departed from. They were but this was not checked, although there is a dispute about the correct contract prices.

One of the core remaining issues relates to exactly how much money was lost. It may well be the case that when all of the figures are worked out, the loss may not have been enormous. If it is the case that the use of tyres was not excessive - in some instances there was excessive use - and if on one occasion the company involved did give notice of a tyre price increase, even if it did not follow all of the appropriate procedures - it might be very difficult to sustain a legal action against it. I am not saying it is a hopeless case but on one occasion the company did give notice of a price increase as it was entitled to do under the contract. While it did not give notice to the Government contracts committee, it gave it to the Garda. It gave us a net credit note amounting to €129,000 to cover the loss as it estimated it. We did not accept this estimate but the amount has since been set against money owed to it. This has been done without prejudice to the eventual outcome of the case. The State is in pocket for the €129,000 or something around this. We continue to leave the company short to this approximate amount for subsequent supplies.

One point I probably did not bring out sufficiently clearly on the previous occasion, but which I think I should, is that the Department has nothing to do with the tendering process in these situations. We get sanction and the Garda operates the procedures. We do not have a dual structure operating inside the Department for supervising what the Garda does on issues of this nature, nor should we. I understand the Department of Defence has been criticised for having dual structures in operation. We have not had them for the Garda for years; the Garda has operated with significant delegated sanctions. I say this not as an excuse for what happened in this instance but by way of explaining how the system works.

I am not criticising by merely stating what was involved, in the case of each of the bodies on whose behalf the Government Supplies Agency handled contracts, discretion was substantially left with the body concerned. In other words, no preferred supplier was selected. It was up to the body concerned to select from authorised suppliers.

The GSA is taking a different approach in regard to future tyre contracts. I know that another supplier will be recommended as a result of the process in which it is now engaged. As the Comptroller and Auditor General said, since this incident happened, there has been a significant reduction in the proportion of tyres purchased from Advance Pitstop from which more than 90% of supplies had been sourced. This figure has fallen significantly to slightly more than half. Obviously, this will change when there is a new contract.

As the Comptroller and Auditor General said, a number of corrective measures have been taken. Responsibility for certification and handling of invoices and payments for extras has been transferred to the finance directorate in Garda headquarters which has more expertise in procurement. The measures taken should help to avoid a recurrence. I sincerely hope they will. That is all I want to say at this stage.

Chairman

Thank you. It was agreed in January 2002, when this issue was previously discussed, that the internal audit report dealing with the investigation of the system of tyre purchase and fitting from Advance Pitstop would be furnished to the committee. Where is it?

Mr. Dalton

As I said on the previous occasion, the report was wider than that of the Comptroller and Auditor General. Fortunately or unfortunately, it went into the question of who was responsible. It should be borne in mind that a significant part of what happened was the result of what may turn out to be wrongdoing. I use the words "may turn out to be" because people are facing disciplinary charges and are before the courts. Unfortunately, the internal audit dealt with this. We were not in a position to publish the report because it drew certain conclusions. We have given the Comptroller and Auditor General a copy, as it stands. That is essentially what happened to it. It fell victim to the fact that court proceedings were in train. If the committee wants a copy, we can excise all the material about who was and was not culpable. A large part of what happened in this matter appears to be down to a certain number of people inside and outside the Garda Síochána participating in practices that are unacceptable. I do not deny that there were inadequate procedures and so on, but a question must be asked as to the reason.

Chairman

It may be difficult for the committee to note the Comptroller and Auditor General's report without having seen the audit report which is the nub of the case. A commitment was given that it would be furnished. The matter was dealt with extensively in January 2002. While the Comptroller and Auditor General's report is very detailed, one can read from the transcript of that meeting that a commitment was given to forward the audit report to the committee.

Mr. Dalton

I have explained the reason it has not been given to the committee or placed in the public domain. I believe it would run foul of the court proceedings. We have given what we have to the Comptroller and Auditor General, admittedly fairly late. I do not have a difficulty with him circulating it to the committee if he wants to, beyond saying I will not be the one to put it in the public domain.

Chairman

Submissions under the new tender competition for tyres were forwarded to the Government Supplies Agency on 17 April 2002 and the evaluation is under way. Has it been completed?

Mr. Dalton

I believe it has. I do not think I am at liberty to say who has been selected because I am not sure it has been announced but I believe there will be a different supplier of tyres.

Chairman

It has taken an amazing length of time, from April 2002 to the end of June this year.

Mr. Dalton

Some of the delay is attributable to the Government Supplies Agency, for which I am not answerable. It is not all attributable to the Garda.

Chairman

Is the Department still dealing with Advance Pitstop?

