COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 25 Nov 2010

FÁS Annual Report 2009

Ms Brigid McManus(Secretary General, Department of Education and Skills) and Mr. Paul O’Toole(Director General, FÁS) called and examined.

Chairman

I remind members and witnesses to turn off their mobile telephones. We are looking at FÁS training and employment authority annual report 2009.

Before commencing, I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence regarding a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor 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 also 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 policies.

I welcome everybody here. Before I call on witnesses to introduce themselves I wish to point out that before the meeting I was informed that Mr. Seán Gorman, accounting officer, Department of Enterprise, Trade and Innovation has been hospitalised following a car accident this morning and, consequently, cannot be with us. On behalf of the committee I wish Mr. Gorman a speedy recovery.

In today's session which I had hoped would be the last time we would have to deal with legacy issues that arose in FÁS in the period up to 2008, we will deal with the issues that have come to light since our last session. These include the payment for training that does not appear to have been delivered by one company, Empower Training, and issues relating to the purchase and lease of property in Offaly which were covered in the Comptroller and Auditor General's report. We will also examine the FÁS accounts for 2009 and get answers on the issues that face the organisation with the unemployment figures well over 450,000. The organisation faces huge challenges at a time when it is going through a major change. As members will be aware only yesterday the Dáil discussed the Social Welfare (Miscellaneous Provisions) Bill which will see the employment aspects of FÁS come under the remit of the Department of Social Protection. We will be looking to see that the controls and oversight that were clearly not in place in previous years are now much in place. I welcome Ms Brigid McManus, Secretary General, Department of Education and Skills and invite her to introduce her officials.

Deputy Edward O’Keeffe

With the permission of the Chair, there is an issue I wish to raise, arising from the last meeting in public session. A statement was made by the National Asset Management Agency that banks may have tried to cheat the Exchequer out of billions of euro. I would like that statement substantiated. That statement was made here by that agency, which is a new agency, and is now the biggest property development company in the world. That it should make a statement like that without support and back-up is very serious. It will have to defend that statement. It should be brought back here to tell us the story on how it was cheated or how the proposed cheating was going to take place. One cannot defend them. Such an agency cannot make statements of that nature without having support and back-up and try to discredit agencies whether in the private or public sector.

Chairman

I would point out that it was a colleague of Deputy O'Keeffe, Deputy Michael McGrath, who raised the issue initially. In fairness, Mr. McDonagh was only reacting to comments made by Deputy Michael McGrath. We agreed at last week's meeting, just for the record, since the Deputy raised the issue, that this committee would write to the Financial Regulator whose responsibility it is. We have done so. A copy of the letter is available for members. We have asked the Financial Regulator to investigate that matter.

Deputy Edward O’Keeffe

That is fine with me but the National Asset Management Agency is answerable to this committee, as the oldest committee in the land since the founding of the State. The Chairman attended a book launch recently in the Euro office at which Mr. Cosgrave presided and made a wonderful speech about the history of this committee and its influence. If we have agencies in the State who behave in that way, and make those outrageous claims, arising from a question from a TD it is a scandal without having back-up and support. The Chairman has written to Mr. Appleby-----

Chairman

Mr. Elderfield.

Deputy Edward O’Keeffe

About three years will have elapsed before we hear from him. He is only interested in my job, public life. I raised another issue on the same day.

Chairman

Sorry, most of this should have been dealt with in the previous session.

Deputy Edward O’Keeffe

This arose in public session today week.

Chairman

What is it?

Deputy Edward O’Keeffe

I asked a question about a payment to an auditing company, Deloitte & Touche - I have the letter here - which got €890,690 for 8,058 hours of work, which is roughly-----

Chairman

We will-----

Deputy Edward O’Keeffe

Hold on. We are on about transparency in this economy and never was it more upfront than now. That an agency who appears before the committee does not have this information for the public arena here is just not good enough.

Chairman

Just a second.

Deputy Edward O’Keeffe

I am listening.

Chairman

Just a second, the Deputy is aware that just ten minutes ago we dealt with that letter and we decided to note and publish it and put it in the public arena.

Deputy Edward O’Keeffe

But it is a public question here by me, as the second questioner when Deputy Shortall left.

Chairman

The letter is now in the public arena as of ten minutes ago.

Deputy Edward O’Keeffe

That is not good enough. The agency should have those answers the day it appeared before the committee and should not try to protect itself by a board decision. We are talking about procurement.

Chairman

I would expect the agency would have those answers also but we have got the answer now. It will be up on our website.

Deputy Edward O’Keeffe

The Chairman is spiting himself by accepting it in that fashion.

Chairman

I will read it out just to put it on the public record.

Deputy Edward O’Keeffe

Of course.

Chairman

Dear Mr. Allen,

Further to the Committees query on Thursday, which was considered by the Board.

The fee payable to Deloitte & Touche to perform Internal Audit Services is €890,690 per annum for 8,058 hours of work.

The firm was appointed further to an EU public procurement competition.

Deputy Edward O’Keeffe

I thank the Chairman. I am not satisfied that the Chairman has written to the Financial Regulator because these people should answer this committee and not the Financial Regulator - he has another job. That they should come in here and make that type of statement about institutions they dealt with, that they were trying to cheat them - I want to know who was cheating them and how can they prove to me that they were being cheated. The agency should be at that table answering the question; it will have to be brought back.

Chairman

We may do that. We agreed as a committee last week that we would write to the Financial Regulator. We have done so. We are awaiting a response. Sorry about the delay, I now invite Ms Brigid McManus to introduce her officials.

Ms Brigid McManus

I am accompanied by Mr. Dermot Mulligan, assistant secretary in the Department dealing with FÁS and skills issues, Mr. Vincent Landers, principal officer dealing with the European Social Fund, among other issues, and Mr. Pádraig Ó Conaill, principal officer dealing with FÁS and skills issues.

Chairman

I welcome all the officials. Will Mr. O'Toole, director general of FÁS, introduce those accompanying him?

Mr. Paul O’Toole

I am accompanied by Mr. Martin Lynch, assistant director general of employment, community and business services, Mr. Conor Dunne, assistant director general for finance and information technology, and Mr. Con Shanahan, director of finance.

Chairman

I welcome the FÁS officials. Will Mr. Ellison introduce himself?

Mr. Brendan Ellison

I am from the sectoral policy division in the Department of Finance dealing with education policy.

Mr. John Buckley

We are examining the 2009 financial statements of FÁS. The accounts should be read in light of the extended disclosures in the accompanying statement on internal financial control. The statement on internal financial control records the progress in implementing the key recommendations contained in the reports of the committee as well as those that arose from reports by my office.

In particular, the statement outlines a number of actions which the board has taken to improve management and governance including the fact that the risk management process has been reactivated; statements are now required from individual mangers on compliance with authorisation and procurement procedures; a committee of board was established to deal with financial matters, including the review of the FÁS annual budget, the review of quarterly accounts as well as the monitoring and review of the adequacy of the system of financial reporting to the board.

FÁS spent more than €1 billion in 2009. This was mainly funded from the Vote of the Department of Enterprise, Trade and Innovation and the National Training Fund. Approximately 80% of the expenditure went on programme costs: €430 million on employment schemes; €266 million on training for employment; and €111 million was spent on training for those in employment which includes apprenticeship costs of €94 million. Overall the expenditure decreased by €47 million from 2008 levels with the largest decline in the area of apprenticeships which saw a reduction of almost €33 million.

Like a number of other organisations with funded pension schemes, assets associated with its funded pension scheme were transferred to the National Pensions Reserve fund at the end of 2009 in accordance with the Financial Measures (Miscellaneous Provisions) Act 2009. The value of the assets transferred was approximately €365 million and all future pension and retirement benefits of this scheme will be met on "a pay as you go" basis out of the annual Voted moneys. Overall, based on the actuarial assumptions set out in its accounts, FÁS's pension obligations at the end of 2009 were of the order of €832 million in net present value terms.

The chapters in my annual report which include references to FÁS are chapter 21, on decentralisation which is coming before the committee next week, and chapter 29, Skillnets, which the committee considered two weeks ago.

Under the decentralisation programme, it was planned to move approximately 400 people from FÁS's head office to Birr. FÁS was one of a small number of bodies which procured property directly under the programme. It made arrangements for a short-term lease to accommodate 40 staff. One firm, the landlord's building company, was asked to provide quotes for the fit-out of the premises. Taking account of these fit-out costs of approximately €1 million, the annualised costs of the accommodation at this premises are higher than an upper benchmark which was set by a property consultant engaged by my office.

