COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 8 Jul 2010

Special Report No. 73 of Comptroller and Auditor General (Resumed)

Internal Control and Governance in FÁS

Chapter 5 — Competency Development Programmes

Mr. Seán Gorman(Secretary General, Department of Enterprise, Trade and Innovation) and Mr. Paul O'Toole(Director General, FÁS) called and examined.

Chairman

In dealing with today's agenda, I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. If a witness is directed by the committee to cease giving evidence on a particular matter and he or she continues to do so, he or she is entitled thereafter only to qualified privilege in respect of the evidence given. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 158, that the committee shall 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.

I welcome Mr. Seán Gorman, Secretary General of the Department of Enterprise, Trade and Innovation, and Mr. Paul O'Toole, director general of FÁS, and call on them to introduce their officials.

Mr. Seán Gorman

I am accompanied by Mr. Dermot Mulligan, assistant secretary, and Mr. Padraig Ó Conaill, principal officer. On foot of the restructuring of Departments, both Mr. Mulligan and Mr. Ó Conaill now have been assigned to the Department of Education and Skills, where they retain the brief for FÁS.

Mr. Paul O’Toole

I am accompanied by Mr. Martin Lynch, assistant director general, and Mr. Con Shanahan, director of finance, of FÁS.

Chairman

Before asking Mr. Gorman to give his opening statement, can he update members on the status of the report published by his Department on the competency development programme? It was signalled that it would be laid before the Oireachtas.

Mr. Seán Gorman

We laid it before the Oireachtas yesterday because we knew it would be made public today. It is a requirement of the rules on value for money studies that they be laid before the Oireachtas and it was lodged in the Oireachtas Library yesterday.

Chairman

Yesterday.

Mr. Seán Gorman

Yes. We sent it to the committee first last week, out of respect to this committee.

Chairman

Is the document you have laid before the Oireachtas Library identical?

Mr. Seán Gorman

It is the same document, yes.

Chairman

All right. I call on Mr. Buckley to introduce his report. The full text of Chapter 5 can be found in the annual report of the Comptroller and Auditor General or on the website of the Comptroller and Auditor General at www.audgen.gov.ie

Mr. John Buckley

Chapter 5 of Special Report No. 73 deals with aspects of performance in FÁS. One programme examined was the competency development programme, CDP, which sought to up-skill persons already in employment.

Expenditure on this programme amounted to €126 million in the six years between 2003 and 2008. In four years of rapid expansion between 2005 and 2008, training was provided to more than 100,000 participants. The training was outsourced. After taking account of administration and promotion costs, more than 90% of the expenditure was paid to external training providers.

The overall goals of the CDP were to increase the portable and transferable skill levels of employees through certified training with a focus on priority needs in the labour market and the needs of low-skilled workers. In regard to the focus on priority needs in the labour market, the examination found that while some courses were the result of approaches from training suppliers, training was generally delivered to meet training needs that had been identified to meet skills gaps in the work force.

In the administration of the programme there were three main concerns. There was a lack of competitive procurement in a number of cases. There were gaps in the monitoring of course delivery and from an evaluation perspective, FÁS was not in a position to demonstrate that all of the stated objectives of the programme were delivered. In the area of procurement, while all payments examined were grounded in contracts, five of the 34 cases at regional level that we examined did not have evidence of competitive procurement and at national level, some contracts were not the subject of competitive tendering. Internal audit work found a somewhat higher level of non-compliance over a longer period. Monitoring visits are a key means of validating claims for payment in cases where there is no other enduring evidence of delivery of intangible services, such as training. The examination found there were gaps in monitoring of the training delivered. Approximately half of courses reviewed by the examination or by internal audit in FÁS had not been the subject of a monitoring visit.

From the viewpoint of assessing programme results, deficits in information hindered FÁS's capacity to assess the achievement of the programme's objectives. By the time an information system was established, the bulk of the €126 million that was to be spent up to 2008 had been spent. While FÁS then began to centrally capture information on participation in certified courses, it did not record the extent to which participants achieved certification. Neither did it report on the extent to which participants moved up the National Qualifications Authority of Ireland, NQAI, framework because as well as not having a record of the extent to which participants achieved certification, it had only an incomplete record of the educational attainments of participants prior to training.

In regard to the portability objective, FÁS has not made any assessment of the extent to which training under the CDP has been successful in equipping participants with transferable skills. From an effectiveness viewpoint, there is some risk that the courses may have been pitched too low for some. A key target of the training was the low-skilled, who research shows are the least likely to receive training. More than 40% of participants were placed on training that could yield certification that was classified within the low-skills category. However, 75% of participants already had qualifications above the low-skills category. While it is likely that many people with certification above levels 1-4 on the NQAI framework would benefit from the acquisition of specific skills, there remains some risk of deadweight, by which I mean that the investment was not productive.

As well as my review of the programme, a value for money review now has been finalised by the Department, focusing mainly on performance in 2006. The Accounting Officer will be in a position to outline its findings. New commitments under the programme have ceased since early 2009 and the only remaining activity is that which arises from working through existing contracts.

Chairman

Thank you, Mr. Buckley. The committee is considering the competency development programme today because it provides a good example of controls and governance that prevailed in FÁS in the period up to 2008. We also will probe into the manner in which it was run and whether the controls existed to ensure that the State and the European Union got value for money from the programme. We must consider how FÁS ran this programme and how the Department that had ultimate responsibility ensured that the CDP delivered one of its strategic goals. While the programme continues, I understand it now operates on a smaller scale as FÁS is concentrating primarily on services for those who find themselves without jobs.

Members must acknowledge that much has changed at FÁS. It has a new director general, a new board, new governing legislation and now is under the remit of the Department of Education and Skills. After today's evidence is given, the committee will review all the evidence it has taken on FÁS since its report in 2009. Notwithstanding the changes that have occurred since 2008, it is important that lessons are learned and the committee will make recommendations to ensure there is no repeat of the carry-on that went on in FÁS prior to 2008.

Mr. Seán Gorman

From the Department's perspective on the FÁS competency development programme, CDP, the CDP has a sound policy basis as the main FÁS response to the strategic imperative of up-skilling Ireland's workforce. This imperative was identified as a key issue in the 2004 enterprise strategy group report entitled, Ahead of the Curve. That report argued that skills, education and training were a key component to the Irish economy building a strong competitive advantage in world markets and formulated the concept that the workforce needed to make what it termed "One Step Up" in respect of its skills and education levels. This need to upskill the Irish workforce had been previously strongly advanced by the European Employment Strategy and it was given more detailed expression in Ireland in the report entitled Towards a National Skills Strategy, published by the expert group on future skills needs in 2007.

The national skills strategy identified the need to up-skill more than 500,000 people by one level on the National Framework of Qualifications over the period to 2020. It also recognised that most of these people were already in employment. It was, therefore, necessary to expand programmes such as the CDP which would focus on the up-skilling of those already in employment. The expansion of the CDP meant that the Exchequer supported the training of a total of 123,000 people in employment over the period 2004 to 2008.

On departmental oversight of FÁS, in addition to ensuring that FÁS meets the requirements of the Code of Practice for the Governance of State Bodies, the Department has a series of oversight arrangements to ensure that moneys are spent in accordance with the purposes for which they were allocated and that value for money is achieved.

In line with other public service organisations, we have in recent years been increasing our emphasis on outputs, performance indicators and value for money. This emphasis includes, since 2007, the laying of output statements for Departments before the Oireachtas.

The Department has enhanced its oversight arrangements in regard to FÁS and the CDP is included in the overall oversight of programmes which include specific performance indicators regarding budget, numbers to be trained and the profile of those to be trained. We have developed this arrangement this year to the point where, without micro-managing day-to-day activities, which are matters for the director general and the board, FÁS is given specific targets in regard to each of its 30 programmes in terms of the budget for each programme; the types of participants who should gain priority access to programmes and how operationalisation should occur in this regard; the target numbers of participants on each programme and the numbers receiving certification; and the target number of participants who will progress to employment or education and training after programme participation.

In addition, we have ensured that liaison meetings between the Department and FÁS management take place on a more frequent basis, normally monthly, and sometimes more frequently. These meetings review programme implementation in the organisation and cover how the organisation is meeting its financial, programme and output targets.

The Department also has a policy of regularly reviewing FÁS programmes in terms of their effectiveness and value for money. The review under discussion is an example of one such review. Taken together, these new arrangements represent a significant level of enhanced departmental oversight of FÁS programmes.

In regard to the CDP in particular, while the day-to-day running of the programme was a matter for FÁS, the Department played an active role in the FÁS board sub-committee which had an oversight role in the implementation of the CDP. This sub-committee met several times each year and gave general direction to the focus of the CDP, emphasising the need to focus on the low skilled who would not otherwise receive training and regularly reviewing budget and programme outputs.

The Comptroller and Auditor General's report, Internal Control and Governance in FÁS, issued in December 2009, and the Department's value for money and policy review of the CDP for 2006, which was recently sent to the committee, raise important issues regarding the management and outputs from the CDP in that year.

On the management of the CDP, the value-for-money review acknowledged its strengths in some respects, for example, regarding the presence of guidelines produced centrally by the services to business division; the high levels of efficiency of FÁS in arranging for the delivery of training; and ensuring that, after the training had taken place, the administrative obligations on the training organisations were strictly adhered to. The report also referred to the correctness of the strict tender competition that was held prior to the award of contracts under the SIA initiative. However, the review also highlighted areas where improvements were needed, particularly where improvements could be made regarding the identification and monitoring of skills needs. The review is based on 2006 activity. Since then, lessons have been learned. The report acknowledges that the second round of SIA contracts which were subsequently awarded in 2007 were more focused in terms of their target and content.

At a macro level, the Department has asked FÁS to ensure that its training content be directly driven by the current and future skills needs of the labour market based on FÁS training programme progression data; the work of the expert group for future skills needs; and the national skills strategy objectives are set out in the 2007 Forfás report.

On the outputs from the CDP programme, it is worth noting that it supported the training of a total of 123,000 people in employment over the period 2004 to 2008. The review acknowledges the strong bias of CDP activity towards certified programmes where possible as a means of ensuring measurable evidence of positive training outcomes. For example, the review notes that more than 93% of the 32,477 participants trained through the regional and sectoral channels in 2007 were engaged in certified training programmes. However, the review did find that in some cases there was insufficient monitoring of whether an actual skill transfer had occurred due to resource constraints.

While the report acknowledges that, for some circumstances, non-certified training may be the most appropriate response and the Department would agree with this, we feel strongly that in general publicly funded training should be certified at least by an industry body and preferably also recognised by the National Framework of Qualifications. At this stage, almost all FÁS training is certified. This certification gives quality assurance regarding the training and gives the individual explicit and portable recognition for the qualifications level he or she has attained.

While spending on the CDP has reduced significantly in recent years as the focus of up-skilling shifted to those who are unemployed, the issues raised today are still relevant. It is for that reason that, in its supervision of FÁS, the Department has given the agency specific targets to meet regarding outputs, participants, certification and progression to further training and education and employment. The Department monitors progress on these targets as part of its oversight role.

Valuable lessons have been learned from the experience with the CDP. This learning has been put into practice in the period since 2006 by the Department and by FÁS. The Comptroller and Auditor General's report and the value for money review have provided useful ways of evaluating the CDP and their recommendations will continue to contribute to the improvement of the CDP and other programmes. I will be glad to answer any questions members may have.

Chairman

May we publish the statement?

Mr. Seán Gorman

Yes.

Mr. Paul O’Toole

We understand the main issue the committee wishes to examine today relates to Chapter 5 of Report 73 of the Comptroller and Auditor General. This chapter deals with performance management and compliance and includes a review of the competency development programme. In his general conclusions on this chapter, the Comptroller and Auditor General made several recommendations to improve performance management and compliance within FÁS. We have taken a number of specific actions to give effect to these recommendations. Specifically, the board of FÁS has put in place a new finance committee. A new set of financial reports has been developed for the finance committee and the board that provide more detail on budget performance and variances. These reports will be enhanced, as required, to meet the needs of the committee and the board.