Mr. Dalton

Yes, there are still AdvancePitstop supplies. The fact that some of the company's employees may not have been acting as they should and may have engaged in unacceptable practices does not mean the entire company is beyond dealing with. Apart from this, it has a significant number of convenient outlets, more so than others I understand. While there has been a significant fall-off in the extent to which we deal with it, my understanding is that the situation will change completely when the new contract is announced which is within reach.

Chairman

Is it not surprising that, after the major debate on the matter in January, 17 months later a contract has not yet been signed?

Mr. Dalton

I cannot answer for the Government Supplies Agency because it is also responsible. I can only deal with the delays that occurred in the Garda. The Government Supplies Agency is conducting the contract process. Neither we nor the Garda make this contract. There may have been some, although not significant, delays when it returned material to the Garda seeking views on various matters. Mr. Michael Culhane, Director of Finance for the Garda Síochána, has been dealing with this matter if the committee wants him to say more on it.

Chairman

Does Mr. Ryan wish to make a comment?

Mr. Ryan

The Government Supplies Agency works hand in hand with the Garda Síochána on a daily basis on a number of issues, tyres included. The contract is about to be awarded. We expect it will be announced within the next month. There has been a considerable time delay, from the date of the previous meeting to the awarding of the contract, one of the reasons being that we had to carry out extensive research on the technical aspects of tyres and determine best practice in the industry. The Automobile Association is a consultant to the GSA and has advised fully on what is technically possible and feasible. Some health and safety issues must also be taken into account. A degree of research and development was carried out. The tenders took the normal course. The GSA does not assess the tenders in isolation. We assess in consultation with the Garda Síochána. However, we are now at a stage where we are confident we can award a contract which will work successfully.

Chairman

Would you not agree that, in the private commercial world, it would not have taken the best part of 17 months to assess the quality and type of tyres, an issue that has been debated extensively in this forum and which dates back to 1998 and 1999? It is not rocket science to define the level and quality of tyres necessary for Garda patrol cars. What has happened is extraordinary. I am not impressed.

Deputy Noonan

I thank the officials, including the Secretary General, Mr. Tim Dalton, and the Comptroller and Auditor General for their work on this matter as well as their preliminary remarks. I come late to this issue on which I would not have the in-depth knowledge of other members of the committee. I have tried to brief myself in the past 48 hours or so and have a few questions to ask. I will ask them in the context of what the Chairman said.

There is a reluctance to criticise the Garda Síochána. However, when people talk privately to Deputies, Senators or councillors, there is strong criticism of the force in all sections of society. There is a cloud over its reputation which arises from a series of issues, of which we are all aware, this being one which has been highlighted significantly. Difficulties occur in every large organisation but what concerns the public as much as the difficulties that have occurred is the seeming reluctance to deal with the issues involved expeditiously and that issues raised drag on and on and are not resolved. There is a lot of merit in what the Chairman said, both in terms of concluding the report and the commitments made to deal expeditiously with the issues involved.

While some of my questions have beenanswered by Mr. Dalton, he might expand on them. In addressing the committee on 8 January he stated early in his submission that when the full picture was available, it would be different from the one then emerging. I thought that was a key remark. I do not see a great difference between the picture in January and the one now emerging. What did he have in mind? Are there other issues he wants to bring to the attention of the committee which significantly change the picture emerging?

Mr. Dalton

Let me comment briefly on the first point made by the Deputy about the cloud hanging over the Garda, for which I do not hold any particular brief; I am here to explain what happened in this case. However, it is one of the reasons a new mechanism is being put in place to deal with concerns about Garda conduct generally. As the Deputy said, there are many issues involved, including those before tribunals and so on. There is a concern that the existing complaints system is slow and lacks objectivity. There are a number of criticisms of the Garda, just as there are of many police services, but the hope is we will address them under the new compalints mechanism.

As regards the picture being different, what I meant on 8 January was that it seemed to us at the time that a significant factor was fraud. I do not want to say definitively, even now, that it was because that is the issue before the courts. No matter what system one has in place, if there are people, inside and outside, who are prepared to participate in arrangements that are fraudulent, there is going to be fraud. That is what I meant by the comment.

My advice at the time was that some of the figures being quoted might not stand up to scrutiny. Therefore, what I am saying is that in this case the actual loss may not be as significant. I do not yet know. We have not yet worked out all of the figures because to some extent we will have to depend on the Comptroller and Auditor General to calculate exactly how much was involved, on which I think the GSA has asked for information. I am saying it may not be as significant, which does not make it a good story.

Deputy Noonan

I will return to the figures later. Also on 8 January Mr. Dalton gave a commitment that the report from the internal audit unit of the Department of Justice, Equality and Law Reform would be completed within one or two months and presented to the committee. Mr. Dalton referred to this in his preliminary remarks. He stated that there were legal constraints to do with publication. Has the work been completed?