I refer to chapter 29 on Skillnets. The committee will recall that the report outlined instances where training had been paid for but was not done. FÁS was informed by Skillnets earlier this year of allegations that it also had been the subject of malpractice by a training provider and it commissioned an internal audit report to inquire into those facts. A brief on the matter has been tabled by FÁS. The apparent lessons are that where two different delivery channels, utilising the same providers, are used for training services, there is, at a minimum, a risk of overlap or duplication. Given this risk and in order to ensure these programmes are delivered with efficiency and regularity, there would be a need for more co-ordination in future if the CDP and Skillnets programmes are retained in their present shape. The director general of FÁS will be in a postilion to update the committee on these or any other matters that arise.

Chairman

I call on Ms McManus to make her opening statement.

Ms Brigid McManus

Will I deal with Mr. Gorman's opening statement? The committee requested some information which we supplied. If the Chairman wishes me to-----

Chairman

Yes. Mr. Gorman is unavoidably absent today because he was involved in a car accident this morning.

Ms Brigid McManus

Mr. Gorman's statement dealt with the Department of Enterprise, Trade and Innovation's perspective in regard to the FÁS 2009 accounts. Obviously, that function has since transferred to our Department.

The year 2009 was a significant one for FÁS in terms of change. Utilising total State funding in 2009 of €1.01 billion, FÁS responded to the significant shift in Ireland's labour market conditions by changing its programmes to focus to a greater extent on the needs of the unemployed. This meant that the agency significantly increased the numbers of unemployed for which it provided job search supports, training and work experience.

As regards job search supports, FÁS and the local employment service increased their capacity under the national employment action plan from 86,000 people in 2008 to 127,000 in 2009. As regards training, provision for the unemployed almost doubled to 120,000 in 2009. This was achieved through changes in the delivery of training courses with innovative formats, such as online blended learning and night courses. As regard work experience, community employment, job initiative and the new work placement programme gave valued work experience to more than 24,000 unemployed.

As regards departmental oversight of FÁS activities, my responsibility is - it was Mr. Gorman's responsibility when he was Accounting Officer - to satisfy myself that the requirements of the code of practice on the governance of State bodies is being implemented and, if reports indicate that problems exist, to ensure that appropriate action is taken as soon as possible. These requirements were met in 2009 and that the chairman of FÁS has met the additional requirements under the code of practice.

I welcome, in particular, the measures taken in response to the Department's request to FÁS to indicate how it will ensure that some of the irregularities which occurred in the past will not recur. These measures include tightening the financial control environment processes and procedures as well as the risk management and internal audit enhancements which are outlined in the statement of internal financial control as set out in the FÁS 2009 report. During 2009 the Department also enhanced its oversight arrangements of FÁS to ensure moneys are spent in accordance with the purposes for which they are 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 the laying of output statements for the Department before the Oireachtas. The oversight of FÁS programmes now includes specific performance indicators in regard to budget and the numbers of profiles of those to be trained.

The year 2009 was also a year of significant change for FÁS in terms of its governance. The principal changes were made under the Labour Services (Amendment) Act 2009 which implemented many of the recommendations of this committee's fourth interim report published in February 2009. Specific to the 2009 Act, changes were made to the structure, size and composition of the board and on foot of this, a new board was announced in January this year. It removed the barrier to a FÁS board director reporting issues to the Minister. It made the FÁS director general clearly accountable to the Oireachtas, including this committee and other committees. It required the disclosure of conflicts of interest by FÁS directors and staff and prohibited their involvement in matters where such a conflict existed and it provided for the protection of whistleblowing FÁS staff members reporting serious wrongdoing in the organisation. Taken together, these changes have significantly strengthened governance and accountability in FÁS. In addition, the new director general of FÁS was appointed in 2009.

Mr. Gorman provided the committee with a note on the European Social Fund as requested at the hearing of 11 November 2010. As regards 2009, the key point is that it was decided to remove all FÁS expenditure from the ESF claim to the European Commission until the issues the Commission raised had been addressed to its satisfaction. The key issue of concern to the Commission related to the inclusion in the FÁS claim of projected rather than actual training costs. There was no allegation of fraud in this case. It is my understanding that the Commission has indicated that once a new IT system is in place, it will address the main Commission concerns. It is expected that the new IT system will be in place early next year. The Department of Education and Skills will then in a position to reintroduce FÁS expenditure in future ESF claims. While no ESF moneys have been lost by Ireland, this course of action has meant that the €45 million that would otherwise have been drawn down in 2009-10 will now be drawn down in 2011. Mr. Gorman also responded to the committee on some internal departmental correspondence submitted to the committee.

I will update the committee, from my own perspective, if you like, on the transfer of departmental responsibility for FÁS as part of the restructuring of departmental responsibilities.

In March of this year the Taoiseach announced the transfer of responsibility for skills and training policy to the Department of Education and Skills and the transfer of responsibility for FÁS employment services and employment programmes to the Department of Social Protection.

This means that the training part of FÁS will be re-mandated as a new training and skills agency under the aegis of the Department of Education and Skills. FÁS employment programmes such as community employment and job initiative and FÁS job search services will transfer to the Department of Social Protection and the relevant FÁS staff will be integrated in to that Department.

The Employment Programmes and Services and Skills Training (Transfer of Departmental Administration and Ministerial Functions) Order of 2010, which came into force on 1 May 2010, provided for the reallocation of responsibility for FÁS as an agency and its related funding from the Department of Enterprise, Trade and Innovation to the Department of Education and Skills. The relevant staff from the Department of Enterprise, Trade and Innovation transferred to the Department of Education and Skills at that time and expenditure since that date is accounted for under my Department's Vote.

The transfer of responsibility for skills and training to the Department of Education and Skills provides an opportunity to co-ordinate the training activities in FÁS with the further education and training activities of VECs, the institutes of technology and other education provision. It should facilitate the creation of synergies in this sector and allow us to eliminate duplication where it exists. Our focus is on restructuring and re-mandating FÁS in its skills and training role. The goal is to create an agency that will provide high quality vocational training so as to deliver a workforce that has the practical skills needed by the economy. The newly mandated and reformed training agency will need to work with the VECs and other actors in order to deliver the Government's agenda in the skills and further education field.

The transfer of functions to the Department of Social Protection required legislation. That Department will, following the commencement of the relevant sections of the Social Welfare (Miscellaneous Provisions) Act 2010, assume funding and overall responsibility for FÁS employment services and employment programmes. This is now planned to take effect from 1 January 2011. Accordingly, in the 2011 Estimates the Department of Social Protection will have responsibility for the policy and funding of employment programmes and employment services.

The Social Welfare (Miscellaneous Provisions) Bill, which has just been published and to which the Chairman referred, provides for the full transfer of FÁS employment services and employment programmes to the Department of Social Protection and this would include the transfer of relevant FÁS staff, property, land as well as certain rights and responsibilities to that Department. This will amend the Labour Services Act 1987. The implementation of this transfer is a significant project and will take a period to implement fully.

In the meantime, a service level agreement will be in place between the Department of Social Protection and FÁS. This will come into force in January 2011. Responsibility for FÁS as a State body and overall governance issues during this implementation period will be the responsibility of the Department of Education and Skills.

Officials from my Department, FÁS and the Department of Social Protection are working closely together to ensure the smooth transition of FÁS employment services and employment programmes to the Department of Social Protection. I would be glad to answer any questions the committee may have.

Chairman

I thank Ms McManus. Can we publish your statement?

Ms Brigid McManus

Yes.

Chairman

Would Mr. O'Toole like to make his opening statement?

Mr. Paul O’Toole

As the committee will be aware, 2009, and, indeed, 2010, has been a period of significant change for FÁS. During 2009, the board of FÁS resigned, the interim director general who was in place at the beginning of the year was replaced by a new director general and the organisation grappled with dealing with the necessary scrutiny of its affairs and the emergence of a variety of complex governance and other issues. New legislation covering its governance was passed by the Oireachtas and was implemented in 2010, including the appointment of a new board.

In October 2009, further issues regarding the operation of aspects of the assessment processes on contracted training provision arose which have necessitated further examination. Our policy is to examine all significant matters brought to our attention by public representatives, members of the public, through internal and external audits, and by our own colleagues. While this is time consuming and can appear protracted, it is necessary to ensure that corrective actions are identified, strategic process changes are put in place and, moreover, that we learn from experience. FÁS had also to deal with a significant, continuing increase in demand for its services given the problems being experienced in the wider economy and the need to provide the best possible supports to unemployed people.