Quarterly reviews of expenditure and performance have been introduced. These will incorporate a detailed mid-year review, including a formal decision by the board regarding any proposed budget adjustments. The Department has provided FÁS with an enhanced specification regarding outputs and outcomes. A new IT system is in development to capture numbers achieving certification in addition to those participating.

Progress is also being made in respect of other recommendations of the Comptroller and Auditor General. The new board, which had its first meeting in February this year, is considering the 2009 accounts. In this regard, it will develop an appropriate statement of internal financial controls. To ensure it has the necessary information and assurances regarding compliance, in conjunction with the audit and risk management review committee, it will receive formal presentations and reports from the executive.

More generally, the Comptroller and Auditor General made recommendations to improve performance management through reporting on effectiveness measures, change management actions and stakeholders satisfaction ratings, together with setting more precise performance indicators. Information systems should record all required information to support performance reporting and informed decision-making.

These recommendations are accepted but will take some time to implement fully. As with all public bodies, our numbers of staff and, therefore, our overall capacity are reducing. In addition, FÁS is in a transition phase as the decisions of the Government regarding the provision of our services are being implemented. Our current focus is on delivering our 2010 activity programme while developing and implementing a range of change management initiatives that will utilise fully our available resources. We are committed to delivering enhanced performance management systems at the earliest opportunity.

Regarding the competency development programme, which provided approximately 123,000 courses to individuals from 2004 to 2008, the Comptroller and Auditor General has made several observations and recommendations in Report 73. This programme is effectively a collaboration between individuals, their employers, FÁS and the social partners. In response to the identified need to address skill shortages in the workforce, including among those with lower skills, FÁS expanded its programmes rapidly between 2005 and 2008. The emphasis was on helping people acquire transferable and portable skills as distinct from work-specific skills to address the perceived market failure.

Most of the courses provided were certified by FETAC, HETAC or others. Although achieving certification was not a requirement of the programme, a survey of one group of 3,000 participants indicated that 76.3% had achieved the relevant certificate. The Comptroller and Auditor General has highlighted a number of points regarding the operation of this programme. In particular, he recommends that the numbers achieving certification should be captured as well as those participating. He has also recommended more systematic evaluation and greater levels of monitoring. These recommendations are accepted in principle and elements of each are already in place, although we accept that more can be done.

Recognising the need for improvement, it is important to state that this programme made a major contribution to meeting the strategic goal of improving the skill sets of many people in employment. With the benefit of hindsight, the programme expanded more rapidly than the development of the underlying support systems. Together with the need for improved targeting, this is the key lesson.

These lessons have been used in conjunction with a more general review of our training provision to set out a programme of improvements to take this aspect of our work forward. We are committed to ensuring that our training interventions for those who are employed or, as is our current primary focus, unemployed are relevant to individuals and the economy and are underpinned by appropriate standards and quality systems.

As with our previous appearances before the committee, we will endeavour to address any question it might have to the best of our ability. I hope that, through these sessions, the committee will be assured that FÁS has accepted the recommendations that have been made and is committed to improving all aspects of our work and its governance continuously.

Chairman

May we publish Mr. O'Toole's statement?

Mr. Paul O’Toole

Yes.

Deputy Róisín Shortall

I welcome the witnesses to the meeting. I have a number of questions for Mr. Gorman on the competency development programme. As it has been a while since he last addressed the committee on the matter, will he provide a recap of the programme and inform us of its duration, annual spend and the split between European Social Fund, ESF, and Exchequer funding?

Mr. Seán Gorman

The programme was designed to reach people in employment and operated through three strands. Two were operated on a——

Deputy Róisín Shortall

Are these the overall figures?

Mr. Seán Gorman

Yes. Expenditure in the 2000-10 period comprised €8.8 million in 2004, €18.45 million in 2005, €37.4 million in 2006, €48.1 million in 2007, €36.6 million in 2008, €12 million in 2009 and an estimated €6 million this year.

Deputy Róisín Shortall

What was the split between ESF and Exchequer funding?

Mr. Seán Gorman

Initially, the programme was funded 100% by the Exchequer, primarily through the national training fund. There was a claim back from the European Commission on the basis of eligible expenditure. The intervention rates varied depending on the type of activity and the beneficiary. A number of our claims on ESF moneys are still being sorted out and I have supplied the committee with a separate note on that, so I cannot judge the extent of the ESF's final contribution. The process involves up-front expenditure by the State followed by a claim back.

Deputy Róisín Shortall

How much does the Department expect to claim back?

Mr. Seán Gorman

I can provide the figures for what is still in the system. The eligibility for ESF expenditure runs under two ESF programme periods, namely, 2000-06 and 2007-13. We are expecting to reclaim approximately €44 million in respect of the former, subject to the final claim being approved and sanctioned by Brussels. We are making adjustments to our claim in light of some of our experiences. Where the 2007-13 period is concerned——

Deputy Róisín Shortall

It is not relevant. What of the figures up to 2009?

Mr. Seán Gorman

There will be funding. We have made a claim for the 2007-13 period, but I do not have the claim figure with me. I will need to get it.

Deputy Róisín Shortall

Is Mr. Gorman telling us that, since 2004, more than €167 million was spent on the competency development programme?

Mr. Seán Gorman

Yes.

Deputy Róisín Shortall

How much of that amount are we likely to recoup from the ESF?

Mr. Seán Gorman

The average intervention rate is between 50% and 75%, depending on the beneficiaries and the extent to which claims are approved. I do not know whether my FÁS colleagues have more detailed information on the clawback, but the amount will not be 100%.

Deputy Róisín Shortall

Perhaps Mr. Gorman could provide us with information on the breakdown between ESF and Exchequer funding during the course of the meeting.

Mr. Seán Gorman

We could provide it to the committee.

Deputy Róisín Shortall

Either way, the amount of money is considerable. Some €167 million has been spent on the training of people already in employment. Essentially, it was a subsidy to employers. Understanding the justification for such a transfer of public money to employers at a time when we usually had full employment and the economy was booming is difficult. During the period in which the programme started, what was the Department's policy in respect of expenditure on training and where was it articulated?

Mr. Seán Gorman

Policy is a matter for the Minister, but I will articulate it.

Deputy Róisín Shortall

That is what I asked Mr. Gorman to do.

Mr. Seán Gorman

We were in a period of high employment and low unemployment. The policy that evolved focused on what we needed to do to upskill the workforce from the perspective of enhancing productivity and individuals' prospects and saleability in the labour market generally. This deliberate policy evolved over time and was informed by a number of pieces of work. For example, the expert group on future skills needs recommended a particular focus on upskilling people in the workforce, something on which the task force on life-long learning and the enterprise strategy group, which produced a reported entitled, "Ahead of the Curve: Ireland's Place in the Global Economy", had also deliberated. In various commentaries and observations on the Irish labour market, the European Commission had pointed to the need to upskill and the advantage of upskilling people at work. The focus was on trying to help the individuals improve their skills base and to provide money as a catalyst to facilitate this happening. It was an absolutely clear dedicated focus to policy, unlike now, where in fact we have turned back. Because of unemployment the resource constraints, naturally enough, require that the unemployed are more of a priority.

Deputy Róisín Shortall

Is it not true to say that the policy pursued by the Department was out of line with what was happening in most of the other European countries, in so far as it was standard practice in boom time that employers would pay for the training of their employees rather than having that paid for by the State? I also find it strange that there did not seem to be any type of hierarchy of need in relation to training. During those years when the Department subsidised employers to the greatest extent, there were still difficulties with long-term unemployed people, women returning to the workforce and enormous problems, still, with literacy. There were problems with different categories of people, those with disabilities and so on, accessing employment. Was there ever any attempt to create a hierarchy of need, because it just does not make sense that there is this massive transfer of money to employers?

Mr. Seán Gorman

On the Department being out of line or why it adopted this policy, we found that unemployment had come down to about 4% during some of those years. For the first time ever we had the opportunity at least to try to do something for the wider workforce.

Deputy Róisín Shortall

The Department had the opportunity to do something for people who were illiterate, and who could not get employment at all, those with particular obstacles to participating in employment.

Mr. Seán Gorman

I will come to that. The policy had a focus on low-skilled people, and as the programme rolled out through 2006-07 and beyond, the focus on the low-skilled increased as the programme progressed. Some of the courses run by us were as basic as literacy and numeracy programmes, aimed very much at disadvantaged people. The long-term unemployed were——

Deputy Róisín Shortall

They were not for those outside the workforce.

Mr. Seán Gorman

No, other training was being made available for those outside the workforce through the Department of Education and Science and also FÁS, but obviously, not through this programme. The long-term unemployment rate at that time had dropped to about 3%. While this was welcome, there was still long-term unemployment. The opportunity presented itself for the first time to try to do something for people at work.

Deputy Róisín Shortall

As Mr. Gorman's Department had responsibility for oversight of FÁS, what guidance was given to it on expenditure of these funds?

Mr. Seán Gorman

When we in the Department looked at how we might respond to this push and the new policy on training and upskilling people at work, we asked FÁS to submit proposals to us for a programme aimed at addressing the skills needs of those in work, with a view to promoting individuals particularly in terms of upskilling and contributing to enhancing their life-long learning experience.

In 2004 FÁS submitted a proposal to us for a significant expansion in in-company training through using available ESF funds.

Deputy Róisín Shortall

I am sorry. My question is about what guidance was given to FÁS on expenditure of these considerable funds.

Mr. Seán Gorman

The guidance given to FÁS was essentially at a very macro level to the effect that training was to be provided for those at work, with a focus on the low-skilled. We did not set specific or individual targets at that stage for the programmes, because FÁS was reviewing the market in providers to see what could be secured. In our guidance to FÁS we emphasised the views of the expert group on future skills needs and those of the European Commission and so on. On the basis of those inputs and its own knowledge of the markets, and in consultation with employers we asked FÁS to devise programmes aimed at upskilling employees.

Deputy Róisín Shortall

What arrangements were put in place to ensure proper spending of that money, and that it was monitored on an ongoing basis?

Mr. Seán Gorman

We had and have expenditure returns coming into the Department on an ongoing basis, from FÁS, weekly and monthly. In this case FÁS established a sub-committee of the board on which we had representation, which was specifically tasked with monitoring this programme.

Deputy Róisín Shortall

There was no system in place within the Department to monitor this expenditure.

Mr. Seán Gorman

Our representation on the sub-committtee of the board was a primary factor.

Deputy Róisín Shortall

There was no system within the Department to monitor this spending.

Mr. Seán Gorman

Not at a detailed level, only at the macro level of the big spend and the numbers being trained.

Deputy Róisín Shortall

I will turn to Mr. Lynch for a few moments, as the person responsible, I take it, for the expenditure of these funds within FÁS. What direction and instruction had Mr. Lynch received on expenditure of these funds?

Mr. Martin Lynch

The expenditure was to be used for portable and transferable skills. In other words it was not intended to fund the types of training that employers, themselves, would fund. It has been generally recognised that employers are very much prepared to fund training, but within the context of the individual company's requirements. We endeavoured to focus very much on the individual's needs and relevant skills in the marketplace, but in a wider context to the individual's specific employment. That was the drive.

We also drove the programme very much towards certification on the basis——

Deputy Róisín Shortall

I accept that. I am just asking about what guidance, if any, was given by the Department on how the money was to be spent.

Mr. Martin Lynch

It was to be spent on the employed, on portable and transferable skills, with a particular focus on the low-skilled.

Deputy Róisín Shortall

Presumably there were no targets or standards set in terms of performance indicators.

Mr. Martin Lynch

There were. There was a programme budget, and as the Secretary General has indicated, we had to report regularly to the sub-committee of the board and to representatives of the Department. There was active engagement, and particular focusing and targeting took place all the time. We are talking about a very new development here. The CDP was a very new type of programme. Previously programmes which even FÁS had funded, such as the training support scheme, were funded very much through individual employers, and focused particularly on employers' needs. This was a complete turn about, and was focused at the individuals. It was a programme that was constantly in development, as such.