Mr. Dalton

Yes.

Deputy Noonan

Therefore, the issue is not the completion of the work involved. What is it?

Mr. Dalton

The difficulty is our internal report addresses the issue of culpability - the same issue before the courts - and we do not want to publicise it. As I said, I will have no difficulty in giving the report to the committee and the Comptroller and Auditor General. If the Chairman decides that he wishes to circulate it, I will have no difficulty with this. I do not want to be the person who puts the document in the public domain. That was my concern.

Deputy Noonan

Without dealing with any of the issues which might prejudice a case before the courts, Mr. Dalton might tell me if the picture has been changed significantly by the report of the internal audit unit of the Department of Justice, Equality and Law Reform? You mentioned the possibility of fraud. Since this matter first appeared in the newspapers, the dogs on the street have been talking about fraud. That is not a change in the picture.

Mr. Dalton

The fact that the dogs on the street were talking about it did not mean that I could also talk about it. What I was talking about was what I could talk about at the time. When I said the picture might change, what I meant was that one may have confirmation of fraud. I know the dogs on the street and the media were talking about it but it is a different matter for me to come here and say it was fraud. I thought that by the time I came here I might be able to say clearly it was or was not. However, I am still not able to say because the courts are even slower than I am.

Deputy Noonan

At the meeting in January Mr. Dalton also indicated that there were two possible sets of criminal proceedings rather than one. Have both been rolled into one or has one been dropped by the Director of Public Prosecutions?

Mr. Dalton

As far as I know, there is one charge but I will have to check the matter for the Deputy. The charge is defrauding the Minister for Justice, Equality and Law Reform. As I understand it, it is a common law offence in respect of which the court has discretion to impose whatever fine it likes or whatever term of imprisonment it considers appropriate. In other words, it is not a statutory offence for which there is a maximum penalty. I will check the matter on which I will come back to the Deputy.

Deputy Noonan

What is the state of proceedings?

Mr. Dalton

The case is being dealt with in the Circuit Court where it has been returned for trial. I do not have an expected time of decision.

Deputy Noonan

As well as the audit carried out by the internal audit unit of the Department and the court proceedings, there is also the internal Garda disciplinary inquiry. I think Mr. Dalton mentioned that there were 23 gardaí——

Mr. Dalton

No, there are 23 charges against five members of the force which circle around discreditable conduct.

Deputy Noonan

Mr. Dalton said the case of the superintendent had been dealt with. What happened?

Mr. Dalton

He was fined.

Deputy Noonan

How much?

Mr. Dalton

We do not normally disclose fines but if the committee wants me to do so, I will.

Deputy Noonan

I do.

Mr. Dalton

It was €1,650.

Deputy Noonan

Was that the only action taken?

Mr. Dalton

Yes.

Deputy Noonan

Did he maintain all of his increments, for example?

Mr. Dalton

Yes.

Deputy Noonan

Has he been promoted since?

Mr. Dalton

No, I do not think so.

Deputy Noonan

Of what rank are the other gardaí involved?

Mr. Dalton

There are two inspectors and two sergeants involved. I should explain - in case it is misunderstood - that in the case of the superintendent involved there is no suggestion that he was involved in anything fraudulent, nor is there a suggestion that either of the two inspectors and one of the sergeants involved were. Only one garda has been charged with criminal offences and he is a sergeant. The others were disciplined for discreditable conduct which took the form of taking trips abroad paid for by the company involved, the value of which was estimated at €45,000. They included trips to Manchester - I presume to a football match, Marbella, somewhere in Portugal and Rome. I do not know whether they were to football matches or to play golf. I think they were described as golf trips.

Deputy Noonan

I noted in the report that there were four trips abroad along the lines you suggest. All of this has been in the public domain for several years. I do not think the gardaí involved in accepting trips abroad ever denied that they had accepted the gifts. Therefore, there was no case to be proved. It is a net point, yet it has taken years to deal with it in the internal Garda inquiry. What was the reason for the delay?

This brings me back to my initial point. There are always procedural delays in big organisations which, including the one of which we are members, tend to move slowly but there is a public perception that it goes beyond this in the Garda, that there has been deliberate resistance to dealing with the issues involved and that matters have been long-figured. If the issues being investigated are simply ones of ethics rather than law and there is no issue of fact being contested, I cannot understand the reason this matter has dragged on year after year.

Mr. Dalton

It drags on for the same reason proceedings in the public and private sectors drag on. I do not subscribe to the view that everything is perfect in the private sector. Apparently, one can lose large amounts of money and still be promoted. Therefore, I do not accept the comparisons made with what happens in the private sector. They are not universally valid. The same applies to the Civil Service. If one wants to take disciplinary action against someone in the Civil Service, fortunately or unfortunately, there are procedures laid down. I am not defending the length of time it has taken to deal with the matter. I have not been involved.