In financial terms, the organisation spent €46.832 million less in 2009 than in 2008. This included a reduction of almost €20 million in staff pay and overheads. In keeping with the moratorium on replacing staff who left the organisation, numbers reduced by 217 - a trend which is continuing in 2010. Throughput on our main training programmes, largely for the unemployed, increased significantly. No new contracts were entered into on the competency development programme as the policy and related funding switched to meeting the needs of the unemployed. Significant increases on activity in our employment services offices, together with our community programmes, took place.

These changes have been carried through into 2010. We continue to put in place a programme of improvements to our governance arrangements in line with the recommendations of this committee and the Comptroller and Auditor General. We have also commenced the implementation of a new training standards system together with improved contractual and other arrangements for our external training programmes. The demand for our services has been maintained and we believe that all main targets will be achieved in 2010.

In summary, FÁS has embarked on a programme of significant reform. In this respect the structure of the organisation will be changed profoundly as the transfer of our employment and community services to the Department of Social Protection is implemented in line with the Government decision in this regard. In all aspects of our work we are seeking to maintain current services, improve these services and implement the programme of reforms in line with the resources available to the organisation. The board, executive and staff of the organisation remain committed to providing the best possible service to the public, while embracing a process of continuous improvements to all aspects of our work. In practical terms, we need to, and will, devise new methods of monitoring and overseeing our various programmes as we may not be able to provide the desired level of on-site monitoring in all cases. At all times we will be guided by the requirement to quality assure all of our work to ensure that our participants can have full confidence in the interventions which are put in place for them. Inevitably, some problems will occur, but by confronting these problems, making the necessary corrective actions and learning from experience, we minimise their likelihood in the future.

Finally, we would like to again assure the committee that we take this process of reform very seriously. We believe that as our employment, community, training and other services take on new forms, the positive aspects of the work of FÁS, together with the lessons learned in recent years, will provide a solid foundation for the future.

Chairman

I thank Mr. O'Toole. Can we publish your statement?

Mr. Paul O’Toole

Yes.

Deputy Darragh O’Brien

I thank Mr. O'Toole and Ms McManus for their opening statements. Turning to Mr. O'Toole's opening statement, I was struck by the reduction in staff numbers. There were 217 posts vacated and, due to the moratorium, not filled. FÁS has been able to deliver an enhanced programme, with additional training courses, for which I commend Mr. O'Toole. Can he explain, first, how FÁS has managed to be able provide more training and more courses with fewer staff and, second, on the trend continuing in 2010 which he mentioned, has he an indication of numbers so far this year and what is he doing within the organisation to ensure the reallocation of resources to the relevant training areas?

Mr. Paul O’Toole

What we have been attempting to do is maximise the available resources in the best way possible. In 2009, there were two particular priorities. One was to resource our front-facing employment services to the best of our ability and we re-allocated staff against that goal, in other words, that there were guidance officers and other support to meet as many people as possible. By doing that, we managed to make the extra guidance interventions possible and we also worked with the local employment services to enhance their level of engagements with unemployed people as well, in other words, we put as much effort as we could into front-facing activity to help guidance in that. I think we have met our main targets in that regard, not without strain. It has been a pressure to do that.

On the training side of the house, we have been able to do that by expanding our evening training programme. In the past that would have been largely for people who were employed and paid for the service. We decided to make that service available to unemployed people so we are maximising the use of our training centres at night and trying to do that as efficiently and effectively as possible.

We also expanded our contracted training provision, in other words, using external providers to provide training on a contract basis to us. Therefore, instead of having a largely direct provision providing the courses, we have moved to a mixture of direct provision and indirect provision through contracted training. In addition, we have tried to work somewhat more efficiently and effectively in our processes.

Deputy Darragh O’Brien

Mr. O'Toole stated that the trend relating to the reduction in staff numbers is continuing. What is the current position regarding staff numbers?

Mr. Paul O’Toole

It is estimated that a further 100 staff will leave the organisation in 2010.

Deputy Darragh O’Brien

So approximately 320 staff will have gone, which is quite a significant development. What was the overall number of staff at the beginning of the year?

Mr. Paul O’Toole

At the beginning of the year, the figure was 2,055. At the start of 2009, there were 2,272 staff. At the close of the current year we will have approximately 1,950 staff.

Deputy Darragh O’Brien

So there has been a significant - approximately 10% - decrease in staff numbers. However, as the figures provided by Mr. O'Toole and Ms McManus show, the organisation has still been in a position to deliver enhanced and additional training courses. It is obvious that the staff and management team at FÁS must have displayed a great degree of flexibility in order for this to be achieved. I commend them for that. What has happened also shows that there was spare capacity to some degree. It is good that work is ongoing in respect of that matter.

In the context of the provision of additional training, Mr. O'Toole referred to local employment services. Was he referring to Jobcare and groups of that nature which are funded by FÁS or the Government and which are tasked with providing training?

Mr. Paul O’Toole

There is a network of local employment services which comes largely under the area partnership structure. We have a long-standing arrangement with those who provide these services to the effect that we fund the component of their work which relates to the guidance services they provide to people. This is called the local employment service arrangement. Historically, the aim of this was to provide additional supports to people who required particular levels of care and attention. However, as a result of the increase in that need as a result of the rise in the numbers of those who are unemployed, we have asked those who provide local employment services to expand their contacts through the national employment action programme, which they have done. They will provide a significant increase in capacity in addition to that being provided directly through our office network. To clarify, these are not training interventions, they are guidance services.

Deputy Darragh O’Brien

How does FÁS ensure that the guidance services being provided meet its criteria for delivery? Are spot-checks carried out? I am sure the courses provided are accredited. If a new partnership comes into operation in a new area, how does FÁS assess that the body charged with providing guidance services is delivering what is required?

Mr. Paul O’Toole

We have a contractual arrangement with the local employment services under which we specify and agree with them the requirements on an annual basis. The local employment services then report to us on the delivery of those requirements. Separate to this, we carry out surveys of unemployed people who have interfaced with the local employment services and our offices in order to gauge their level of satisfaction with the services being provided to them.

Deputy Darragh O’Brien

The main matters with which we have dealt during the past 18 months or so are procurement procedures and the corporate governance of the organisation. In his opening statement Mr. O'Toole referred to the number of significant changes the organisation has been obliged to implement. This has happened at probably the worst time possible in light of the level of strain that has been placed on FÁS in current circumstances.

FÁS's annual report for 2009 makes reference to the action taken to strengthen the financial control environment. That is crucially important. I do not know whether Mr. Dunne or Mr. O'Toole wish to comment on this matter. An important outcome from the committee's investigations into FÁS was a recommendation that the organisation should try to tighten up its financial controls. I have no intention of going over old ground but, as Mr. O'Toole indicated earlier, revised procedures in this regard were approved by the board of FÁS in April 2009. As a result, individual managers are required to complete statements of compliance. The annual report states:

The declaration was to be completed in 2010 in respect of the previous year. The declaration will now be signed every six months commencing in July/August 2010.

There seems to have been a delay in putting this procedure, which is extremely important, in place. Will our guests indicate why that is the case? Are the additional financial controls in place and, if not, when will they be put in place?

Mr. Paul O’Toole

The previous board introduced a procedure whereby staff within the organisation, from the level of assistant manager upwards, would indicate their compliance with procurement procedures. That measure was introduced during the year and staff were briefed in respect of it. The board revisited the matter in December 2009 and the original procedure was revised and adapted. What it was seeking to do was implement a self-declaration process so that where issues arose, they would be declared. The detailed forms, etc., were developed this year. For that reason, instead of introducing a new form, I put in place an alternative measure whereby the directors of each department were asked to provide me with a report on the procurement functions relating to their areas for 2009. I received these reports, in full, from each director and made it available in order that people might assess the position to which we have moved in respect of procurement.

Compliance certificates were introduced in the current year, with a view to their being completed for the six months up to and including June. We have used those forms and they have been submitted to me.

Deputy Darragh O’Brien

So the process is up and running.

Mr. Paul O’Toole

It is in place.

Deputy Darragh O’Brien

I note that over 350 staff have attended various workshops in that regard.

Mr. Paul O’Toole

Yes.

Deputy Darragh O’Brien

That is quite a high number. The committee is due to deal next week with a report on procurement processes across State agencies and Departments. How is the procurement process within FÁS structured at present? I am aware that the financial levels, etc., which previously obtained have been changed on foot of the investigations carried out and the recommendations made by this committee. The self-declaration form also came about on foot of one of the committee's recommendation and I am glad that it has been introduced. Will Mr. O'Toole outline the hierarchy that obtains in respect of procurement? How many procurement officers does FÁS employ, what are their qualifications and, in the context of fulfilling their role, what level of experience do they possess? Many Departments and agencies - not just FÁS - have fallen short in this area because they did not have the right people in the right places. Will Mr. O'Toole outline the position?