Deputy Róisín Shortall

The riding instructions from the Department would seem to have been just to spend the money each year.

Mr. Martin Lynch

There was a target spend, but it was very much in the context of——

Deputy Róisín Shortall

That was the focus, presumably, in how to spend the money each year.

Mr. Martin Lynch

A whole document was produced in conjunction with the Department which set the parameters on how it was to be spent, on what and the various eligible and ineligible categories.

Deputy Róisín Shortall

That did not seem to include any element of evaluation or quality control.

Mr. Martin Lynch

The programme was very small, starting off, and certainly the quality was in it.

Deputy Róisín Shortall

It was very small, perhaps.

Mr. Martin Lynch

No, the quality was not small. The quality was there throughout, even when the programme was enlarged.

Deputy Róisín Shortall

On what basis is Mr. Lynch saying that?

Mr. Martin Lynch

On the basis that it mainly consisted of certified programmes. Certified programmes have a clear indication of transferability and portability of qualifications. With very low overhead cost — we had a relatively small number of people working on this programme — we achieved an extremely——

Deputy Róisín Shortall

Was that not part of the problem, that FÁS was expected by the Department to gear up much too quickly? Given that only 50% of the courses were visited by FÁS staff indicates that the agency did not have the capability to monitor such large spending.

Mr. Martin Lynch

Sometimes if one looks at the file on a particular project, one might find it did not receive a monitoring visit. Local management would take the view that if it were running three similar courses, it might monitor two of them. Then, if there were indications of problems, it would obviously monitor them all.

Deputy Róisín Shortall

Still it all seems fairly casual.

Mr. Martin Lynch

No.

Deputy Róisín Shortall

I want return to Mr. Gorman.

During this time of full employment and the policy of subsidising employers to the tune of €167 million, did the Department of Finance or anyone in his Department express reservations about this programme to him?

Mr. Seán Gorman

I have no recollection of the Department of Finance having reservations about this programme. The allocations for particular programmes were agreed as part of the Estimates process every year in bilateral discussions with the Department of Finance. The Department would question every line in every Vote each year as a matter of standard practice. I have no recollection of anyone there questioning this as a policy or a spending area.

No one in the Department for Enterprise, Trade and Innovation proposed to stop, reduce or increase the scheme's allocation. While we would have discussions from time to time on the ups and the downs and the pros and the cons of different budget lines, particularly during the Estimates process, no proposal to stop the scheme was made.

Deputy Róisín Shortall

Were concerns expressed in the Department about the policy being pursued?

Mr. Seán Gorman

There were none expressed to me. It was the policy of the day.

Deputy Róisín Shortall

Did any senior officials express reservations?

Mr. Seán Gorman

No.

Deputy Róisín Shortall

The value for money report, which the committee finally received recently, was discussed some months ago when the Department attended the committee. This review, first mooted in 2005, examined the expenditure under the competency development programme in 2006 and intended to draw lessons from it. It was not published, however, until mid-2010.

Taking five years to produce a value for money report raises serious questions about the competence of the Department in overseeing this expenditure. Does Mr. Gorman agree?

Mr. Seán Gorman

There were particular difficulties around the report. I agree it took an inordinate amount of time to produce finally and formally. However, the Department did not wait for the formal completion of the value for money report as it kept this programme under review and made changes to it. For the rest of the programme's life cycle, improved monitoring and reporting on targets with different shifts on emphasis took place. It was not that the Department stopped everything until the review was done.

When the review began, there were difficulties with records and access to records which took a long time to sort out. It is not the case that there was no assessment of the programme as it progressed.

Deputy Róisín Shortall

We really do not know that. It seems incredible a report of fewer than 200 pages could take five years to produce. Does that not raise huge questions about the Department's competence in overseeing programmes?

Mr. Seán Gorman

It looks bad.

Deputy Róisín Shortall

It is bad.

Mr. Seán Gorman

It was a very complex programme. We pushed it through as quickly as we could. In the meantime, work was proceeding on implementing the programmes. It was the earliest at which we were in a position to conclude it formally.

Deputy Róisín Shortall

The year in question was 2006. Since then, the Department failed to complete the report. In the interim it spent more than €100 million on the programme. I put it to Mr. Gorman that there was a certain urgency about evaluating the programme to see whether the taxpayer was getting value for money, whether it was an effective programme and whether there was adequate monitoring.

We now know there was not and the Comptroller and Auditor General has identified several significant weaknesses in the programme. It is inexcusable that the Department can embark on a value for money study and yet it cannot produce a 200-page report for five years.

Mr. Seán Gorman

The evaluation of the programme was not entirely dependent on this report.

Deputy Róisín Shortall

Why did it take five years to complete a value for money report?

Mr. Seán Gorman

The process proved to be very complex. There were issues at the very beginning about the availability of data which was mentioned in the Comptroller and Auditor General's report. The programme started up and got running ahead of the system's capacity to catch up because of the pressures that were on it.

Deputy Róisín Shortall

I do not understand what that means.

Mr. Seán Gorman

What it means is that when the exercise started, the terms of reference were agreed in 2008, there was a problem accessing data on the programme as the records in FÁS were not up to date and freely available. This caused an initial and considerable delay.

Deputy Róisín Shortall

Did it take more than two years to get the data on how the Department was spending public money?

Mr. Seán Gorman

Yes, it took nearly that. A draft report was produced in March 2009. When the Comptroller and Auditor General started his review – I am not putting this forward as an excuse but as a fact – I decided to wait to see what it would contain before we finalised our report. Our value for money report confirms everything the Comptroller and Auditor General highlighted in his review.

Chairman

Before we go on, why did Mr. Pat Hayden, a principal officer, resign as chairman of the review group?

Mr. Seán Gorman

Mr. Pat Hayden was chairing the review group and, as far as I understand, he thought the exercise was taking too long and decided he did not want to be involved any further. As a result of a suggestion by this committee that an independent outsider should complete the review, I brought in a retired principal officer from the Department of Finance.

Chairman

Did Mr. Hayden outline in writing his reasons for resigning?

Mr. Seán Gorman

He sent an e-mail stating he was resigning but I do not believe he gave reasons for doing so in it.

Chairman

Did he question the role of other departmental personnel who were involved with the FÁS board in the programme?

Mr. Seán Gorman

He did not to me. He resigned out of frustration with the process.

Deputy Róisín Shortall

That is very different to what Mr. Gorman told us the last time he was before the committee. On that occasion, Mr. Gorman read Mr. Hayden's e-mail to the committee. Clearly, Mr. Hayden has been entirely vindicated because it has taken the Department five years to produce a value for money report while it spent an additional €100 million of taxpayers' money in the meantime.

Is it not the case that Mr. Hayden resigned because he knew there was serious foot-dragging going on in the Department to conceal the information and delay the publication of the value for money report while large amounts of money continued to be spent? He also had serious reservations about the reporting system in place. He was required to report to a representative of the Department who was also a director of FÁS, meaning there was no transparency in the process.

Mr. Seán Gorman

That is the reason we put in a new chairman after he went from outside but——

Deputy Róisín Shortall

That is not the reason Mr. Gorman put in a new chairman. Mr. Gorman was asked by the Chairman of this committee the reason Mr. Hayden resigned.

Mr. Seán Gorman

He resigned out of frustration with the process. That is my understanding. He was not satisfied that it was moving quickly enough and he decided he had had enough.

Deputy Róisín Shortall

And that there was not transparency in the process.

Mr. Seán Gorman

On the transparency issue, I was the one who asked for the review. I wanted the review and therefore on that basis——

Deputy Róisín Shortall

Mr. Gorman did not attach much urgency to it if he wanted a review. It started in 2005 and the report was produced in 2010.

Mr. Seán Gorman

If I did not want to have the issue outed, to use that term, I would not have asked for it in the first place.

Deputy Róisín Shortall

The terms of reference of the value for money report state that the core purpose of the review is to analyse the inputs, outputs and outcomes of public expenditure that supports training programmes for the employed and to inform future policy development and provision. How can that inform future policy if Mr. Gorman leaves it lying for five years and in the meantime spend an additional €100 million?

Mr. Seán Gorman

As I said, we were not just waiting for the report to be finished. We were making adjustments and improvements in the way we were capturing outputs and indicators right through that period up to 2006, 2007, 2008 and 2009, to the point where we now have programme indicators and output measurements for each of the individual 30 programmes that are operated by FÁS.

Deputy Róisín Shortall

After the event.

Mr. Seán Gorman

No. During the process we kept improving. Annual output statements had arrived as a requirement for presentation of Estimates to the Oireachtas and we were using those as a means of improving——

Deputy Róisín Shortall

We got a copy of that in recent days——

Chairman

Before Deputy Shortall moves from that point, and I will give her time to address it, would it be reasonable to assume that there was an attempt to bury the report——

Mr. Seán Gorman

Certainly not, no.

Chairman

——because of the embarrassment it would create for other people involved in the whole programme?

Mr. Seán Gorman

No. I would not accept that. The——

Chairman

What other explanation is there for the resignation of a principal officer, the questioning of the commitment of the Department and the role of a member of the Department who was also a member of the board of FÁS?

Mr. Seán Gorman

I am responsible for the Department and at no stage was there ever any intent or objective to bury any report. As I said, I was the one who asked for it. In any event, even if I thought——

Chairman

Mr. Gorman was not vigilant in making sure the report was brought to its finality if it took five years to do that.

Mr. Seán Gorman

I accept that was an unacceptably long period.

Chairman

I am aware Deputy Shortall wants to proceed with her questioning but what was the role of Mr. Mulligan, who is present, in all of that?

Mr. Seán Gorman

Mr. Mulligan was the assistant secretary in the division at the time with responsibility for FÁS, and Mr. Hayden would have reported to him.

Deputy Róisín Shortall

Therefore, he was a director of FÁS.

Mr. Seán Gorman

He was on the board of FÁS at the time, yes.

Deputy Róisín Shortall

Which is a significant point that Mr. Gorman left out. It is a significant point in regard to accountability and transparency that there was an examination of expenditure in FÁS going on and the reporting mechanism was to a member of the board of FÁS, who is also Mr. Gorman's assistant director general.

Mr. Seán Gorman

He was, yes.

Deputy Róisín Shortall

Therefore, there was not transparency in that system.

Mr. Seán Gorman

The value for money review was not, and those reviews are not, dependent on one individual such as Mr. Mulligan in the position he was in. The review has to go to an outside independent assessor to have it tested as to its robustness. That was done and it was verified as a robust report.

Deputy Róisín Shortall

And we know how those things work generally.

Mr. Seán Gorman

Yes. There was also an obligation on us by virtue of a Government decision to publish the report.

Deputy Róisín Shortall

My statement that it was not transparent and that there was little accountability in it was not a question. I am making that statement. Clearly, it is not appropriate that the reporting mechanism would be as it was in that case where it is reported to somebody who is internal to the FÁS organisation. That is the point I am making.

I want to ask Mr. Gorman——

Chairman

Mr. Hayden obviously put his career on the line to highlight the fact that, in my view, there was an attempt to bury the report.

Deputy Róisín Shortall

What was Mr. Gorman's position, given that a respected principal officer in his Department, took a particular stand on this issue and had serious concerns to the point where he resigned? That is an unusual enough occurrence within a Government Department for such a senior person to take a stand like that. How did Mr. Gorman deal with that issue?

Mr. Seán Gorman

I dealt with it by moving on and appointing somebody else to finish it. That is how I dealt with it and I——

Deputy Róisín Shortall

That is not exactly dealing with it. Mr. Gorman knew this principal officer. He had worked with him for some time. He had serious concerns. Did Mr. Gorman address those concerns at any point?

Mr. Seán Gorman

At one stage I asked him if he would want to continue. He did not, and on that basis I felt it was better to get somebody else into the organisation who was——

Deputy Róisín Shortall

Asking somebody if they want to continue is not addressing their concerns.

Mr. Seán Gorman

I had no concerns around transparency. I had no concerns around suppression, none whatsoever.

Deputy Róisín Shortall

That is surprising because members of this committee would have concerns about the reporting system Mr. Gorman put in place.