In order to conclude what is an inordinately long procedure, it will be necessary to compare procedures in the Garda with those in the Prisons Service or the Civil Service, for example. I know from experience of the difficulties one has in finalising such cases, even where there appears to be clarity. It takes a long time because people have to make a defence and avail of procedures which they utilise to the maximum. That is one reason for the delay. As for an underlying lethargy or, as the Deputy says, a reluctance to deal with the issues, I do not know that to be the case, particularly in the Garda. It may well be the case but I do not have the evidence to say there is.

Deputy Noonan

In his preliminary remarks, Mr. Dalton indicated that from a policy point of view the Minister and the Department were putting an overarching procedure in place in order that matters of public concern with the Garda could be dealt with more independently. Is expedition - getting over the lethargy - part of the proposal?

Mr. Dalton

The idea is that there would be an independent body along the lines of the ombudsman office in Northern Ireland. It would have independent investigators. If they were slow in their procedures, it would not be because of Garda lethargy but because of defects we have not anticipated at this point. I would expect cases to be dealt with more expeditiously - certainly, more independently - than under the current complaints system.

Deputy Noonan

On 8 January Mr. Dalton spoke about the outcome being different from what people were expecting, focusing on the loss of revenue to the Exchequer. He said it might transpire that more expensive tyres were being used for significantly longer periods than in comparable police forces and that if technical advice was taken, tyre changes might take place more frequently and that even if the tyres were more expensive, it might not end up being a major loss. Can we go through the figures? The Comptroller and Auditor General estimates the loss at £208,000, whereas the credit note from the company refers to a figure of about 102,000. Is that in euro or pounds?

Mr. Dalton

It is €129,000 or £102,000.

Deputy Noonan

It is admitting to a figure of £102,000, while the Garda seems to have a barter system going with it, with the cost of services provided offset against the credit note, even though it was refused initially. Is that correct?

Mr. Dalton

Yes.

Deputy Noonan

Mr. Dalton said that the internal audit unit had come up with a significantly higher figure than the estimate, or was it Mr. Purcell?

Mr. Dalton

Mr. Purcell.

Deputy Noonan

Is it a fact that the internal audit unit is coming up with a significantly higher figure?

Mr. Purcell

As the accounting officer said, he was good enough to give me a copy of the completed internal audit report on a confidential basis. I was delighted to have it. The figure contained in the report, which is neither here nor there in relation to the criminal proceedings, is the internal audit unit estimate of the total amount overcharged at £238,000. It also stated that by applying a price list supplied by the company in the second quarter of 1998 it had found that there could be a further overcharge of £79,000. I accept it is difficult to come up with an estimate which is the reason I stressed in my opening remarks that we had come up with a best estimate using the best data available. The data came from the main supplier's computer files which were made available to the Department because its system was not producing the information that would enable it to manage its expenditure on tyres and vehicles generally. Therein lies the difficulty. I do not know if the figure is £102,000 or, as suggested, the upper limit which seems to be £300,000.

Deputy Noonan

The point I was going to make is that rather than going down, the estimated loss is going up according to the internal audit unit. On 8 January Mr. Dalton questioned the Comptroller and Auditor General's estimate of £208,000 but now his own internal audit unit shows a higher figure. Does the internal audit unit figure have the agreement of the Garda?

Mr. Dalton

No, the internal audit unit is not part of the Garda.

Deputy Noonan

It is based on information supplied by it.

Mr. Dalton

It is. As the Comptroller and Auditor General said, it is difficult to know which figure is right. I am also talking about the figures produced by our internal audit unit. The GSA has asked us to calculate a figure. The purpose is to allow it to take proceedings based on whatever figure we produce. I do not know what figure we are going to ask for. I am not sure that we will receive whatever figure we ask for as there are issues which may cast doubt on our entitlement to payment, one of which is that at one point Advance Pitstop complied with its contractual obligations. Now that the court proceedings are virtually out of the way, I agree that, apart from ensuring the system works in the future, the priority is to calculate the figure and get advice from the Attorney General on what we may or may not recover and institute proceedings on his advice. I accept that is the next step.

Deputy Noonan

Does Mr. Dalton envisage pursuing this matter legally, through negotiation or arbitration?

Mr. Dalton

Although I have not discussed this with others, the way I am personally minded is to get a fix on the figure we are talking about. I find it as difficult as the auditor. If we get a fix on the figure, I will take the advice of the Attorney General on whether it is appropriate to pursue the matter legally. I will be looking for agreement to take a civil action. What usually happens is that counsel will be appointed and if there is an arguable case, they may begin negotiating. The company might state to us, if we are looking for €136,000, that it will give us €130,000 at which we will look as it will save us a lot of money in fees and so on. Otherwise it would be normal to ask the Attorney General for advice. If it comes up with a good deal, we will think about it.