Mr. Paul O’Toole

The first task was to ensure basic compliance with the procedures. When I initiated the review, I set out for my colleagues four overriding principles which, in my opinion, needed to guide our procurement process. These are: to operate within the law; to adopt best practice; to serve the needs of the organisation; and to deliver value for money for the taxpayer. We have set these down as our overarching goals in the context of procurement. We have made significant savings - that is the tangible demonstration of the changes - through the expanded use of our framework arrangement and through adhering to seeking best value overall.

I reiterate what I stated previously to the committee, namely, that we need to overhaul our overall financial and procurement procedures. Procedures sometimes break down because people do not understand them or within a wide and dispersed organisation, different interpretations can be applied. One of the tasks I have given to one of my colleagues, who is new to the job since April of this year, is to conduct a review of our procurement practices overall.

We have taken a number of actions which we believe are working well. We have increased our compliance within the current regulations. We have also increased awareness of and the need to obtain value for money. Furthermore, we have tried to espouse an ethos of declaration of issues rather than people being obliged to discover them in another way. What is happening is that, genuinely, my colleagues who are in the field and who are procuring on behalf of the organisation are identifying issues, challenges, interpretations, etc. We are on a good path in developing that. That will be improved further when the new financial policies and procedures embracing procurement are adopted. We have practices that are probably more restrictive than in the public sector generally and I am not sure that is necessarily the right way to go. We are also improving our capacity and capability in strategic procurement through the framework arrangements we are putting in place.

Deputy Darragh O’Brien

It sounds like a great deal of progress is being made. Mr. O'Toole mentioned significant savings. Will he quantify them for last year and to date this year?

Mr. Paul O’Toole

I will ask Mr. Dunne to address that. The overall figure decreased by between €10 million and €12 million this year and procurement is a significant driver of that. There are other factors but there are some tangible examples of successes that Mr. Dunne can bring to bear.

Mr. Conor Dunne

I will mention a few procurement savings, mainly based on framework agreements where we have gone out nationwide for contracts. On telephone costs alone, we have saved €135,000 in 2010 compared with 2009; mobile telephones, €48,000; light, heat and power, €604,000; printer consumables, €44,000; cleaning of premises, €500,000; and insurance, €500,000. Other frameworks out at the moment will deliver significant savings, particularly in regard to ICT maintenance, of at least €200,000 per annum. We have gone to tender for frameworks in regard to transport, catering and waste management. Frameworks have also been launched for building consulting services. There will be significant savings there.

Deputy Darragh O’Brien

The examples Mr. Dunne has given are not specific to his organisation. They show what can be achieved if there is a focus on procurement. The committee's view is that significant savings and efficiencies can be driven in Departments in the current economic climate. What is the overall figure?

Mr. Conor Dunne

In 2010, purely on framework agreements going out to tender, there is a saving of €2 million compared to 2009. The saving will increase because, for example, on our SAP maintenance, there will be a saving of €475,000 over a four-year period. That just kicked in two months ago.

Deputy Darragh O’Brien

What is the percentage saving?

Mr. Conor Dunne

Overall, if we look at the six areas where we have savings, we are on an average of 14% saving on those frameworks.

Deputy Darragh O’Brien

That is excellent. I commend Mr. Dunne on that.

Mr. Conor Dunne

The Deputy asked about procurement staff. The procurement office is headed up by a procurement manager who is well qualified and has a master's degree in procurement. The person came from the private sector a number of years ago from the pharmaceutical business.

Deputy Darragh O’Brien

Does that person oversee all procurement within the agency?

Mr. Conor Dunne

Yes.

Deputy Darragh O’Brien

Then that person can spot check as he or she wishes.

Mr. Conor Dunne

Exactly. We have put additional resources into that office.

Mr. Con Shanahan

With regard to the overhead reduction in 2009 compared with 2008, we have more than a 20% reduction in overheads. Mr. Dunne mentioned a number of key framework agreements that are in place but a series of much smaller agreements were not reported separately. These were reported separately for our board to give an indication but our overhead costs fell from €53 million in 2008 to €41 million and we expect them to fall considerably in 2010.

Mr. Paul O’Toole

We think we are making significant progress but I emphasis there is more to go. The compliance is one aspect and while we have adopted the compliance approached specified by the board, we think getting the culture and ethos right, supported by a mechanism of self-declaration and a better understanding of how value can be achieved, will serve us. I emphasise that because our procedures are there but it is vitally important for any organisation that procedures serve the operation of the business or the service and are not an end in their own right and, for that reason, we are having a comprehensive review of them. We want to achieve the principles I set out - better value for money and effective administration.

Deputy Darragh O’Brien

FÁS must be commended on significant savings in procurement. Every Department can make significant savings in procurement. The State spends approximately €15 billion a year on procurement of goods and services and a 10% saving would amount to €1.5 billion. That would also lead to major efficiencies, including a tightening of control weaknesses. Page 35 of the report mentions a number of instances in this regard. I do not want to deal with the issue regarding invoices in 2009 totalling €222,000 paid by FÁS in respect of which there was no evidence of any goods or services being received. That is a matter for the Garda. It has moved on and, therefore, I do not want to dwell on that.

Mr. Con Shanahan

A total of 90% of that has been recovered.

Deputy Darragh O’Brien

And the insurance excess makes up the difference. It is a much lower loss.

In the overall scheme of things, it is relatively small but the final paragraph states that following internal audit work, there are invoices totalling €207,000 for which there is no evidence of goods and services being received by the organisation. Will Mr. Shanahan elaborate on that?

Mr. Con Shanahan

Four items make up the figure of €207,000. A sum of €75,000 related to income that internal audit determined should have been collected over a four-year period at our various Opportunities events where small exhibitors participated but, for a variety of reasons, the income was not collected from them. The cumulative value of that over the period was €75,000 and that was never registered as a debt on our books but essentially it is uncollectible as this point in time.

Two other items related to commission that was charged, which our internal audit department has determined was inappropriately charged. One case involves a sum of €19,000 which again relates to the Opportunities events, and the other is €33,000. Both of those have been referred to the Garda and if there is not a successful outcome, we will then have to decide whether to take separate cases.

Deputy Darragh O’Brien

Has FÁS paid commission in both instances?

Mr. Con Shanahan

FÁS paid commission to intermediaries in respect of services provided by subcontractors.

Deputy Darragh O’Brien

Are these not FÁS employees?

Mr. Con Shanahan

No, this has nothing to do with employees. There were two sums, €19,000 and €33,000, and they are both being investigated by the Garda to see whether the recipients have a case to answer. Depending on the outcome of that, we will have to decide whether or not we pursue that further.

Deputy Darragh O’Brien

Do they go back some time?

Mr. Con Shanahan

They go back a number of years.

Deputy Darragh O’Brien

Did they happen prior to the new financial procedures being put in place?

Mr. Con Shanahan

Absolutely, 2008 and prior.

Deputy Darragh O’Brien

Are they just mentioned in this account because they have not come up before?

Mr. Con Shanahan

Essentially, they are part of the legacy issues we have. The final amount of the four is a sum of €80,000, which is at issue with the community programme in the mid-west region and which involved a supervisor who was employed by a community organisation. We have determined that approximately €80,000 was paid to the community organisation and we are seeking its return. The organisation is engaging with the supervisor to maximise a return that might have been involved there. Again, this is with the Garda and we feel that up to €60,000 may be recovered from the organisation before the project is concluded.

Deputy Darragh O’Brien

I refer to page 44 of the notes to the financial statement and the specific skills and job training allocation. There has been a significant increase in this from €41.3 million to €64.4 million. That was mentioned and is understood. Mention was made in Mr. Gorman's statement, which was read by Ms McManus, of the increase in the numbers of people out of work using the agency for retraining and up-skilling. How does the agency assess the success of those courses? The significant investment in these courses is welcome, but how does FÁS assess the success of the trainees and the throughput and are these people successful in the jobs market for the field in which they have been trained? What interaction does FÁS have with the Department of Social Protection in that regard? I am aware a number of changes are coming down the line which may assist in that area, but how does the programme work as things stand?

Mr. Paul O’Toole

What we have been seeking to do is to maximise the number of interventions that are available. We have had to use a variety of methods to do this, some of which have been discussed. We have had a range of shorter courses available as well as the traditional longer ones and a variety of mechanisms which are concerned with making choices available. The rationale behind that is to enable as many people as possible to keep in contact, because most research suggests that the longer somebody is unemployed, the greater the danger of becoming long-term unemployed. Therefore, what we have done in that regard is to try to keep people in contact.