Mr. Seán Gorman

I had none——

Deputy Róisín Shortall

It is surprising that a Secretary General of a Department should say he is not concerned about that arrangement. It is also surprising that when a principal officer expresses serious reservations about something that Mr. Gorman is doing he did not, apparently, make any attempt to address those concerns. This is about the expenditure of large amounts of public money.

Mr. Seán Gorman

I am and was absolutely satisfied that there was no attempt to cover or suppress anything. On the contrary——

Deputy Róisín Shortall

What is the current status of the competency development programme?

Mr. Seán Gorman

The programme is being wound down. The amount of money available to it for 2010 is approximately €6 million and by virtue of a further policy decision of the Minister and the Government, the priority is now moving into unemployed——

Deputy Róisín Shortall

When was the decision taken to wind it down?

Mr. Seán Gorman

The 2009 budget.

Deputy Róisín Shortall

Who took that decision?

Mr. Seán Gorman

It was taken in consultation with the Minister at the time in terms of the allocations. It was a decision taken around the available allocations, the available moneys and where the priority should now lie, and it was clear the priority was unemployment as distinct from upskilling people at work because of the very serious problem we had. It arose in the context of Estimates decisions.

Deputy Róisín Shortall

It had nothing to do with the publicising of the expenditure and the lack of controls.

Mr. Seán Gorman

No. The driver for the shift in policy was entirely a recognition of the change that had taken place in the labour market where we were now dealing with a very high unemployment position which did not prevail at the time this programme was at its peak.

Deputy Róisín Shortall

I ask Mr. Gorman about the report he made available to us in recent days, the eventual value for money report that was published. The copy we have been given has significant amendments to it. It is obviously not a final copy. In particular, large sections of the recommendations are deleted and there are boxes in the side margins indicating that chunks of the recommendations have been removed. Can Mr. Gorman tell the committee who was responsible for those final amendments?

Mr. Seán Gorman

I was not aware until now that Deputy Shortall has a copy with amendments on it but a steering committee was established to do the report, chaired by a retired official from the Department of Finance. The steering committee made whatever changes were made and submitted the final report to me, which I agreed without any amendment.

Deputy Róisín Shortall

Can Mr. Gorman find out who made these amendments in the five margins?

Mr. Seán Gorman

It would have been done by the author of the report in consultation with the steering committee.

Deputy Róisín Shortall

Why did we not get a final version?

Mr. Seán Gorman

I do not understand it because I do not have that copy.

Chairman

I asked Mr. Gorman at the start of the meeting if the copy we were supplied with was the same copy as was laid before the Dáil and he said it was.

Mr. Seán Gorman

To my knowledge there is only one copy. What the Deputy has is a complete surprise to me. I do not know——

Deputy Róisín Shortall

Somebody might check in the next few minutes——

Mr. Seán Gorman

I can, yes.

Deputy Róisín Shortall

——where that version came from, the date of that version and, specifically, who made those amendments because they are fairly significant changes.

Chairman

This is the version that was supplied to us as a committee.

Mr. Seán Gorman

Does the hard copy have amendments in the margin?

Chairman

Yes — the one we received from the Department.

Mr. Seán Gorman

I will have to check, as I do not know.

Deputy Róisín Shortall

Perhaps Mr. Gorman could get someone to check now and let us know.

Mr. Seán Gorman

I have my own copy here. I received it from the committee in final form.

Deputy Róisín Shortall

I am sure somebody will be able to check for us.

With regard to the fact that the report took five years to complete and the concerns expressed by Mr. Hayden were not addressed, how appropriate does Mr. Gorman think it was that this value for money report was carried out by a group of people, all of whom were insiders? With regard to the need for accountability and transparency, surely there should have been outsider involvement.

Mr. Seán Gorman

The formula for value for money reports is prescribed by the Department of Finance. Insiders are needed for a start, in the sense that people who know the territory are needed. The group included representatives from FÁS which delivered the report, the Department and the Department of Finance. After we changed the chairprson, we had an outside chairperson. A report, when finished, is subject to independent assessment to verify it is robust and objective. On that basis, I was happy with the group which looked at it.

Deputy Róisín Shortall

Who are the independent persons who checked it for its robustness?

Mr. Seán Gorman

We had a representative from the Department of Finance and also a retired principal officer from the Department of Finance on the group.

Deputy Róisín Shortall

That is not exactly independent. They are still insiders.

Mr. Seán Gorman

In so far as they relate to us, they are very independent in terms of the relationship between the Department of Finance and a line Department.

Deputy Róisín Shortall

I want to ask about expenditure under the programme. This will be my final question, as other members wish to come in. We have details in the report of the Comptroller and Auditor General in Appendices E.2 and E.3 of the transfers of large amounts of money to what are called strategic partners. In 2005 and 2006, for example, The Chambers of Commerce of Ireland received €2.6 million and in 2007, €4 million. The Irish Congress of Trade Unions also received significant amounts of money, as did a number of employer bodies, for example, the Society of the Irish Motor Industry, the Small Firms Association and ISME. It seems that under the strand of the programme involving strategic partners public money was being divvied out between the social partners represented on the board of FÁS. Was Mr. Gorman concerned about the amount of money going to bodies associated with members of the board of FÁS? What steps did he take to ensure transparency in that decision-making?

Mr. Seán Gorman

I am satisfied that the process of selection of the strategic partners to which Deputy Shortall referred was open and transparent and that proper tendering procedures were applied.

Deputy Róisín Shortall

On what basis was Mr. Gorman satisfied?

Mr. Seán Gorman

There was participation by us in the FÁS sub-committee. There was an open call for proposals in the national newspapers.

Deputy Róisín Shortall

What does participation in the FÁS sub-committee mean?

Mr. Seán Gorman

It means having a representative on the committee dealing with——

Deputy Róisín Shortall

What was that representative doing?

Mr. Seán Gorman

Monitoring implementation of the programme.

Deputy Róisín Shortall

Mr. Gorman was the representative in the early days. He was a member of the board.

Mr. Seán Gorman

No, this committee was not in existence in my time.

Deputy Róisín Shortall

Mr. Gorman was a member of the board and succeeded by Mr. Mulligan.

Mr. Seán Gorman

Yes, I was succeeded by Mr. Dermot Mulligan.

There were invitations in the national newspapers inviting applications and 84 were received and assessed by FÁS. Subsequently, 30 tenders were evaluated by a cross-divisional team in FÁS and submitted to the board for approval. I am satisfied there was an open and competitive tendering process in FÁS.

Deputy Róisín Shortall

All of these decisions have to be viewed in the light of what we know about what happened in that era when there was the spending of public money with abandon, when people travelled abroad on various trips and there was excessive corporate entertainment in FÁS. Representatives of the Department were very much part of that fling during the good years. The decisions taken in divvying out these funds to people associated with board members have to be viewed in the unhealthy climate that prevailed in FÁS for a number of years.

Mr. Seán Gorman

We now know there were difficulties in FÁS at the time. However, this was a very open and transparent tendering process, with eight or nine specified criteria and with each of the tenders being evaluated. I would have had and still have no reason to doubt the veracity of the tendering process.

Deputy Róisín Shortall

Other than Mr. Gorman giving personal assurances, he has not provided any evidence to show that he was thorough in ensuring transparency. He took people at their word and trusted people on the board. As we now know, that is entirely inadequate in terms of oversight by a Department for that level of expenditure.

Mr. Seán Gorman

Our job in overseeing the process is to ensure, through certification by the chairpersons of the boards, that there are robust systems in place for public tendering. We do not monitor on a day-to-day basis their actual application. We rely on internal audit controls, the boards and the statements of internal financial controls included in the annual reports by the chairpersons. We also rely on the auditing done by the Comptroller and Auditor General to receive assurance and reassurance on these processes.

Deputy Róisín Shortall

Does Mr. Gorman accept that this approach was inadequate?

Mr. Seán Gorman

We know that there have been problems. In close consultation with FÁS and the FÁS board, there is a new series of tighter public procurement rules, regulations and procedures in place in FÁS.

Deputy Róisín Shortall

Does Mr. Gorman agree that the oversight role which was supposed to have been performed by the Department in respect of FÁS generally during those years and, in particular, the competency development programme was entirely inadequate?

Mr. Seán Gorman

No, I do not. FÁS is a huge organisation which is managing approximately 30 programmes. The level of oversight of FÁS or other similar State agencies depends on the various layers of the system in doing their thing, complying with the rules on a transparent basis. There are checks and balances in the system. As I stated, they are the statements on internal financial controls which have to be signed off by the chairman, the internal audit function in the organisation and the Comptroller and Auditor General's audit. The competency development programme was unusual because in the time I have been involved with FÁS I do not recall a dedicated sub-committee being set up to oversee a single programme such as this. There was heavy oversight in FÁS of this problem.

Deputy Róisín Shortall

To what extent does Mr. Gorman think the problem was caused by the culture that had been allowed to develop in the relationship between the Department and FÁS; the close personal relationships between various key players, specifically the Minister at a certain stage and her soon to be husband with regard to the relationship between the Department and FÁS; the regular movement of personnel between the Department and FÁS and people sitting on the board; and the climate that had been to allowed to develop in terms of all of these key players being very closely associated with each other, socialising together and going on trips abroad together? Is it not the case that during the period in question any notion of transparency or accountability went out the window because people were having too good a time? Those responsible for ensuring proper procedures were in place and proper accountability for the expenditure of public money did not do their job.

Mr. Seán Gorman

I cannot comment on Ministers and any relationships between Ministers and boards. That would not be appropriate. From the point of view of the Department, as I explained, our reliance is on the processes and systems in place. We have to take a certain amount of this on the basis that the systems are in place, that they are checked and audited and that nothing is showing up.

Deputy Róisín Shortall

We know now after two years' examination——

Mr. Seán Gorman

We know now.

Deputy Róisín Shortall

——that those systems were not working. What action did Mr. Gorman take to ensure there were proper accountability systems for the expenditure of that public money?

Mr. Seán Gorman

We had all the standard procedures in place at that time. They are enhanced now, but at that time there were all the standard procedures — monthly reporting, auditing, annual reporting and liaison meetings.

Deputy Róisín Shortall

They did not work.

Mr. Seán Gorman

They did not work in certain areas, but the vast bulk——

Deputy Róisín Shortall

The oversight of FÁS was inadequate.

Mr. Seán Gorman

I would not say it was inadequate. The problems that have emerged in FÁS were there and they escaped many of us, not just the Department.

Deputy Róisín Shortall

Mr. Gorman's Department is the parent Department and he is responsible for ensuring it is done properly and there is accountability. My final question is a specific one——

Chairman

Deputy Shortall referred to Annex E2 listing the strategic partners approved by the board between 2005 and 2006, and she spoke about the possible conflict of interest. Could Mr. Gorman name those who were on the sub-committee of the board who approved these projects? Could we have names?

Mr. Seán Gorman

I can get the Chairman the names.

Chairman

We want them now, please.

Mr. Seán Gorman

I might have them here. The main board would have approved the contracts.

Chairman

I noted that, but the sub-committee then made a recommendation.

Mr. Seán Gorman

I might have the names of members of the sub-committee here now. Yes, I have them here. The chair was Mr. Des Geraghty, and there was Ms Jenny Hayes, Mr. Brian Keogh——

Chairman

Mr. Gorman might state who they represented.

Mr. Seán Gorman

Mr. Des Geraghty represented ICTU, Ms Jenny Hayes, IBEC, Mr. Brian Keogh was the employers' representative on the board, Ms Sally Anne Kinahan would have been ICTU, Mr. Dermot Mulligan represented the Department, Mr. Niall Saul, who was the chair of the internal audit, was a private sector member, Mr. Frank Walsh was a FÁS worker director and staff representative, and Mr. Owen Wills was of the TEEU.

Deputy Róisín Shortall

All of whom are associated with bodies which benefited from the allocation of these funds.

Mr. Seán Gorman

Mr. Niall Saul and Mr. Brian Keogh may not have been, but in the case of most of the others, yes, in some way.

Deputy Róisín Shortall

Mr. Saul had involvement with the employers' body, is that correct?