Deputy Curran

I agree with Deputy Noonan that the timescale in resolving this matter seems to be quite long, given that since it first appeared in the media some steps have been taken.

Mr. Ryan might be able to answer my first question. In 1997 the Government Supplies Agency organised a tendering process. How did it work?

Mr. Ryan

Prior to a contract being advertised and awarded, we consult the customer department. More than one department deals with the supply of tyres. The requirement must be quantified, specified and advertised as required under European procurement directives. A period of 56 days is normal for advertising in the European Journal. The tenders returned are assessed. Where the GSA has expertise in relation to the product and service required, we assess the tenders independently and, where we do not, we refer directly to the customer who has a direct input into the marketing system used to award the contract.

Deputy Curran

Mr. Dalton talks about tenders being assessed. Are they assessed on terms other than monetary value? Are they product specific? Is everyone tendering on exactly the same basis?

Mr. Ryan

The EU directive requires two assessments, the first of which is validity of the tender which covers compliance with the specification and terms and conditions. Once a tender is deemed valid, we consider it to be on the table and available. It is then further assessed and marked. The decision criteria are determined prior to advertising the tender competition. They are advertised in the tender documents in order that suppliers will know exactly how the tenders will be assessed to ensure openness and fairness.

A mathematical formula is used in tendering. There are weightings for price, ability to deliver the service required and track record. At the end of the process the firm which scores highest is normally awarded the contract or, if not, preferred supplier status, at which stage we go to the customer and run through all the criteria and products.

In regard to tyres, a number of factors are taken into account relating to ability to deliver the service, that is, the ability of the garages or suppliers to deliver to individual locations. A range and mix of tyres required - I referred to health and safety - must be available. All of these factors are taken into account.

Deputy Curran

In 1997 how long did the whole procedure take, from the time the contract was advertised to when it was awarded?

Mr. Ryan

I do not have those details.

Deputy Curran

On the evaluation process, did the Government Supplies Agency conduct the evaluation, complete the weighting programme and make the recommendation or was the matter referred back to the Garda to sort out?

Mr. Ryan

It was done in consultation. On prices, there is a formula, a straightforward percentage differential. Depending on the terms of the contract put out to tender, delivery may be the most important criterion, particularly where immediate deliveries are required but this will be specified. It all depends on circumstances at the appropriate time.

Deputy Curran

Who conducted the evaluation in 1997?

Mr. Ryan

The GSA.

Deputy Curran

The GSA advertised and evaluated the contract.

Mr. Ryan

In consultation with the customer department.

Deputy Curran

In consultation with whom?

Mr. Ryan

The Army and the Garda, the two primary users of tyres.

Deputy Curran

What was the extent of the consultations? Surely the requirements are known when one advertises in the first instance?

Mr. Ryan

They are and to some degree are specified. One of the features of the current tender competition is that we have a number of outlets which have offered a service to individual Garda stations and Army barracks. It is a matter of determining which outlet is best suited to supplying the Garda station or Army barracks concerned.

Deputy Curran

On the current contract which has been out to tender for one year or more, how has the procedure changed in comparison to the tendering process in 1997?

Mr. Ryan

The process is basically the same. Following the last meeting we went into great detail to ensure a level playing field for all suppliers in regard to specification of the product which had to comply with the performance rating, an issue on which we sought expert advice. It was also difficult to assess the tender documents to eliminate the tenders that were invalid. It took considerable time to assess each of the tenders. The specification is that tyres should be homologated in that they must be used on original vehicles for which a manufacturer has recommended a tyre. It is an industry standard that both we and customer departments are satisfied will deliver the quality of tyre that will meet requirements and is reasonable within the market. There are a number of cheap brands which would not produce the same performance levels. There is no industry standard for performance level. We normally use an Irish or British standard for most products. However, as there was no standard for tyres, as advised by our technical advisers, we went for a homologated tyre. If it is good enough for a manufacturer to use and is recommended, we will continue with this policy.

Deputy Curran

You saying that in the current process the type of tyre will depend on what was originally specified by the manufacturer. If the vehicle is a Ford, it might be a Dunlop tyre and if it is something else, it will be a different make of tyre. In other words, it is not possible for one brand name to satisfy all requirements.

Mr. Ryan

It is not possible for one brand name to satisfy all requirements.

Deputy Curran

In 1997, it did not matter as long as the tyre fitted the wheel.