We have a long-standing relationship with the Department of Social Protection which refers people who are unemployed to a FÁS guidance officer. That person will then try to seek a suitable intervention from FÁS or otherwise to try to keep the person in contact, either through ourselves, a training grant or a variety of other mechanisms. We are working progressively to ensure that all of our interventions are appropriately certified by an industry specialist, with something like an ECDL. This is done mainly through FETAC and to some degree through City & Guilds. Therefore, one measure of success is the acquiring of a recognised, certified skill by the individual concerned. We follow up then on their progression to further study, training or into employment.

Deputy Darragh O’Brien

Does FÁS keep any records on the number of people who avail of its services and then attain employment?

Mr. Paul O’Toole

We have a certain amount of short-term data. For the first three months or so after they leave us, we try to track what they do. As they move out of the system and leave the live register and become involved for various reasons in what they want, the connection becomes a little more extended. However, we conduct a survey every couple of years to look at the progress people have made. We look at people with whom we have had an intervention and where they are after two years. We check whether they are in employment, still unemployed or whether they have progressed to further training or further skills development. We do that survey approximately every two years.

Deputy Darragh O’Brien

While FÁS tracks progress through surveys, does it have any idea of the number of users of its services who over the course of 12 months obtain employment? People come off the live register all the time, but has FÁS particular statistics? Currently, many professionals and skilled people are unemployed and FÁS has had to change to deal with that. It is no longer just about basic training. Has Mr. O'Toole any data in this regard?

Mr. Paul O’Toole

I have no data on that with me, but I would be happy to provide it.

Deputy Darragh O’Brien

That would be useful. What is the situation with regard to back to work allowances for people out of work who want to get back into the workforce on a self-employed basis? What assistance is provided to them through FÁS? What are the steps involved with regard to obtaining assistance from FÁS, the Department of Social Protection and any of the enterprise boards in that area? How does somebody go about getting assistance and how often does FÁS come across such people?

Mr. Paul O’Toole

I will ask some of my colleagues to respond to those questions.

Mr. Martin Lynch

The back to work allowance comes under the remit of the Department of Social Protection. We give advice in our offices with regard to its availability and the accessibility of the programme, but we are not directly involved with the participants.

Deputy Darragh O’Brien

Is it the case that FÁS just provides advice, but is not involved in the assessment?

Mr. Martin Lynch

Correct.

Mr. Con Shanahan

FÁS is represented on all the local county enterprise desks and would, obviously, be aware of what assistance is being provided to people starting their own businesses. If they participated in training, they would be entitled to a training allowance, which is equivalent to the back to work allowance. If people developing an idea are in training, they will get a training allowance from FÁS. If they are employees, they may get an employment grant from a county enterprise board or from Enterprise Ireland, depending on the size of the company. There is some assistance available. Also, as Mr. Lynch mentioned, the Department of Social Protection provides a back to work allowance. Therefore, there is an allowance, which is broadly equivalent to what they would get on social welfare, which they can retain for a period of up to one year, depending on the circumstances, while they are establishing their business.

Deputy Darragh O’Brien

Okay. I thank the witnesses for their responses to my questions, particularly on the cost savings side and the way in which they and the team in FÁS are dealing with the situation in which we find ourselves. FÁS must be commended in particular on the savings it has driven through in the procurement area over the past year or two. I am interested in seeing the figures mentioned and hope they will be forwarded to me, along with the financial control documents mentioned. These show how far FÁS has come. We have moved forward from what has been brought up in this committee on a number of occasions. Procedures have changed and that is good. I commend FÁS on the work it has done in improving its internal controls and on its cost savings.

Deputy Pat Rabbitte

Mr. O'Toole was not chief executive of FÁS when the legacy issues on today's agenda were occurring. Will he explain to the committee what the shape of FÁS will be when he comes here next year?

Mr. Paul O’Toole

The intention signalled by Government is that the employment community services functions of FÁS, which represent approximately half of the overall budget, will have transferred to the Department of Social Protection. That process will involve a number of stages. The Oireachtas has already enacted one element of this, which enables the Minister for Social Protection, Deputy Éamon Ó Cuív, to take policy and budgetary responsibility of employment and community services. As indicated by the Secretary General, this is likely to take place in January 2011. Therefore, we will have a service level agreement with that Department in respect of the delivery of those services. A further Bill is before the Oireachtas currently and it, if enacted, will enable the formal transfer of the staff of the relevant premises and technologies, etc. This is due to take place in 2011, subject to enactment of the Bill. Therefore, we will have a transition programme which will involve FÁS, the Department of Social Protection and the Department of Education and Skills so that we will have an orderly transition to the new arrangements. The training function will derive its policy direction from the Department of Education and Skills and we will drive that forward. Reference was made to this in some of the opening statements.

Deputy Pat Rabbitte

The staff of FÁS will have dropped below 2,000 by then. What will the total staff of FÁS be when the transfers referred to take place?

Mr. Paul O’Toole

The numbers will have to be determined in light of the adoption of the recovery plan mentioned yesterday and the allocation of staff for the non-commercial semi-State bodies. I expect the number will be reduced from the current number, but I do not have a figure yet. We expect to work that out with the Department over the coming months.

Deputy Pat Rabbitte

With regard to the staff who have left FÁS, was that as a result of natural wastage or did FÁS offer a redundancy programme?

Mr. Paul O’Toole

The Government introduced an incentivised early retirement scheme and a career break scheme in 2009 and a number of staff availed of that. Quite a number of staff aged 60 and over also left.

Deputy Pat Rabbitte

Does the new architecture mean that FÁS will have staff, who will ultimately be the responsibility of the Department of Social Protection, working side by side with staff who will be the responsibility of the Department of Education and Skills?

Mr. Paul O’Toole

No, I do not think there will be anything formal. Subject to the legislation the intention is that the staff of FÁS who currently do those services would be fully integrated into the Department of Social Protection and then that the remaining staff-----

Deputy Pat Rabbitte

Will there be a distinction in reporting arrangements of the staff in the centres-----

Mr. Paul O’Toole

There will, yes.

Deputy Pat Rabbitte

-----as between two different Departments?

Mr. Paul O’Toole

We have now about 17 main training centres and a number of satellite centres, but the bulk of the employment services are actually based in employment services offices - physical buildings around the country. The intention is that those properties would transfer to the Department of Social Protection as well.

Deputy Pat Rabbitte

Will a substantial number of people leave FÁS to become direct employees of the Department of Social Protection?

Mr. Paul O’Toole

At the time when this was being prepared a number of months ago, it will be something up to 40%.

Deputy Pat Rabbitte

FÁS has a budget of approximately €1 billion, which is the same as the budget at the time when we had virtually full employment. There is now a growing demand for its services and the budget is still €1 billion. Was it getting too much then or is it getting too little now?

Mr. Paul O’Toole

I have a year's experience of this now. I think the structure of the FÁS budget is not clearly understood and maybe we have not communicated it fully enough. Approximately 60% of our expenditure is payments to participants on the various training and employment programmes. The balance is used for our operating costs, which depending on the measures, is somewhere between 15% and 18%. So the core running costs are between 15% and 18% and the balance of the costs are the payments we make to external providers in the public, the not-for-profit and the private sectors, who engage in a set of interventions, training, programmes for the disabled, etc., on our behalf. So we have three separate blocks of expenditure. Like everybody else we have to manage that expenditure in the different circumstances, so what we are trying to do is operate it as efficiently as we can.

Deputy Pat Rabbitte

I accept that and I agree with what Deputy O'Brien said about the improvement in procurement. However, I return to the question the taxpayer in the street would like me to ask. It is a bit of a problem to understand why FÁS was getting €1 billion when we had full employment and it is getting €1 billion when we have 500,000 unemployed.

Mr. Paul O’Toole

Obviously, I cannot comment on the €1 billion in the past, but my responsibility is the current expenditure since 2009 and in 2010. What I am trying to emphasise is that very substantial portions of that are non-discretionary to FÁS. So the 60% that goes on participants' payments on schemes - to the supervisors of those schemes and to people on training interventions - is paid on the basis set out by Government. Those payments are analogous to social welfare benefits and we have, literally, no discretion in the matter so we are trying to make it as efficient as possible.

Deputy Pat Rabbitte

Let us consider the competency development programme. I was not a member of the committee, but I understand the Accounting Officer, Mr. Gorman, told the committee in July that there was no disquiet or concern expressed by senior officials about the value, assessment and effectiveness of this programme. He was asked the question explicitly and said: "No." That apparently was not true. I believe Mr. Mulligan was next in command in the Department at that time. How did the committee manage to get an answer of "No"? We often get a certain amount of obfuscation and claims that life is not perfect etc., but we do not usually get a flat "No" when it is untrue. As Mr. Mulligan was the senior person involved, can he tell us?