Chairman

Would it be described as an insider job?

Mr. Seán Gorman

No. The analysis of the SIA tendering process by our review was that it was quite robust.

Chairman

We know some of the targets. For example, the Society of the Irish Motor Industry was contracted to deliver 2,600 days' training and delivered only 725.

Mr. Seán Gorman

It would have been paid only for the training delivered.

Chairman

Is Mr. Gorman sure of that?

Mr. Seán Gorman

Yes, that is the case. It would not have been paid for training not delivered.

Deputy Róisín Shortall

On that sub-committee on training for the unemployed, the majority of the members of which had a vested interest, we know from the Comptroller and Auditor General's report that its work was to monitor the outcomes of the programme, to review FÁS policy on the training of persons at work, and to recommend policy changes or other initiatives where appropriate. Has Mr. Gorman reports from that sub-committee that recommended policy changes?

Mr. Seán Gorman

Not directly to the Department. There would have been some recommendations within FÁS internally to make changes.

Deputy Róisín Shortall

Would Mr. Gorman have had any concern about the lack of transparency in that committee and the fact that all of its members were associated with bodies that benefited from the disbursement of these funds?

Mr. Seán Gorman

I had no concerns on the basis that they were obliged to comply and, as far as I still am aware, were complying with the open rules of public tendering.

Deputy Róisín Shortall

Okay, I will just say to Mr. Gorman again that I have the impression that this was a slush fund and has all the appearance of such. It was disbursed by persons who had vested interests in making those allocations because all the members of the committee were associated with various bodies that benefited from the decisions of that committee. It is extraordinary that Mr. Gorman does not have any concerns about the lack of transparency and accountability in that process. It is yet another occasion on which I am very surprised that Mr. Gorman did not have any concerns. I will leave it at that.

Chairman

Arising from Deputy Shortall's questions, a number of other questions have come up. The Comptroller and Auditor General's report refers in page 119 to the internal audit investigation of a training company in the midlands. How did the irregularities come to light, what was the outcome of the investigation, has FÁS recovered the money in question, has the matter been referred to the Garda, has the company been awarded any contracts since these issues came to light, and did FÁS seek any refund or penalty in these issues?

Mr. Seán Gorman

With the Chairman's permission, would it be okay if I asked the FÁS representatives to deal with this because it is more of a day-to-day matter for them?

Mr. Con Shanahan

I do know that there was no loss to the Exchequer in that case. The money was fully recovered from the training concerned. I am not quite sure how it arose, whether it was discovered by a routine internal auditor or whether it was a whisleblower. I am not 100% sure of that.

Chairman

Given that this is an issue in the Comptroller and Auditor General's report, I would have thought Mr. Shanahan would have more information than he has now. He stated he is not sure. Surely the matter was brought to his attention by the Comptroller and Auditor General's report, he would have had it fully investigated and would have a response to all the questions I asked.

Mr. Martin Lynch

It was information communicated from outside the organisation which indicated there might be a problem with this company. We called in our internal audit immediately and they investigated what was going on. It turned out the company had some people on some training programmes about which we were not happy because they might have been seen as employees of the company, in effect, and we might have been seen as grant-aiding them. We were not happy with that and accordingly proposed, which subsequently happened, that they be suspended from our training register. As Mr. Shanahan has said, we recovered any money in dispute.

Chairman

Was the matter referred to the Garda?

Mr. Martin Lynch

No.

Chairman

Why not?

Mr. Martin Lynch

It was not, to my knowledge, referred. We were satisfied we had taken appropriate action but it was not referred to the Garda.

Chairman

How does FÁS explain the other practice of paying per participant for courses rather than paying a company a grant for courses? There was one example where there were 120 participants on a course and FÁS paid the company running the course per participant rather than a block grant for the course.

Mr. Martin Lynch

On the basis that our general practice has been performance based, which is, if the people are not on the programme, one does not pay for the people. Now that can be inverted to suggest that it might be better just to pay a block grant but it is not guaranteed that there will be the numbers on the programme. Frequently, we have made arrangements with companies to provide training and they have not delivered, but we do not pay them when they do not deliver.

Chairman

The course referred to in the value for money study involved IBEC and the Small Firms Association.

Mr. Martin Lynch

That was one specific course. However, the value for money report did not highlight that several programmes run by the Small Firms Association had low numbers. I have no doubt they cost the SFA money because it was only paid for the small numbers but it would have incurred the cost of running the full programmes. One may take one example in absolute isolation and draw one indication from it, but often one must consider the wider picture and I am satisfied with the wider picture.

Chairman

Mr. Lynch has stated as a matter of fact that the SFA and IBEC ran courses in which there was low participation.

Mr. Martin Lynch

Yes. They only got paid for the low numbers.

Deputy Niall Collins

How many training provider organisations did FÁS engage over the life of the programme, aside from the strategic partners? How many were private entities?

Mr. Martin Lynch

I do not know the number but there would have been a vast number throughout the country. Individual regions would have tendered in their own individual areas as well as national tenders. I imagine the numbers would have been vast.

Deputy Niall Collins

Will Mr. Lynch provide an overview of the tendering process, including the type of process and the information FÁS sought through the tendering process? Does FÁS have any idea how many of these training providers are still in existence today? How many mushroomed into existence on foot of the existence of this programme and have since disappeared?

Mr. Martin Lynch

The majority would have existed for quite some time before we engaged them on the programme.

Deputy Niall Collins

Does FÁS have specific numbers in this regard?

Mr. Martin Lynch

We would have only called to tender companies that were already on the national register of trainers. It takes some time and is an extensive and detailed process to become registered. Not alone must the company be qualified, the individual, specific people must be cleared to deliver a given programme. It is a rather detailed process. At times a given company would have expressed an interest in delivering a competency development programme and, frequently, it would have found the process rather onerous and may not have pursued it for that reason. However, most of the companies would have been of long standing. I do not have the facts to back up that statement at present.

Deputy Niall Collins

Will Mr. Lynch collate them and send them in afterwards? He referred to the large number of providers and suggested they comprised various forms and were drawn from the social partnership pool of providers and trade unions. What vetting was carried out through the tendering process with these organisations, for example, in respect of tax compliance?

Mr. Martin Lynch

A firm would have to be tax compliant for us to pay them once the issue of payment arose. The social partner contracts would have represented less than 20% of the total, although the contracts might have been higher. Since we pay only on a performance basis, ultimately, the reality is that less than 20% of the actual expenditure incurred relates to those social partner contracts. Tax compliance is paramount to us. We would not pay people unless they were tax compliant.

Deputy Niall Collins

Was all of this sought up-front? In the case of the HSE a question has arisen about a particular programme and the money is being followed. The trade union movement is a different entity. It is made up of not-for-profit organisations comprised of membership. Does FÁS monitor the annual reporting of trade unions? Perhaps that should be a question for the Department. I do not mind who answers it. What is the level and degree of obligation on all the trade unions, specifically those that provide the training? Are they all tax compliant? Do they all comply with the requirements of the registrar of unions, especially with regard to tax obligations? They may be not-for-profit organisations but they have obligations to be up to date with PAYE and other forms of taxation.

Mr. Martin Lynch

The programme activity is monitored in detail. I will call on Mr. Shanahan to discuss the tax situation but with regard to activity, we only pay the trade unions on the same basis that we pay any other provider or, for that matter, the employer bodies. That is to say, we pay them on the training they deliver, not on the basis of any greater arrangement.

Deputy Niall Collins

Is Mr. Lynch telling us he is satisfied that they are all tax compliant and up to date with their statutory obligations with regard to returns?

Mr. Con Shanahan

Such a relationship is a matter for those organisations and the Revenue Commissioners.

Deputy Niall Collins

It is a matter for FÁS if it is paying them public moneys.

Mr. Con Shanahan

To be paid, all our trainers must submit tax clearance certificates. All our trainers are subject to withholding tax, which we take on fees. I have no reason to suspect that situation does not apply here.

I refer to the amounts of money and the performance issues raised. Of the €21 million approved by the board in the period 2005 to 2006, expenditure of less than €14 million was paid out on foot of contracts. Of the contracts approved by the board in 2007 amounting to almost €19 million, some €10 million has been paid out to date. As has been pointed out, these payments were made on a no foal, no fee basis. If the participants did not show, the trainers did not get paid.

Deputy Niall Collins

The Comptroller and Auditor General's report referred to some courses being developed as a result of approaches by providers. In other words, they were supply driven rather than demand driven. This is the impression given. How many courses are at issue in such cases? What is the percentage?

Mr. Martin Lynch

We did not believe we had all the knowledge required to determine exactly what courses might be appropriate everywhere. If providers came up with suggestions about courses, we were pleased to consider them but not to consider them for that provider. We would have gone to tender for such courses unless there was a unique programme and we took the view that there was a justification for treating it as a unique programme. Certainly, we did not close our ears to ideas for programmes, regardless of from where those ideas came. That does not imply there was any particular favouritism shown to any provider as a consequence.

Deputy Niall Collins

The report states there were 123,000 participants. Does FÁS have any handle on how many of these are now at work? How many have since found themselves out of a job?

Mr. Martin Lynch

No, we do not have the details.

Deputy Niall Collins

Is there any plan to capture such information as part of a look-back exercise?

Mr. Martin Lynch

No, not at this point because I imagine such an exercise would be rather complex and detailed. In addition, there is the fact that the programme has effectively stopped new commitments since the start of 2009. We are in wind-down mode and most staff have been reassigned to other functions, if they are not already retired. Consequently, the resources to carry out such a look-back would be rather detailed.

Deputy Niall Collins

I refer to the 123,000 participants. How many days' training does that figure equate to? Some of these were part-time and full-time one-day courses. How many days' training were provided as opposed to the number of participants?

Mr. Martin Lynch

I do not have the details of days but very few of them, even though there is one instance quoted of a one-day programme on which there was quite a number of people, were one day because the vast majority were certified programmes. Even a modular certified programme would have to be quite a number of days. Some of them stretched as far as ten or 20 weeks where we would have been talking about programmes, perhaps in the retail sector, which would have off-the-job and on-the-job elements to them, but I cannot give the Deputy a number of days.

Deputy Niall Collins

That was then and this is now. Can FÁS capture this information about participants on all courses it runs now?

Mr. Martin Lynch

We would be able to get that on programmes we would run for other purposes but we do have the data for this particular programme.

Deputy Niall Collins

Mr. Lynch probably will not know the answer to my next question either. With regard to the 123,000 trainees, what percentage participated in more than one course?

Mr. Martin Lynch

Some would but I do not have the numerical breakdown of that.

Deputy Niall Collins

Have the organisation's systems caught up to make such information available now?

Mr. Martin Lynch

In our system for dealing with unemployed people, we encourage people to follow progression routes frequently from one programme to another if they are starting with a basic skill programme. We are able to get data on that information at the moment.

Deputy Niall Collins

During the years the CDP ran and during the years under review, 4% of the participants were long-term unemployed. Separate from the CDP, what was the focus of FÁS on that 4% cohort during those years? It seemed to hit the floor at 4% and it could not seem to go any further. What specifically was the focus during those years for that cohort?

Mr. Martin Lynch

We still had, for example, community employment programmes running, even through the boom times, and they continue to be specifically aimed at the long-term unemployed. We also ran other programmes for the long-term unemployed over the period.

Deputy Niall Collins

With regard to monitoring by the organisation, the report states many of the staff involved were administrative and were not qualified to do the relevant and proper monitoring. Does the organisation engage in training its own staff to monitor all its courses? If so, is that ongoing? Has FÁS caught up, given a deficiency was highlighted in the CDP?

Mr. Martin Lynch

Yes, we train our own people to monitor both from a financial point of view and a quality point of view. The resource limitations on us from time to time mean management and staff locally have to be prudent in their judgment about where and how to monitor. One might get instances where a particular course shows no evidence on a file that monitoring has taken place but the same provider in some situations might be providing two or three courses. The local manager might have decided he will ensure he will sample monitor and if the sampling throws up problems, he pursues it elsewhere. I am happy that the people monitoring had the skills to do it under the CDP. We were fortunate in having some good people working on the programme over its lifetime even though the resources were tight.