Mr. Ryan

Health and safety considerations are taken into account in the operation of the contract in the sense that mixing of tyres across an axle or two is not recommended. While there is no legislation to this effect, it is not considered best practice. There will be a requirement for different brands of tyre which can be accommodated within fleet operations. For example, if there is a puncture or one axle cannot be reused, the other tyre can be removed and used on a different car and a complete new set applied to the vehicle. However, safety must be the prime consideration.

Deputy Curran

I do not want to drag this out. However, I am surprised, given that this is not a massive contract in terms of overall Government spending, that it has taken an enormous amount of time to put a contract in place, even after learning from the mistakes of the past. The process appears to have taken an exceptionally long time from the time it was put out to tender in April 2002 to June 2003.

Mr. Ryan

Most time has been taken up on the operation of the contract. The biggest delay has occurred in assessing the numerous suppliers for individual locations.

Deputy Curran

While I do not have any more questions to ask, I have one or two comments to make. As I said, I appreciate the whole process has continued for quite a long time. However, a certain amount of progress has been made, primarily, I presume, as a result of the findings of the Comptroller and Auditor General and the fact that practices and procedures have changed. I welcome this. I am sure Mr. Dalton will admit that most of the changes were glaringly obvious in relation to brands and certification on payment and so on. When the Comptroller and Auditor General drew up his report, he had to go to the supplier involved to get the relevant documentation. From the point of view of accountability, there were major gaps. I can see, therefore, how this situation arose. It should be acknowledged that the changes have been made, primarily based on the report from the Comp-troller and Auditor General.

I do not want to dwell any further on the matter. I am conscious that legal proceedings are pending and do not think some of the matters involved should be delved into at this point. However, the meeting should not conclude that no progress has been made. There has been progress on the issues of accountability and certification of payment, in particular. However, I have grave concerns about the efficiency of a tendering process which commenced in April 2002 and concluded 14 months later for what was not the most complex or largest contract in the world. The process has been too slow. While I am not familiar with the internal workings, I regard it as an unacceptably slow rate on which to deliver a return.

Chairman

What volume of tyres was used in the last two years and what was the expenditure involved?

Mr. Dalton

I do not have a figure for the volume used. The annual spend on tyres in the Garda Síochána is approximately €650,000.

Chairman

Per year.

Mr. Dalton

Yes.

Chairman

Do you have the figures for 2001 and 2002?

Mr. Dalton

I will try to get them.

Chairman

How do the figures compare to those for the previous three years? Perhaps you will get the figures for 2001, 2002 and to date in 2003.

Mr. Dalton

I do not have the figures. However, the Director of Finance for the Garda Síochána is sitting beside me and may be able to obtain them before the meeting concludes.

Mr. Michael Culhane

I have some figures for 2001. As noted, there were limitations in regard to the accounting information available to us. The total spend in 2001 was approximately €650,000 and in 2002, €758,000. Let me explain the difference. In 2001 some of the expenditure passed through the district imprest accounts, which meant it was not captured in the Department's accounting system. Therefore, while it might appear there was a substantial increase between 2001 and 2002, the fact is the information was not captured in the accounting system. I understand we use approximately 8,000 tyres per annum. Consumption in 2001 and 2002 would have been broadly in line with this figure.

Chairman

It would tell a major story if we could get the figures for the years 1998-2000.

Mr. Culhane

I do not have that information.

Chairman

It appears from the Comptroller and Auditor General's report that the figure is considerably higher. The figures for the three previous years indicate that the report has been very effective in terms of the overall spend on tyres. That is what I glean from the reduction.

Mr. Culhane

In terms of the control mechanisms we have put in place, the Comptroller and Auditor General's report has had a positive impact on the consumption of tyres. By diversifying away from Advance Pitstop as a source of tyres to other companies we have achieved better value for money in the price of tyres.

Chairman

The proof of the pudding is in the eating. Perhaps the Comptroller and Auditor General has figures for previous years.

Mr. Purcell

I have some. However, I caution that they are estimates provided by the Department. If it is not in a position to give the figures, I do not know whether I should give the estimates which indicate roughly that the spend in each of the years, 1998-2000, averaged out at €1 million. While estimates always come with a "health warning", it appears there has been a significant reduction in both the spend on and the consumption and volume of tyres used since the matter was raised. I am sure the Accounting Officer can come back at a later stage with firm figures in order that the committee can make a final judgment.

Chairman

I congratulate the Comptroller and Auditor General on his report. In simple mathematical terms, if the estimated figure for each of the years 1998-2000 was €1 million, taking into consideration the fact that the price of tyres would have increased during that period, the figures of €650,000 for 2001 and €758,000 for 2002 represent a considerable reduction.