Mr. Dermot Mulligan

I think Mr. Gorman's remarks in July were driven by the fact that he had not seen the documentation at the time that it was prepared. So the concerns that had been raised had not been submitted to him and that was the-----

Deputy Pat Rabbitte

Was it Mr. Mulligan's decision not to submit it to him?

Mr. Dermot Mulligan

It was. The concerns were raised in the context of the issue about how to provide for the implementation of the national skills strategy in the national development plan. There was consideration in the Department on the memorandum for Government in relation to that. The context was that the expert group for future skills needs had been for over a year doing a considerable amount of work on the national skills strategy and it was in the position of finalising its report. In coming to that conclusion that we should have a national skills strategy, that it needed to be funded, the question of its inclusion in the national development plan came up.

Deputy Pat Rabbitte

While I appreciate that, specific criticisms were made by the senior officer in the Department whose responsibility it was to have oversight of this particular CDP programme. He made very particular fundamental forensic complaints about the merits of the programme to Mr. Mulligan, who was the senior person. Why was it considered unnecessary to act on that? While Mr. Mulligan may have very good reasons for not acting on it, it is extraordinary that this committee would have been told that no concerns were voiced, when they were voiced by somebody at principal officer level.

Mr. Dermot Mulligan

When Seán Gorman made a contribution to the committee in July he said that they were not voiced and that was on the basis of what was available to him at that time, which was that when the documentation was prepared - when the document the Deputy is referring to was prepared - it was not submitted to him. In terms of the points raised in the documentation, there was the concern about the scale of the provision for the implementation of the national skills strategy in the memorandum. What was being considered was €500 million over the period of the national development plan and there were concerns raised about the scale of that. In fact, on consideration the amount that was provided was less than that. That was because in the work that the expert group was doing at the time, two issues arose in terms of the costings. One was that they were based on estimates by the OECD of the cost of implementing this sort of plan and there were concerns about how they would translate in practice in the Irish situation. Second, as was acknowledged in the national skills strategy as published by the expert group, not all of the funding for the implementation of the skills strategy was going to be funded by the State - some was going to be funded by employers and some by individuals. While there was concern about the funding, in fact the funding that went into the national development plan was less. So that was one of the points that was raised.

Deputy Pat Rabbitte

Can we stick with the CDP aspect? Mr. Hayden, who was the principal officer concerned, is known to me since I worked in the Department - although I have not spoken to him for ten years. The memorandum he sent to Mr. Mulligan on 25 August 2006 was very clear. For example, he recommended that a forensic audit of a sample of the projects should be undertaken. Was that done?

Mr. Dermot Mulligan

Yes. That was a consideration that was acted on. I was the Department's representative on the board of FÁS. I was on the sub-committee of the board that was monitoring the competency development programme. It was called the sub-committee on training for the employed. After that suggestion regarding audits was made, I raised it at the next meeting of the sub-committee, on 13 September 2006. It was agreed at that meeting that a number of strategic alliance projects would be audited by the FÁS internal audit unit. That unit began the audit in October 2006 and it was completed in July 2007. It reviewed eight strategic alliance projects. The audit formed the basis for some of the work that was published in the Comptroller and Auditor General's report on internal control and governance of December 2009.

Chairman

To put this in context, before Deputy Rabbitte became a member of this committee, we heard evidence to the effect that Mr. Hayden, who was the chairman of the competency development programme review group, resigned in protest at the lack of action and activity by the review group. It was described here on the day evidence was given that it was not the best of career moves for Mr. Hayden to do that, but it was courageous. In response to Deputy Rabbitte, you referred to Mr. Gorman, who is not here to answer, unfortunately, because of an accident this morning. When Deputy Rabbitte said that Mr. Gorman gave a blank denial at the meeting of July, you said he was unaware of the correspondence that went between Mr. Hayden and you. You were sitting next to him on that day. You did not correct the evidence given in any way. Is that correct?

Mr. Dermot Mulligan

I was here on the day.

Chairman

Why did you not inform the committee that the evidence being given by Mr. Gorman was not correct?

Mr. Dermot Mulligan

It was because I did not recollect the correspondence at the time. It related to January 2007, I think. It was done-----

Chairman

It was 2006.

Mr. Dermot Mulligan

It was 2006, sorry. That was a number of years ago. It was done in the context of the finalising of the memo in relation to the national development plan.

Chairman

Mr. Hayden was so shocked by what went on here in early July that he again made a move, or he acted, which I suppose was not a very good move career-wise. He is a courageous man. He was so shocked by the evidence given that he wrote to this committee on 23 July, which was 15 days later. That letter is on record. I will quote from it:

At that meeting Seán Gorman .... told the committee that no reservations related to that programme had been expressed by officials of the Department. I had a direct responsibility for the administration of the Competency Development Programme at the time. The attachments below, that detail assessments and recommendations that I made in the period between August 2006 and January 2007, belie the evidence given to the Committee on Public Accounts by Seán Gorman. Accordingly, and to facilitate their fuller assessment and reporting on the hearings held to date on this subject ....

He asked us to bring this document, which has been in the public arena since then, to the attention of the committee. That is the context. Mr. Mulligan sat there on 8 July and allowed Mr. Gorman to mislead this committee.

Mr. Dermot Mulligan

I apologise for that, Chairman. It was based on the fact that I did not recollect the correspondence that has been submitted to the committee. I did not recollect it at the time and I apologise for that.

Chairman

That is the context for Deputy Rabbitte's line of questioning. I apologise to the Deputy for interrupting him.

Deputy Pat Rabbitte

I thank the Chairman. Is it not also true that Mr. Hayden was so concerned that he drafted a letter for the Minister, and attached notes to it explaining why he intended to take that step? Was that letter sent?

Mr. Dermot Mulligan

That letter was not submitted to the Minister for signature.

Deputy Pat Rabbitte

Why was that decision taken?

Mr. Dermot Mulligan

The letter from the Minister to the chairman, as drafted, sought improvements in the information being supplied by FÁS to the Department. The reason it was decided not to submit it to the Minister was that the Department already had a significant amount of information from FÁS on the operation of the competency development programme. A lot of that information was-----

Deputy Pat Rabbitte

Where did the Department get that information from?

Mr. Dermot Mulligan

A lot of that information was received through the sub-committee of the board on training for the employed. In correspondence that-----

Deputy Pat Rabbitte

How did it get to the Minister?

Mr. Dermot Mulligan

There was a concern that the Department was not receiving information from FÁS. What I am saying is that up-----

Deputy Pat Rabbitte

Mr. Mulligan said the letter was not given to the Minister because the Minister already had a lot of information about what was going on in FÁS. Who was giving him the information?

Mr. Dermot Mulligan

If I said that, I misspoke. What I meant to say was that the letter was not sent because the Department already had a lot of information on the competency development programme from FÁS.

Deputy Pat Rabbitte

Did the Minister have such information?

Mr. Dermot Mulligan

The Minister had information, as provided by the Department. The reason the letter was drafted was-----

Deputy Pat Rabbitte

Mr. Hayden was the principal officer responsible here.

Mr. Dermot Mulligan

Yes.

Deputy Pat Rabbitte

When I was Minister of State in the Department in a circumstance like this the principal officer would be entitled to send his report directly to the Minister. Under the 1987 Act, the Minister is entitled to direct FÁS to act. He has wide powers under that Act. Apparently, they have never been invoked. Is that true?

Mr. Dermot Mulligan

The Minister, through his Department, gives directions to FÁS, particularly-----

Deputy Pat Rabbitte

He does so through his Department. Does Mr. Mulligan accept that the Minister has a role in all of this?

Mr. Dermot Mulligan

Sorry, the key role-----

Deputy Pat Rabbitte

The paperwork and the evidence on this would tend to show that the officials keep all of this away from the Minister. The Department deals with FÁS, which is not what the 1987 Act envisaged.

Mr. Dermot Mulligan

The Minister would have received reports on any queries that he would have had in regard to the operation of any programme in FÁS.

Deputy Pat Rabbitte

Of course he would. How was the Minister supposed to query if he did not know? Did the Minister know that the principal officer was as concerned as we now know to be the case?

Mr. Dermot Mulligan

What I would say is that I was not as concerned in regard to the flow of information. We already had a significant amount of information in the period up to January 2007, which was when the letter was drafted. That information increased significantly very shortly afterwards, in February 2007, when FÁS management submitted a detailed report and summary in regard to the projects of the competency development programme. It updated that and other progress reports in the months after that. The strategy was to attempt to utilise the contacts at official level before involving the Minister in correspondence around the issue. That worked.