Deputy Niall Collins

Has any information come to Mr. Lynch's attention since the publication of these reports in regard to CDP or any of the providers he is examining that warrants investigation or, as the Chairman said, warrants referral to the Garda? Has anything happened since?

Mr. Martin Lynch

I do not think so. I do not like to be absolute in my answers to such questions in case I am not a party. Sometimes information might come into the organisation that would be relayed to our audit team and I might not even be aware of it so I cannot personally be absolute but I am not aware of it.

Mr. Paul O’Toole

To my knowledge, we are looking at a number of courses that may have involved CDP that we need to investigate further to see whether any issues arise. We do not have any specifics in that regard but it has been a fact for the organisation over recent years that we get a constant stream of individual complaints or issues brought to our attention, including for the CDP. We investigate rigorously each and every one of those. Ultimately, if we make a finding in that regard, it would be reported to the Comptroller and Auditor General as part of our normal reporting arrangement.

Deputy Niall Collins

FÁS reports to the Comptroller and Auditor General. Has the body a policy on handing information over to other authorities to investigate?

Mr. Paul O’Toole

We have on a number of occasions referred matters to the Garda, including a high profile one in the recent past which has resulted in a guilty plea by the individual concerned. Our colleagues in internal audit liaise with the Garda and take guidance from it in respect of what matters are appropriate to refer to it. Where we believe there is potentially fraud or criminal involvement, we have referred matters to the Garda. We make a judgment call in the circumstances of each case.

Chairman

I wish to clarify a number of issues. Page 118 of the Comptroller and Auditor General's report goes further than Mr. Lynch set out. It states, "Monitoring visits by FÁS were not carried out in respect of half the courses examined by him". There was an extensive failure to monitor courses. How does that tally with the evidence Mr. Lynch has given? If a participant was on two or three different courses and if one was okay, assumptions were made by monitors.

I seek specific information on some questions asked. Perhaps Mr. Lynch will supply the committee with the information if it is not available now. Could he provide us with a list of locations and organisations in the CDP spend where he has identified failures either in spending controls or quality control? How many external organisations are under investigation currently? What business has FÁS has done with them? How many employees are under investigation regarding their spending? Against how many has disciplinary action been taken? We need specific information arising from many of the questions asked.

Deputy Shortall asked a number of questions about European funding. What is the European Commission's attitude to the CDP? Is it just wishful thinking that there will not be a net loss to the Exchequer? Will Mr. Lynch provide us with hard evidence and information on the current attitude of the European Commission to the CDP and what has happened in recent years?

Mr. Con Shanahan

With regard to the 2000 to 2006 operational programme, which we discussed earlier, an audit undertaken by the European Social Fund auditors uncovered some audit trail issues on a programme that is not related to CDP at all. Work was subsequently done by FÁS to clarify fully the audit trail and to demonstrate that there was no over claim and that the integrity of the claim was uncompromised. That work has been completed successfully and the issue has been dealt with.

No particular issue has come to the attention of the European Social Fund, ESF, auditors or the Commission with regard to the competency development programme, CDP. We are aware of the claims due to be submitted at the end of July and, no doubt, the auditors and Commission will review that in due course. They are very conscious of the public issues that have been raised with regard to the competency development programme and I am sure there will be additional focus on the claims. We have taken a cautious and prudent view in our approach to determining what expenditure should be included in the claim and have done the work in that area. The submissions have been made to the Department.

Chairman

Have the European Union auditors ever examined any of the activities of FÁS?

Mr. Con Shanahan

The European Union auditors look at our activities annually. Auditors from the Office of the Comptroller and Auditor General, our own internal auditors, European Union auditors and Department auditors all examine our activities. We have been audited in depth over the past 18 months in particular.

Chairman

Would that have included examination of CDPs?

Mr. Con Shanahan

Yes, some CDPs would have been covered.

Chairman

Would the programmes covered have been selected by the Commission itself?

Mr. Con Shanahan

It always selects programmes independently for verification.

Chairman

Does Mr. Gorman have anything to add?

Mr. Seán Gorman

Deputy Shortall asked about our estimation of the value of the ESF claim for the CDPs for the period 2000 to 2006. I have just received information that we estimate it at €52 million.

I would also like to refer to the point the Chairman raised about the report and the amendments to it, which I had not seen. We checked with our IT people and were informed there is a facility available on the Word programme on which documents are prepared which allows a person to open the document and ask the memory to display any amendments that were made to the document. This list can then be printed. I had not seen the amendments as the submission I received did not include any of the amendments made by the author of the report.

Chairman

I asked about locations and whether we could have a list of locations. Will we get that list soon?

Mr. Con Shanahan

The moment I get the list, I will submit it to the committee.

Chairman

A recent newspaper article referred to a warehouse lease at Tolka Valley Business Park and made an allegation of cronyism where local management was overruled when it sought to terminate the lease in 2003. The lease was extended to 2011 in 2005. When did FÁS discover there was a conflict of interest in this regard and what action has been taken?

Mr. Paul O’Toole

I will answer that to the best of my ability. A lease on that premises ended in 2003. The lease was taken to expand the range of facilities available for apprenticeship training. Two courses took place in that regard and the lease ended in 2003. The premises was subsequently leased again in 2007 and the circumstances of that lease and the suitability of the premises is currently under investigation by our internal audit department. We are concerned that we took on board a premises that year which was not used for the original purpose, which was to expand the apprenticeship operation. Apprenticeship levels started to fall off a little at the later stage, but it appears the premises was not suitable for purpose. That issue is being investigated, but the internal audit is not completed. When it is completed, we will make it available through the normal channels.

Chairman

What rent is being paid for the premises currently?

Mr. Paul O’Toole

Approximately €40,000 per year.

Chairman

You said it was not fit for the purposes proposed. What use is being made of it at the moment?

Mr. Paul O’Toole

It is currently being used for storage of various pieces of furniture and other items.

Chairman

That is expensive storage. Was a conflict of interest uncovered?

Mr. Paul O’Toole

That is what we are trying to investigate at the moment. We have not demonstrated a conflict of interest, but we are examining the matter.

Chairman

With regard to past conflicts of interest discussed here, what is the current situation regarding the individuals involved?

Mr. Paul O’Toole

The situation in what terms?

Chairman

In terms of past conflicts of interest that were highlighted here. What is the current situation regarding people who were allegedly involved?

Mr. Paul O’Toole

At the end of last year, the out-going board directed me to carry out an investigation into the findings of various internal audit reports to see how they impacted on various individuals within the organisation. The committee will be aware that board left office and the new board took up its duties and met for the first time in February of this year. Between those periods, we went through a tender process to hire an external assessor. That external assessor has been working on that project since February of this year and is working through it. Therefore, we are working through each of the matters raised by the audit committee in respect of the potential culpability of various individuals in the organisation. Quite a number of those have left the organisation at this stage.

Chairman

Did they leave on pension?

Mr. Paul O’Toole

They retired from the organisation. One of the individuals included is the person before the courts.

Chairman

We will not go further than that for the moment, for obvious reasons. However, we would like to be kept up to date. It seems that the situation, where allegations were made and there is a certain level of evidence, has dragged on for a long time.

Mr. Paul O’Toole

I appreciate that, but assure the Chairman that we do not want it to drag on longer than is necessary. The audit committee made its conclusion and summary report based on audit findings, but it stressed that there should be no automatic conclusion of culpability. Every individual has the right to present his or her side of the story and we must ensure that right is exercised fully and properly. That is what we are doing. However, we are carrying through with the process, as I have been directed to do.

Chairman

When do you expect a conclusion to the investigation into the Finglas property?

Mr. Paul O’Toole

I expect it to conclude before the end of this month.

Chairman

Will you send us a note on it?

Mr. Paul O’Toole

We will.

Deputy Róisín Shortall

I have a few questions to put to FÁS. The Comptroller and Auditor General raised concerns about the use of unqualified trainers to deliver some of the competency development programmes. On how many occasions did this happen and what action was taken by FÁS in terms of withdrawing payments or fines and so on? How did FÁS deal with that?

Mr. Martin Lynch

We have very few examples of unqualified trainers.

Deputy Róisín Shortall

How many trainers are there altogether?

Mr. Martin Lynch

I do not have the figure for trainers.

Deputy Róisín Shortall

This discussion is about the CDPs and the problems associated with them. One of those problems was the use of unqualified trainers. Therefore, I would think FÁS would have that information for us.

Mr. Martin Lynch

We do not collate that information centrally. Any such examples are dealt with at local management level and the issue is taken up and addressed at that level. If a problem needed to be escalated to central level and if action needed to be taken on the register of trainers of the company, we would know about it, but local problems are addressed locally.

Deputy Róisín Shortall

FÁS has overall responsibility for the administration of this programme, yet it cannot tell us how many unqualified trainers it has.

Mr. Martin Lynch

The instances of courses with unqualified trainers would be very few.

Deputy Róisín Shortall

It is not an adequate response to say there were few instances of courses with unqualified trainers. We need to know how many. This is a valid question, because this is one of the issues identified by the Comptroller and Auditor General. How serious a problem was it? How many instances were there? This is basic information Mr. Lynch should be able to provide.

Mr. Martin Lynch

To my knowledge, it was not a serious problem.

Deputy Róisín Shortall

How can Mr. Lynch make that assessment if he does not have the figures?

Mr. Martin Lynch

I have told the Deputy the information is not available to me at this moment.

Deputy Róisín Shortall

Could we have that information? It is significant because it was one of the criticisms of the Comptroller and Auditor General. I refer to a case identified in the Comptroller and Auditor General's report on page 119, regarding a training programme run in the midlands region. This was investigated by FÁS in 2008 and it was found that there was falsification of the numbers of participants on the training course. There was quite an issue regarding the participants being granted certification by an outside body but this turned out not to be the case; the certificates had been printed by the training company itself and not by a certifying body. Also, of the 25 tutors, only one of them was registered with the national register. These were all very serious problems and difficulties regarding the delivery of that course. How did this come to the attention of FÁS? What was the outcome of that investigation? Were these matters referred to the Garda Síochána? Was the company awarded any subsequent contracts by FÁS? Was there any penalty imposed on the company, given the false information it provided to FÁS?

Mr. Martin Lynch

This is the case the Chairman asked about. I gave the answer at that stage which was that the company was suspended off the national register of trainers as a consequence. We have recovered any money that was questionable and that is where the matter lies.

Deputy Róisín Shortall

The case was not referred to the Garda Síochána?

Mr. Martin Lynch

No. I said that to the Chairman at the time.

Deputy Róisín Shortall

I apologise, I must have missed that as I was reading a document. Will Mr. Lynch explain why it was not referred to the Garda Síochána?

Mr. Martin Lynch

It just was not referred. A referral was not something that arose. If anybody was of the opinion at the time that it was appropriate to refer it, then it might have been referred but——

Deputy Róisín Shortall

Those aspects of the problem described by the Comptroller and Auditor General are accurate.

Mr. Martin Lynch

Yes.

Deputy Róisín Shortall

He found that there was falsification of the numbers and that the certificates were printed by the training company instead of by the outside body and only one out of 25 tutors was registered. Are these are all accurate findings?

Mr. Martin Lynch

Yes.

Deputy Róisín Shortall

Yet, there was no basis for making a report to the Garda? This strikes me as being quite serious fraud. How much was the contract worth?

Mr. Martin Lynch

The Comptroller and Auditor General quotes the value as €412,000.

Deputy Róisín Shortall

Why would FÁS not have referred this to the Garda?

Mr. Martin Lynch

In retrospect it might have been appropriate but it was not at the time referred to the Garda Síochána.

Deputy Róisín Shortall

Did Mr. Lynch make that call?

Mr. Martin Lynch

I did not make that call.

Deputy Róisín Shortall

Who made the call?

Mr. Martin Lynch

I do not know who made the call.

Deputy Róisín Shortall

Was Mr. Lynch responsible for delivering the programme?

Mr. Martin Lynch

Yes.