Mr. Dalton

The Comptroller and Auditor General's report has certainly had a positive impact in the sense that it has not just resulted in the introduction of new procedures but also in diversifying in terms of the sources of supply. In 2001 Advance Pitstop provided tyres to the value of €632,000 and Bridgestone, €11,000. In 2002 the Advance Pitstop share fell to €472,000 while the figure for Bridgestone was up to €120,000 and More Miles to €166,000. The balance has been shifting, partly due to the report of the Comp-troller and Auditor General.

On comparisons with the figures for previous years, as there are estimates involved, I would prefer to come back to the committee with definite figures.

Chairman

Looking at the reality, we are talking about real savings. There has been a massive sea change in financial expenditure. I am amazed that we are being given an estimated figure at this stage. Given that the figures for 2001 and 2002 are available, it is alarming that the figures for previous years are not. It appears from the Comptroller and Auditor General's report that €1 million has been saved on tyres based on the figures for the previous three years.

Mr. Dalton

If the figures are correct, I accept that €1 million is a lot of money. However, I do not know if they are.

Chairman

It appears there was total mismanagement, regardless of the quotations and inquiries into Advance Pitstop. It seems management of the system was totally shambolic prior to the introduction of regulation.

Mr. Purcell

While I appreciate the Department's difficulties in this matter, part of the problem related to the way expenditure was recorded. Payment was made through district offices which made it difficult to collate all of the information on expenditure. To be fair to the Department, it has now changed the system and everything is going through the director of finance with the result that one is now in a position to get much more concrete information on the expenditure on tyres. This was partly the objective of the examination and the lesson has been taken on board by the Department which has taken corrective action.

In reply to Deputy Curran, there have been many positive outcomes on the source of the difficulty in getting hard figures for 1998, 1999 and 2000.

Chairman

Is it possible to confirm the figures for that period?

Mr. Dalton

We will certainly try. I am as interested as anyone in finding out what exactly was spent during that period. I do not have the figures.

Chairman

If we can get the confirmed figures for the three years in question and the actual spend for each of the last two years, it will be easy to decide on the mismanagement of the process prior to that date.

Mr. Dalton

Yes. We will supply the figures.

Deputy Connaughton

While I was not a member of the committee when this matter was last debated, it appears Advance Pitstop was on the grid in so far as the management of the contract was concerned. From the documents I have read and the evidence given, it appears it had almost complete managerial control of what was happening and tendered a particular price to supply tyres for Garda cars. This is not rocket science. We all have to change our tyres at certain times. It appears Advance Pitstop made all the running in regard to the contract, which is the reason there is a question mark about the issue.

After the contract had been signed, many of the tyres were sold at a higher price than that tendered to the Garda Síochána. Why did it not catch on to this immediately? Obviously, somebody had to sign a cheque to pay for the higher priced tyres. One would not have needed an internal auditor or to hang around for two or three years to know what was happening. The Garda Síochána accepted a tender price for the tyres but two months later was paying a higher price for them. Did this not cross anybody's mind in the Department or the Garda unit handling the matter? Can we have some indication as to how this could have happened?

Mr. Dalton

None of this comes near the Department, nor should it. It is reasonable that we rely on the Garda Síochána to handle these matters properly, subject to checking that the systems for doing so are in place. The contract provided that the tyre prices could be increased during the term of the contract subject to certain notifications by the company. As I recall, notice had to be given to the Garda Síochána and the GSA. According to our internal audit unit analysis, on at least one occasion the company gave notice to the Garda Síochána. Therefore, it is difficult to know whether we would succeed in claiming that it overcharged from that point if it was charging a higher price for the tyres supplied.

Deputy Connaughton

I assume AdvancePitstop did not wait for one year for the cheque for tyres bought in a particular week.

Mr. Dalton

I do not know if anybody noticed. It may well be the case that somebody did notice that the Garda Síochána was paying more than it should. That is the problem.

Deputy Connaughton

That is the central issue. Is it coming out in the investigations?

Mr. Dalton

That may well turn out to be an issue in the fraud case, I do not know. One person inside and two outside have been charged with fraud. It may emerge that the parties involved knew well what was happening but up the line someone certified it as being in order. In the system one has to depend on somebody. If one depends on someone who does not do the right thing, I can see how this can happen. I do not want to say that is what happened but it could well be the case that someone noticed that two persons outside and one person inside knew what they were doing.

Deputy Connaughton

I have another question along the same lines. I understand there had been a business relationship between Advance Pitstop and the Garda Síochána before this tendering process was initiated, that the Garda had dealt with the company previously. There was nothing wrong with this because the job of AdvancePitstop was to sell tyres but how far back did the relationship go?

Mr. Dalton

I do not know.

Deputy Connaughton

Would it be true to say the Garda Síochána had purchased tyres from Advance Pitstop for perhaps ten years before?

Mr. Dalton

That may well be the case but I do not have that information. I will try to find out for the Deputy.