Deputy Pat Rabbitte

In light of the budget of €1 billion, and given that FÁS has such an important role, if I were the Minister I would have wanted to have known about this. Is it not the case that expenditure on the CDP programme ramped up from €8 million in 2004 to €45 million in 2008 and that €150 million was spent on the programme over that period alone? Was not also the case that the person in the Department who was responsible for the programme believed there were fundamental questions to be asked about its effectiveness? So concerned was he that he brought the matter to Mr. Mulligan's attention in writing and drafted a letter for the Minister. The Minister, however, was in blissful ignorance of the letter because, I presume, Mr. Mulligan decided it should never reach his desk. Is that not what happened?

Mr. Dermot Mulligan

Before the letter was drafted, senior management in FÁS assured the sub-committee that a detailed and summary report of the strategic alliance projects would be furnished to the next meeting, which was in February. That is what happened. I was assured and convinced that the contacts that we had through the board sub-committee, but also departmental contacts, would give us the information that we needed to supply to the Minister. That is what happened.

Deputy Pat Rabbitte

What is the position regarding the site purchased for FÁS headquarters in Birr?

Mr. Paul O’Toole

FÁS owns a site in Birr which is in the order of 5.7 acres. It was purchased, I believe, in 2005. The indications that we have had from Government is that there will be a review of decentralisation in 2011. For this reason, we have not proceeded in any way to develop the site. What has to be factored in now is the subsequent decision on the transfer of employment and community services to the Department of Social Protection. That will be a factor that will obviously be considered in light of the review of decentralisation.

Deputy Pat Rabbitte

In August 2004, the site was valued at €140,000 per acre. Three or four months later, it was purchased by FÁS for twice that figure. How did that happen?

Mr. Paul O’Toole

I will ask my colleague, Mr. Connor Dunne, to take the Deputy through that.

Mr. Conor Dunne

That is correct, however the original advice from our property agent was a desktop review. When the agent went on site in Birr sites in the vicinity were going at up to €300,000 per acre. The agent recommended the payment of €275,000 per acre, which was the commercial value at the time.

Deputy Pat Rabbitte

A property consultant valued the site initially at €140,000 per acre.

Mr. Conor Dunne

Yes, the consultant did an initial evaluation.

Deputy Pat Rabbitte

However, when he visited Birr he found the site was worth twice that figure.

Mr. Conor Dunne

That is correct.

Deputy Pat Rabbitte

Who is this person?

Mr. Conor Dunne

It was one of the big professional firms.

Deputy Pat Rabbitte

Which of them?

Mr. Conor Dunne

Hamilton Osborne King, HOK.

Deputy Pat Rabbitte

His knowledge of Birr and of the property market was to value the site at 50% of what he subsequently thought was the value.

Mr. Conor Dunne

From paperwork I have reviewed, he said it was a preliminary initial valuation. It was a desktop view. It was when they went down to Birr and tried to assess sites, they looked at the price for which sites in the vicinity were going and found that two sites nearby were going for more than €300,000 per acre. They came with a recommendation that to get the site would cost between €275,000 and €300,000 per acre.

Deputy Pat Rabbitte

Does FÁS normally buy land for its own uses in terms of the infrastructure of the organisation?

Mr. Conor Dunne

FÁS, in the past, would have bought land for training centres, etc.

Deputy Pat Rabbitte

Does the State not have the expertise to advise on and procure this type of purchase?

Mr. Conor Dunne

FÁS has its own facilities. It has a management department with a professional staff. In relation to the acquisition of property, staff went to an outside professional. It should also be noted that the guidelines on the decentralisation programme issued by the OPW at the time were that the range per acre in the environs of a small town was between €100,000 and €500,000.

Deputy Pat Rabbitte

Would it not have been more customary to commission the OPW to conduct this business?

Mr. Con Shanahan

That would not normally be the case in FÁS. FÁS gets a special mention in the Comptroller and Auditor General's report because it had the expertise in-house. For example, the Department of Social Protection would use the OPW and FÁS would use its own internal department. It has that skills set internally.

Deputy Pat Rabbitte

Does Mr Dunne think that expertise was evident in this purchase?

Mr. Conor Dunne

There is a difference between facilities management and the acquisition of property. Normally, facilities management would be expertise in design and construction costs but not necessarily in site values. That would always be done by a professional auctioneer outside the organisation.

Deputy Pat Rabbitte

The position is that we have a landlocked site of 5.5 acres in Birr for which we paid €1.5 million.

Mr. Conor Dunne

It is not landlocked. Planning permission for the access road into the site has been secured.

Deputy Pat Rabbitte

Will planning permission make the site un-landlocked, as it were?

Mr. Conor Dunne

It makes it accessible.

Deputy Pat Rabbitte

Where I am from, planning permission does not build access to a site but gives one permission to build it.

Mr. Conor Dunne

As far as I am aware, there is access available to the site.

Deputy Pat Rabbitte

Who handled this matter for FÁS internally?

Mr. Conor Dunne

A number of people would have been involved in that transaction.

Deputy Pat Rabbitte

Does anyone know why FÁS was to end up in Birr in the first place?

Mr. Conor Dunne

That was a Government decision.

Deputy Pat Rabbitte

Are the documents that went to the board available? Did the board know when it approved this purchase that our friend in HOK was sitting at his desk in Dublin pontificating about prices in Birr about which he clearly knew very little?

Mr. Conor Dunne

It is documented in the board's papers that the initial valuation was €140,000 per acre. It was also documented in the board's papers that due to the further investigative work, the value had risen to €300,000 per acre.

Deputy Pat Rabbitte

The board was content about that.

Mr. Conor Dunne

The board agreed the purchase of the site at €275,000 per acre.

Deputy Pat Rabbitte

How much was HOK paid?

Mr. Conor Dunne

I have the figure here somewhere. It was the normal percentage rate.

Deputy Pat Rabbitte

It was normal.

Mr. Conor Dunne

It was normal for those days. I do not have the figure at the moment but I will find it shortly.

Deputy Pat Rabbitte

Do we know who the vendor was?

Mr. Conor Dunne

As far as I know, the vendor was the Respond housing agency, a charitable organisation.

Deputy Pat Rabbitte

I believe it is a charitable organisation owned by a development company.

Mr. Conor Dunne

I do not think so.

Deputy Pat Rabbitte

Is that right? Is it a different organisation from the Respond I am accustomed to dealing with?

Mr. Conor Dunne

As far as I am aware, Respond is a charitable housing agency. We bought the site from it.

Deputy Pat Rabbitte

Perhaps Mr. Dunne will look at the paternity of the agency sometime. Was the Department consulted at the time about this venture and did it give its approval?

Mr. Conor Dunne

The site acquisition was approved by both the Department and the Department of Finance.

Deputy Pat Rabbitte

At the price of €300,000 per acre.

Mr. Conor Dunne

Yes, at €270,000 per acre.

Deputy Pat Rabbitte

Were both Departments advised that this was the board recommendation and did they both approve it?

Mr. Conor Dunne

Yes.

Deputy Pat Rabbitte

What will be done with the site now?

Mr. Conor Dunne

I have no idea what we can do with it now.

Deputy Pat Rabbitte

Does FÁS have a Friesian or Aberdeen angus herd?

Mr. Conor Dunne

No. This is down to the whole decentralisation decision. We were held up by the Labour Court decision in transferring staff. That certainly put a hold on the development of the Birr site.

Deputy Pat Rabbitte

I accept Mr. Dunne is not responsible for the decision on decentralisation. What is the connection between this and the premises FÁS leases there?

Mr. Conor Dunne

My understanding is that the intention of leasing the premises was to have an advance office in the Birr office technology park.

Deputy Pat Rabbitte

Was it a separate decision or was it in anticipation of the decentralisation process?

Mr. Conor Dunne

The purpose of it was in anticipation of decentralisation in order to get staff down there early.

Deputy Pat Rabbitte

Did HOK come to our rescue again or did FÁS do the job itself?

Mr. Conor Dunne

My understanding is that a lease was agreed at €99,000 per annum. A local property agent was used. A fit-out was required which FÁS undertook using a contractor that was on-site. A cost plan was done first and the quote was within the cost plan.

Deputy Pat Rabbitte

What was the cost of the fit-out?

Mr. Conor Dunne

Including furniture, it was just more than €1 million.

Deputy Pat Rabbitte

How many people was it intended to accommodate?

Mr. Conor Dunne

It was to accommodate 40 people.

Deputy Pat Rabbitte

How many does it accommodate?

Mr. Conor Dunne

At present there are 17 staff. We also operate a jobs club out of the building and there is an employment services office clinic in the building as well.