Deputy Róisín Shortall

What was his view and recommendation on what should happen in this regard?

Mr. Martin Lynch

I did not make a recommendation on this case. It would have been dealt with by regional management at the time.

Deputy Róisín Shortall

Mr. Lynch had no role in dealing with it?

Mr. Martin Lynch

Not specifically.

Deputy Róisín Shortall

Was that regarded as an insignificant matter?

Mr. Martin Lynch

No, not at all.

Deputy Róisín Shortall

Why would that not have been brought to Mr. Lynch's attention, to be dealt with?

Mr. Martin Lynch

If the Deputy does not mind me saying something about my personal situation, I happened to be in hospital for about three months in the middle of 2008. That is irrelevant, I know, but——

Deputy Róisín Shortall

Who was acting as Mr. Lynch's replacement when he was on leave?

Mr. Martin Lynch

My recollection is that Denis Rohan was in charge at the time, but I am only saying that, not as an excuse for inaction but it might indicate that maybe during 2008 there might have been other issues that might lead one not to——

Chairman

In response to the question I asked Mr. Lynch, he said there was no loss to the State. I ask him to be more specific. A total of €412,000 is involved in this issue. How much was clawed back by the organisation? I ask him to name the company.

Mr. Martin Lynch

I presume I am free to name the company.

Chairman

Under privilege.

Mr. Martin Lynch

The company was named, to my knowledge, Foras Training, but I am not sure of the full, precise name. There was a Foras in the name.

Chairman

The amount was €412,000. Mr. Lynch does not know how much has been clawed back by the organisation, he does not know the name of the company.

Mr. Martin Lynch

I do know but sometimes, one has a very precise name for a company but I do not have the name with me here.

Chairman

Deputy Shortall asked a relevant question.

Mr. Con Shanahan

The interest paid was €7,400 and that was recovered. That was the sum of money that was overpaid and which was recovered.

On the point about the qualifications of tutors and the relationship between tutors and trainers——

Chairman

Please confine the point to the company for the moment. The amount was €7,400 as stated in the report. Deputy Shortall asked a relevant question as to why the Garda Síochána was not involved.

Mr. Paul O’Toole

I cannot address the specific details. What I know is that we take a view when matters come to our attention. My colleagues in internal audit would take a view and they have a liaison with the Garda Síochána and certain matters are referred. One has to establish in some fashion that there is a prima facie case that the Garda would wish to examine further and there would be a judgment call on whether a matter was appropriate. With regard to this matter, we can find out specifically but that is our general approach.

Chairman

Is it the case that procedures were not followed fully by FÁS with regard to procurement practices? Can Mr. O'Toole assure me that procurement practices were followed?

Mr. Paul O’Toole

That would never be a reason for not referring a potentially criminal matter to the Garda Síochána. We would never attempt to do that. If we have to deal with procedural lapses on our part, these would be evidenced through audit and we have to deal with those. This would not be a reason. The internal audit report that brought these matters to attention is on record. It would have been considered by the audit committee and passed to the Comptroller and Auditor General. It is not a case of a lack of transparency. The matter of referral to the Garda would be a judgment and if, necessary, in consultation with the Garda. The organisation has referred several matters to the Garda in recent years.

Chairman

I refer to an article which states that FÁS has dealt with mounting concerns by conducting a nation-wide review of all 257 contracted training programmes. I asked the witnesses specific questions earlier. Have those reviews been carried out on all those programmes? It is on record that 23 potentially explosive audit reports were being undertaken within the organisation. What is the current status of those internal audit reports? There are also alleged breaches of procurement procedures.

Mr. Paul O’Toole

With regard to the 257 courses to which the Chairman refers, this review was instigated by me last October, following some public concern in respect of the assessment processes followed in some training courses. On the back of that, I directed that all current contracted training courses would go through a three-phase review. The first phase was a specific monitoring visit to establish basic compliance and this was completed in January and reported to the senior management team. The second phase was a review of more than 32,000 individual assessments of the learners in those courses. That work has been completed and an initial finding was presented to the senior management between the end of June and earlier this month. For the third phase we have contracted with an external company to validate the processes we used in the evaluation of those 300 courses. In other words, there is an external perspective that says the process we followed for that review stacks up to what we said we would do. The work is finished and I am expecting the complete report by the end of this month.

Chairman

The information provided in the opening statement is very relevant to the work we doing. Why were we not told about it?

Mr. Paul O’Toole

Is the Chairman referring to the 300 training courses being reviewed?

Chairman

I refer to all of the information provided as a result of questioning.

Mr. Paul O’Toole

In my opening statement I dealt with the subject matter, the CDP programme under examination in chapter 5. I confined my remarks in my opening statement to chapter 5. The matter of the 300 courses being reviewed arose last October. I acted——

Chairman

How many of them were CDP programmes?

Mr. Paul O’Toole

None. They were all contracted courses for the unemployed.

Chairman

When will we receive the findings of the review?

Mr. Paul O’Toole

We will bring the findings of the review to the board at the Regar and make them available. It was not an internal audit review, it was carried out by me through our training wing through a process of external validation.

Chairman

The company in the midlands, Foras Training, received €851,000 in 2007 and €447,000 in 2006. How much did it receive under the CDP?

Mr. Paul O’Toole

We do not have that figure available, but we can find and make it available.

Chairman

Does Mr. O'Toole know when the company was set up?

Mr. Paul O’Toole

I do not have any information on it.

Chairman

What is the total sum paid to the company by FÁS?

Mr. Paul O’Toole

We will provide a report containing that information for the Chairman and the committee.

Deputy Róisín Shortall

The programme was known as One Step Up. How many of the 123,000 participants actually took one step up in terms of qualifications?

Mr. Martin Lynch

One Step Up is the terminology we used with good intent to progress people in what was seen as the national framework of qualifications. The reality is that the framework of qualifications, for the purposes of the programme, did not take effect until 2007. FÁS genuinely was proactive in trying to work with the three qualifications bodies to have programmes assimilated to the framework. It is a nice concept that people take one step up, but often they are taking one step across, one step down and back up again. As time passed, we found the classification of low skills could mean different things to different people. In some cases it is considered to be less than a second level education, but for others, it may be the equivalent of a second level education that is years old.

Deputy Róisín Shortall

Can Mr. Lynch not tell us the answer?

Mr. Martin Lynch

The reality is that it is complex.

Deputy Róisín Shortall

I am concerned about the fact that while the CDP has come to an end, significant amounts are being spent on training in the current year. In recent months FÁS invited tenders for providing that training. How much is it spending on training in the current year? I am not referring to the employment programmes but specifically to training.

Mr. Paul O’Toole

We will dig out that figure.

Mr. Con Shanahan

In the context of the CDP and the significant moneys paid out during the lifetime of the programme, it represented less than 2% of the FÁS budget during the period. The vast majority of the funds has been targeted at unemployed persons through employment schemes or training programmes. At its peak, it represented less than 4% of our budget.

Deputy Róisín Shortall

From the committee's point of view, it amounts to €167 million. The critical point is that proper accounting is required.

Mr. Con Shanahan

I am pointing out that in the context of the funds available for the training of the unemployed during that period——

Deputy Róisín Shortall

I asked about training.

Mr. Con Shanahan

In 2010 the total FÁS budget is just over €1 billion, of which approximately €300 million is directed at training of persons who are unemployed. A major proportion — over €400 million — is accounted for by employment schemes.

Deputy Róisín Shortall

How much is FÁS spending on training this year, outside of employment schemes?

Mr. Con Shanahan

The figure is €300 million.

Deputy Róisín Shortall

What is the level of spending on the programme for which FÁS invited tenders in recent months? What is the name of the programme?

Mr. Paul O’Toole

I am not sure to which programme the Deputy is referring.

Deputy Róisín Shortall

FÁS advertised three months ago inviting training bodies to tender for work.

Mr. Paul O’Toole

That may not have been FÁS.

Deputy Róisín Shortall

Was it not?

Mr. Paul O’Toole

We advertised our normal contracted training programmes using our normal contracted training procedures, outside of which we have not stepped this year.

Mr. Dermot Mulligan

It may be the labour market activation fund to which Deputy Shortall is referring and for which the Department sought tenders.

Deputy Róisín Shortall

How much is the Department spending on it?

Mr. Dermot Mulligan

We will spend some €20 million this year.

Deputy Róisín Shortall

What lessons have been learned from the CDP experience and what safeguards have been put in place to ensure quality is controlled in that element of training and that there is full transparency in the expenditure of money?

Mr. Paul O’Toole

Regarding the CDP and the review of general training provision, we have work to do to ensure underlying support systems are robust and meet the needs of vastly expanded programmes. We are ratcheting up our number of training interventions. It exerts considerable strain on the organisation to manage it properly. We can only do so if the underlying systems and processes support it. In parallel with the work we have been doing to improve our governance, we have made a considerable investment in reviewing all aspects of training provision by which I mean the nature of the courses provided and their relevance to the individual and the market. This amounts to asking why we are doing it in the first place.

Regarding quality systems, do we have the appropriate personnel with the appropriate skills to quality manage every aspect of training provision? We need strengthened contracting arrangements with training providers to ensure they are clear on their obligations and that we have the means to follow up on this point. We must ensure our supporting personnel have the right skills, the appropriate backup and are clear on the right way to do things. We have been investing in this in the past few months and expect to bring forward a number of changes from September. We have a heightened level of awareness of the need to get this right. We have new systems and procedures in development which we intend to put in place in September.

FÁS is committed to ensuring the integrity of its learning interventions meets the highest standards. Many already do and, despite all the necessary criticisms we have had to face, there is tremendous good work being done. We need to wrap this up in a way that is more transparent, to ensure the reporting, demonstration and stewardship is clear to the committee, the Government and the taxpayer. In my opening statement I refer to the fact that not all of this is yet in place. The Comptroller and Auditor General has raised questions about monitoring. Every public sector organisation is in a different ballpark and must use fewer resources more effectively. If we cannot have one monitoring system, we must devise other systems and methods to collect the information we need. We are on the right path. We have achieved a great deal and are doing some excellent work but we have further to go.

Deputy Róisín Shortall

I thank Mr. O'Toole.

Mr. Dermot Mulligan

With regard to the labour market activation fund, there was an open tender. The tender specification was highly detailed and specific about the type of participant that we wanted to train and up-skill and about the needs of that type of participant. There was a tender process, people submitted their tenders and a selection committee chaired by the chairperson of the expert group for future skills needs looked at the tenders. That committee ranked the successful tenders and submitted them to the Department. The Department has taken them and is at present in the process of meeting the successful projects and going through a process with them to set out exactly what should be the key performance indicators, what the programme and financial outputs are to be and what the stages, in terms of the contract period, are to be, with a focus on the results in terms of up-skilling the people and the certification pertaining to that. While we are at an early stage of the process, we are working through a specific structure that takes on board many of the points raised in respect of the CDP programme by the Comptroller and Auditor General report and the value for money review.

Chairman

I revert to Foras Training, which Mr. Martin Lynch named earlier, in respect of expenditure on the CDP programme between 2003 and 2008. There is no sign of Foras Training from 2003 to 2005 but it suddenly appears as one of the top ten recipients of funding under the CDP in 2006, when it received €447,740. In 2007, it received €851,000, when it went from tenth to ninth position, after which it disappeared. What track record had this company that allowed it to appear suddenly among the top ten recipients, remain in that position for two years but then to drop out? There is no sign of it in 2008. Can members have sight of the contract and tender documents that brought about the contracts to Foras?

Mr. Martin Lynch

I am sure that——

Chairman

We could poke around here all day but unless we deal with and come to grips with specific examples, things will just drift on. In that respect, I seek hard information on this company, Foras Training, which Mr. Lynch named.