Deputy Connaughton

In regard to the overseas trips, how many persons were involved?

Mr. Dalton

Different numbers were involved. Five people went on some and four on others. It was the same five people.

Deputy Connaughton

Were they all gardaí? Was anybody else involved?

Mr. Dalton

I believe there was one civilian. We have not yet had a resolution of that issue.

Deputy Connaughton

Was the civilian in question a civil servant, from your Department?

Mr. Dalton

He was brought in as a fleet manager and, I believe, also became involved. I am saying this late because I only began to discuss it with others yesterday but we have entered correspondence concerning him and accept there is an issue to be resolved in his case in which I do not believe court proceedings will arise. However, it may well be the case that he will face censure. He is not covered by Garda disciplinary regulations. I do not know what censure would apply in his case.

Deputy Connaughton

Is it correct to say the person in question is not a civil servant?

Mr. Dalton

He is a civilian employee, a civil servant.

Deputy Connaughton

To where is he attached?

Mr. Dalton

He is Garda fleet manager in the transport unit at Garda headquarters.

Deputy Connaughton

Are charges imminent in his case?

Mr. Dalton

Yes. We are only looking into this now.

Deputy Connaughton

Was he on the trips mentioned?

Mr. Dalton

He was.

Deputy Connaughton

To where?

Mr. Dalton

Manchester, Rome, Spain and Portugal.

Deputy Connaughton

I presume there is documentation.

Mr. Dalton

There is. That was all gone into in the disciplinary investigations.

Deputy Connaughton

Does it appear as evidence?

Mr. Dalton

Yes, there is no dispute about it.

Deputy Boyle

I have a few brief questions. Perhaps I could be told if I am being repetitive as I was in the Chamber for a vote. Have there been changes in the code of conduct in regard to availing or making use of this type of largesse by gardaí? Is the Department examining the question of introducing a code of conduct? If one is already in place, to what extent does it apply to civilian employees?

Mr. Dalton

It is already illegal for some to accept gifts. There are also provisions in Garda disciplinary regulations dealing with the issue. It concerns the lack of good conduct rather than law.

Deputy Boyle

Are the regulations applicable only to uniformed members of the GardaSíochána, or do they apply to civilian members?

Mr. Dalton

Civil Service regulations apply to the civilian involved. The Ethics in Public Office Act probably also applies to him.

Deputy Boyle

I understand Garda budgets at local level were used in the acquisition of tyres; that when the need arose, cars from various locations were driven to the various branches of the company involved and that invoices were issued at local level. Was there an understanding that the invoice received was consistent with the agreement reached with the company?

Mr. Dalton

Yes.

Deputy Boyle

Are you telling us that there was no communication from any of those involved in operating a local fund on behalf of the Garda Síochána that prices seemed to be at least twice the normal level? The average price seems to have been £200 per tyre.

Mr. Dalton

What I am saying is that there was no checking of any significance of what they were supposed to pay for tyres and what was actually certified as payable. When an invoice was received, it seemed there was no checking of the bill submitted and the contract price. Some may have checked but it was not done to any significant extent. That was part of the problem.

Deputy Boyle

If those involved in sanctioning expenditure at local level had concerns, whom would they contact? Would they contact directly the Government Supplies Agency, the Garda Síochána at divisional level or the Department?

Mr. Dalton

They would not contact the Department because we would not have the invoices, rather they would contact the finance section in Garda headquarters.

Deputy Boyle

You have no record of any such query being made in relation to this episode?

Mr. Culhane

The entire contract was managed by the garage in Garda headquarters. The communication would have been sent from the district office to the transport section in Garda headquarters. Until new arrangements are put in place, finance directors have no involvement in the certification of invoices. Part of the weakness was that when the 1997 contract was put in place, the price list was not circulated to district offices. Consequently, it was difficult for them to check prices. I understand some queries were raised with local garages or local branches of Advance Pitstop about work which had been charged for but which had not been done, in which cases credit notes were issued. There was vigilance at district office level.

Deputy Boyle

Will the new system which now seems to be in place apply to queries that local budget holders may have in relation to future concerns? How will they go about expressing those concerns and to whom will they express them?

Mr. Culhane

All invoices for tyres are forwarded to the finance directors for price checking. We are in the process of devolving responsibility to district offices in order that in future they will have a budget for tyres. At the moment there is a central fund which forms part of the Garda Vote. Expenditure on tyres is monitored centrally.

Chairman

That concludes questions. I am delighted with the quality of the Comptroller and Auditor General's report and pleased to note that the matter was referred by the Department and the Committee of Public Accounts to him. As there are legal proceedings pending and the internal audit unit report has not been furnished, I propose that the committee should not note the report until all of the work has been completed. Is that agreed? Agreed.