I refer to a confidential audit report that was conducted in respect of a company. FÁS spent €5 million on courses run by a company that was falsifying results. Questions put to the Minister in the Dáil revealed that €658,000 was spent at a company in connection with four courses that were questionable. A total of €215,000 was paid to the company to run the courses, with €400,000 spent in allowances and a further €42,000 was spent retraining students after the irregularities were discovered. Mr. O'Toole is on record as stating that he was seeking to recoup between €42,000 and €190,000 of the €215,000 paid to the firm and that he was taking legal advice regarding the recovery of that money. In addition, FÁS gave seven contracts worth up to €277,000 to the firm. These were awarded after the firm admitted in April 2007 that assessment material had been manipulated. The Tánaiste wrote to FÁS in October 2009 asking the reason the agency had not ensured that further irregularities did not occur after the admission was made. She also asked whether there was a basis for seeking to have the company removed from the national register of trainers. Mr. O'Toole should outline what has happened since then.

Mr. Paul O’Toole

I think the company to which the Chairman refers with regard to that matter is Ashfield. The matters were first drawn to the attention of senior management within the organisation in February 2009 when seven courses were cited in respect. If my recollection of the report is correct, there was no issue in respect of four of the courses. I am working from memory in this regard. I will make a general point that many firms are active with many courses and often, many courses are running perfectly acceptably and the problems may arise in a minority of them. However, on the specific point in respect of this case, the company received further contracts from the organisation. When this was drawn to our attention we sought to recoup what we thought might be losses to the State in respect of the issues. In the event, two courses were found to have caused significant problems. The company——

Chairman

Mr. O'Toole used the word "significant". It is a fact that one or more of the instructors falsified results?

Mr. Paul O’Toole

Yes, that is what I mean by that. There were falsified results in respect of one of those courses and there was a dispute regarding the second one as to whether this was the case. In respect of the first one, the retraining and the necessary restoration of learning for the students involved was handled by the company at no cost to FÁS. The company did not do so for the second one and FÁS stepped in to resolve that for the benefit of the learner. It was the cost of so doing that we were seeking to recoup. The company has since been in liquidation and through our legal services we have been in contact with the liquidator. What I said was, and it still holds, is that we were unlikely to receive any recoupment from the liquidator.

Chairman

I am looking again at the CDP programme and the company enjoyed a payment of €443,000 in 2008. How was this money being paid out without any real monitoring taking place? The Comptroller and Auditor General spoke about less than 50% of courses being monitored. How could this kind of money be paid out to a company under this programme only for irregularities be uncovered subsequently?

Mr. Paul O’Toole

I do not know whether the irregularities relate exactly to that sum of money but the monitoring or assessment of payment——

Chairman

What does Mr. O'Toole mean by saying that he does not know?

Mr. Paul O’Toole

What I mean by that is that of the €408,000 in the CDP programme, I do not know whether the courses referred to relate to that particular payment because the firm was not simply active under CDP programmes. That is the point I am trying to make in this regard.

In general, however, before any company would be paid, it would be obliged to submit its documentation. Consequently, there would have to be documentary evidence and a claim form, which would be assessed through a paper assessment. I understood the Comptroller and Auditor General to be referring to physical monitoring visits to various courses and my colleague, Mr. Martin Lynch, dealt with that point. That was handled within our regions, which would determine what monitoring was required within the resources available to them. Again, I make this point to avoid misleading the committee going into the future in particular. The level of monitoring that we are able to undertake is a function of the people who are qualified and are available to so do. As I was trying to indicate in my earlier comments to Deputy Shortall, we must consider and re-engineer, where necessary, how we ensure that companies are doing what they are meant to do, including monitoring to the extent that we are able to do it.

Chairman

When irregularities surface, how long does it take FÁS to act on them? It is obvious, given comments made by the Tánaiste, that she is unhappy about the organisation's response time in dealing with irregularities.

Mr. Paul O’Toole

I suppose this has been made clear in respect of the issue to which the Chairman referred. I must try to assure the Chairman and the committee — this goes back to Deputy Shortall's questions on what we have learnt in this regard — that we have instigated a much more systematic review at senior management level of problems that arise. Consequently, senior management, including me, are engaging at a much earlier stage when problems arise and are brought to our attention. We have tried to put in place early warning systems. As I indicated, we will have a far more comprehensive system in place by September of this year.

Chairman

To return to one of my first questions, the Department gave assurance that moneys would be recouped. How much money was recouped?

Mr. Paul O’Toole

I gave an assurance that we would seek to recoup funding from Ashfield. The company is in liquidation. We have tried to pursue the debt with the liquidator but our legal advice is that we are unlikely to succeed.

Chairman

What is the extent of the debt?

Mr. Paul O’Toole

The debt being pursued with the liquidator is €120,000. We tried to pursue the full cost to the State, including allowances that would have been paid to the trainees. The net loss is probably lower because the allowances we pay are in the nature of social welfare equivalents. However, we did try to pursue the full cost to the State in that regard.

Chairman

We will need a full report on that.

My next question relates to 33 acres outside Tullamore at Mount Lucas. The facility was opened some time in March of last year. The sod was turned in October 2007. Will Mr. O'Toole tell us what is happening at the centre?

Mr. Paul O’Toole

The Mount Lucas centre was developed between 2007 and 2008 to be a national construction training facility. It has been developed with that purpose in mind. As it was coming on stream——

Chairman

What size was the project?

Mr. Paul O’Toole

There was an investment of approximately €6.7 million.

Chairman

How many acres?

Mr. Paul O’Toole

I do not know the acreage but it is probably of the order described by the Chairman, namely, 33 acres.

The site has been developed to provide equipment and plant hire training. Plant equipment includes site cranes, both mobile and fixed. The centre was developed to provide highly specialised training to people within the construction sector in that regard. Such training was traditionally provided by FÁS in other centres. In many cases, people are travelling to the United Kingdom for the training.

The introduction and opening of the centre coincided with the collapse in the construction industry and was at a time of significant change in FÁS, including in respect of the availability of qualified instructors.

Chairman

What did Mr. O'Toole say about availability?

Mr. Paul O’Toole

I referred to the availability of qualified instructors to provide the training.

Chairman

Were they not available?

Mr. Paul O’Toole

There were some available but, as with every other State organisation, FÁS is subject to the recruitment moratorium. It is linked and is one issue.

Chairman

It was not a question of a skills shortage but of the moratorium.

Mr. Paul O’Toole

It was the moratorium issue. So as not to mislead the committee, I must state we have a qualified instructor in place who is currently providing the training. The instructor can take only four to six people because the training is highly specialised. It must be done properly.

However, we are obviously not getting the full benefit from the site at present. For that reason, we have asked our colleagues — they have done it——

Chairman

What benefit is being obtained?

Mr. Paul O’Toole

There are a number of training courses of a specialised nature. We are using the facility in conjunction with the VEC.

Chairman

Could Mr. O'Toole stick to the courses on offer? How many staff are there and how many participants?

Mr. Paul O’Toole

There are three staff on site. We run——

Chairman

Three staff or three trainers?

Mr. Paul O’Toole

Three staff. There is one manager, one administrator and one full-time instructor. We are introducing other courses because the facilities are currently under-utilised. With the VEC we are introducing other courses and are hoping to use the facility for evening training of a general nature. However, the site has very considerable potential to provide training in a range of areas as the economy improves. An example would be training in alternative energy production in the green economy. FÁS is moving its training provision in this direction. We are trying to utilise the facilities in the short term but our intention is to expand the use of the facilities in conjunction with the introduction of new courses during the hoped-for upturn in the economy.

Chairman

Would it be reasonable to describe the project as a massive white elephant?

Mr. Paul O’Toole

It would be unreasonable to describe it as that. It would be reasonable to say it is completely under-utilised.

Chairman

Is that not the same thing?

Mr. Paul O’Toole

The site has considerable potential to provide a very valuable training resource not simply for FÁS, but in an overall context. We are trying to ensure we can get to that point.

Chairman

Was the €6.7 million investment in buildings or did it include the acquisition of lands?

Mr. Paul O’Toole

The land was provided to FÁS for peppercorn rent by Bord na Móna. We have a lease with Bord na Móna and approximately €10,000 per year is paid for the site. The €6.7 million was for the redevelopment of the land. The facility is built in a bog area. Given the nature of the terrain, it is particularly suitable for site training in respect of a range of work practices. We had to drain the land, construct buildings and equip them. This is what the money was spent on.

Chairman

I came to this meeting in the hope that we would see a new FÁS. Having listened to what I have heard today in respect of Tullamore, north Dublin and the issue of training courses, I believe there is still a chronicle of mismanagement and ineffective and inefficient use of taxpayers' money.

Mr. Paul O’Toole

I would be disappointed if that were the Chairman's conclusion. I would have hoped he would have seen that we have significant legacy issues. They have been ventilated at this committee and in other fora for a period of time. We are seeking, in difficult and different times, to address every single one of them.

Chairman

Mr. O'Toole said he would confine his opening statement to the CDPs. However, to the best of our knowledge there are 23 internal audits into various aspects of FÁS's activities. There are also other investigations coupled with what we are now hearing about. I gave the examples I outlined specifically to determine what FÁS was doing with the capital budget. It is very disturbing.

Mr. Paul O’Toole

The issues raised by the 22 audits refer to the period up to 2008. The work in that regard was completed at the end of 2009. An organisation such as FÁS will always have issues to deal with. We reach into many communities and many aspects of training. We reach into a lot of people's lives. FÁS is a big and complex organisation and it will always have a certain number of issues. I would have hoped the Chairman would have seen that we are being transparent in addressing them, that we are seeking to hide nothing and that we are trying to provide any information sought by the committee or other body. Internally——

Chairman

Is it within the provisions of the Data Protection Act?

Mr. Paul O’Toole

We have to operate within the law. Bearing in mind the transparency we can bring to the process, we have had a host of issues to deal with, including issues in respect of governance, reporting, the training provision I have discussed, and the individual issues to which members referred. We are tackling every one of them. It is important not to lose sight of the fact that, as we do so, we will provide certified training to over 94,000 unemployed people this year. We will provide community employment and other employment programmes to up to 40,000 people.

We are dealing with a body of 12,000 apprentices, who are still in the system despite the downturn. We are dealing with those who are struggling to get their apprenticeships and putting people through the phases of the associated work. We are dealing with the hundreds of thousands of unemployed people who come to our offices seeking guidance and support. We are dealing with them with fewer resources. We are saving money on our cost base and working towards the Government's decision in respect of the transfer of responsibility for the organisation from the Department of Education and Skills to the Department of Social Protection. A body of work being done by the 2,000 people who remain in the organisation is committed to that decision.

Since we were last before the committee, we have recognised that many areas require improvement. I assure the committee that it is my intent and that of the board and my colleagues to deal with these issues. Ensuring a balance in understanding is important. While there will always be matters that we need to address and we will seek to deal with them, a considerable amount of work is being undertaken to help people at a difficult time. A commitment has been given. When appearing before the committee, we have been careful in our wording so as not to be misleading in any fashion. Where problems and residual issues remain to be dealt with, we admit to them, but we will also refer to the progress we have made.

Chairman

We have never questioned the commitment of Mr. O'Toole's 2,000 staff. Rather, we questioned and still question the commitment and performance of the people at the top. Many of the issues that have been raised with the committee during the past 18 months and longer have not been finalised. The Department must work within the law, but this committee, which deals with matters of public accountability and the effective use of taxpayers' money, is not happy with the pace of progress. We hope we will receive answers to the many questions that have been put to Mr. O'Toole and Mr. Gorman, the Secretary General, as quickly as possible. They would allow us to put our investigation to bed and write a final report on the organisation.

Mr. Paul O’Toole

I will seek to address each point.

Chairman

Does Mr. Buckley wish to add anything?

Mr. John Buckley

No.

Chairman

I thank everyone who participated today. Is it agreed that we dispose of the Comptroller and Auditor General's Special Report 73 — Internal Control and Governance in FÁS? Agreed.

The agenda for next week's meetings, at times to be decided, is our consideration of Vote 22 — Courts Service and Chapter 17 — Criminal Court Justice Building. We will also consider the issue regarding the Department of Finance to which we referred. The times of these sittings must be agreed upon during the coming days.

The witnesses withdrew.

The committee adjourned at 1.15 p.m. until 10 a.m. on Thursday, 15 July 2010.