Deputy Pat Rabbitte

What will happen to the site and the 17 staff if it is confirmed in 2011 that decentralisation will not go ahead?

Mr. Conor Dunne

The 17 staff are quite happy to stay there. The office is working well.

Deputy Pat Rabbitte

They have a lot space anyway.

Mr. Conor Dunne

There is a jobs club in the building and we are using it for an ESO clinic as well. I understand we have other uses for it also. For example, the VEC is interested in taking some space in it. The idea is to get utilisation out of it.

Deputy Pat Rabbitte

What is the view in FÁS about the job that was done in leasing the office in terms of the cost? I understand that it is 77% above benchmark if one takes it over the range of the lease and the investment to refit it.

Mr. Conor Dunne

That is a conclusion in the Comptroller and Auditor General's report. Within his report the other 12 leases that are mentioned in table 114 on page 295 were all greater than the benchmark for a small town area by 72%. I conclude that we are no better or no worse than those responsible for the other 12 decentralised properties.

Deputy Pat Rabbitte

Yes, I suppose Mr. Dunne is correct.

Mr. Conor Dunne

The cost of the fit-out per square metre was below the cost of the Bruce Shaw QS fit-out at the time.

Deputy Pat Rabbitte

Why was it considered necessary to make the move at all? If a site was purchased for a new headquarters and planning permission had been sought to build a road to it, why was it necessary to move people at all to Birr until the new office was built?

Mr. Conor Dunne

It is my understanding that at the time FÁS was trying to fast-track its decentralisation programme. Getting 40 people down there was considered to be a way of getting it kick-started.

Ms Brigid McManus

While I was not involved with FÁS at the time, in terms of the Department and some of the agencies that were due to decentralise the decentralisation implementation group and the overall Department of Finance approach was to encourage or insist, depending on the range that was managed, people to set up advance offices in order to try to get some people decentralised and encourage further people to volunteer for decentralisation. The general policy environment was that where possible, if people were prepared to decentralise, one should lease interim offices. It depended on how quickly one felt one was going to be building. The circumstances varied. For example, in our case a couple of our bodies, which were much smaller in scale than FÁS, leased interim office space-----

Deputy Pat Rabbitte

Could we conclude that it was part of the madness of the time?

Ms Brigid McManus

There was a policy decision to decentralise on which I will not comment. In terms of implementation there certainly was a difficulty when there were delays in getting headquarters. People had moved to Departments or agencies who were recruited on the basis that they would be decentralised but they were often commuting up to Dublin. For example, in the case of our own Department we decentralised a group of people to Athlone but with the Mullingar decentralisation what we have done to accommodate the people who were due to decentralise is to arrange an alternative destination such as Tullamore, for example, that might suit them instead. There probably was a decision which perhaps varied in Departments to send an advance party, which worked well in some Departments or agencies.

Deputy Pat Rabbitte

Are the 17 FÁS staff resident in Birr?

Ms Brigid McManus

I do not know about that.

Deputy Pat Rabbitte

Are the circumstances that caused FÁS to put a proposal to the board to build a new headquarters a comment on the inadequacy of the present accommodation?

Mr. Paul O’Toole

In terms of our headquarters in Dublin?

Deputy Pat Rabbitte

Is the decision to build a new headquarters a comment on the inadequacy of the present accommodation?

Mr. Paul O’Toole

If I understand it correctly, the decision to build a new headquarters flowed from the decision on decentralisation. Our current headquarters in Baggot Street is under consideration, as the organisation is now divided. We have a lease on it, the major part of which expires in 2013. Therefore, as the decision on decentralisation has been taken and as the decision on the splitting of the organisation comes through a decision will be required on our current headquarters.

Deputy Pat Rabbitte

Is there any co-ordination within the service on that kind of situation? There is much fall-out from the decentralisation programme, as announced, being stopped. There is the new economic environment. There is the fact that there are probably other agencies such as FÁS where the lease is due to expire in the next two or three years. Is there any overall co-ordination to try to make savings in that situation?

Mr. Paul O’Toole

There is an overall requirement for FÁS to identify any surplus property that it has and to declare it to the Department of Finance, which we have done. In the light of the changes, subject to the enactment by the Oireachtas, a programme board has been established with the Department of Social Protection, the Department of Education and Skills and FÁS at Secretary General level and my level, director general, to co-ordinate the overall programme of transition. Within that we will be bringing to the table for the Department of Social Protection a number of properties and employment services offices. We have already begun a liaison with its property function to ensure that we are handling in an orderly fashion anything to do with property which will become the preserve of the Department of Social Protection. We are doing it on a case-by-case basis. A project team will be put together to examine the property.

In addition, internally within the organisation the board has commissioned a report. My colleague, Mr. Dunne, has reported to the board on our overall property portfolio. Many of those premises are leased. We own a certain range of properties. We are exiting properties that are not needed as we go. In 2009 we exited something like 16 properties. We are absolutely clear on the need to manage resources as effectively as possible, to co-ordinate those arrangements with the Department of Social Protection in particular at the moment and to exit property that is not needed in as orderly and fast a fashion as we can.

Deputy Pat Rabbitte

FÁS is a very important organisation. It is more important now than ever given the circumstances in which we find ourselves. Is Mr. O'Toole's work constrained in any way by the fact that he is now located in Dublin and might be likely to stay in Dublin?

Mr. Paul O’Toole

I am able to undertake my duties from Dublin. It is a requirement that in the event of decentralisation to Birr I will be obliged to transfer there.

Deputy Pat Rabbitte

Did Mr. Dunne find the HOK figure?

Mr. Conor Dunne

No, sorry.

Mr. Paul O’Toole

We will provide that information to the Deputy.

Chairman

The information we got in response to Deputy Rabbitte's questions is stretching credibility quite a bit. There were very strange happenings in Offaly and Laois. I mentioned Mount Lucas on the last occasion. Let us focus on Birr for the moment. There was a landlocked site and we were told by Mr. Dunne there is planning permission for access. Do we own the property over which the access road will be built?

Mr. Conor Dunne

My understanding is that we have a legally binding agreement stipulating we have access to the site.

Chairman

Is funding involved, or a cost?

Mr. Conor Dunne

There is not.

Chairman

Let us consider the premises refurbished for €1 million. It was to deal with 40 people although 400 were to be decentralised. Mr. Dunne mentioned the company that carried out the refurbishment. Would I be correct in saying it was owned by the landlord of the offices?

Mr. Conor Dunne

That is correct. The builder was on site. As I stated, a cost plan was drawn up by our own independent QS. The project did not go out to tender and was a type of rent-design-build – if one could call it that. The cost was about €1,200 per square metre whereas the Bruce Shaw index of construction costs showed much higher costs at the time.

Chairman

Was it a temporary arrangement pending the development of the site on which €1.5 million was spent?

Mr. Conor Dunne

That is how it appears, yes.

Chairman

Why did Mr. Dunne sign a ten-year lease in that case?

Mr. Conor Dunne

There is a five-year break clause in the lease.

Chairman

It was a ten-year lease.

Mr. Conor Dunne

It was a five-year break clause.

Chairman

Why even a five-year break clause?

Mr. Conor Dunne

I would imagine that, by the time one received planning permission, built the premises and moved in the staff, five years would be reasonable time.

Chairman

Was the leasing of the premises approved by the board of FÁS? Deputy Rabbitte asked that.

Mr. Conor Dunne

Yes, it was.

Chairman

What about the upgrade?

Mr. Conor Dunne

Yes.

Chairman

On the last occasion, we spoke about Mount Lucas. Since then the manager in that part of the world took the committee to task for daring to ask questions about Mount Lucas. I described it as a white elephant at the time. Mr. O'Toole said in evidence that it was under-utilised. He said:

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.

Mr. Paul O’Toole

There was, at the time I gave that evidence, very low utilisation of the site. It was designed specifically for construction-related training on scaffolding, plant equipment and cranes. It was being under-utilised in regard to that purpose. We had a facility in the location and wanted to get some use out of it. We acknowledge it was under-utilised. What we have done in the meantime is change the course structure. The VEC is using part of the premises. We have introduced a couple of evening training courses and we intend to expand in this area in the short term. The number of people going through the facility this year will have increased to just under 180.

We have also tackled our cost base in regard to the facility. We have cut out and reduced costs where possible. I have asked the team, which will report to me, about a further plan for the long-term use of the facility. The team has looked at a number of ideas in relation to this. It is looking at the feasibility of long-term use. Given that the facility exists, we aim to have maximum utilisation.

Chairman

Is Mount Lucas just outside Tullamore?

Mr. Paul O’Toole

Yes, it is a few miles outside Tullamore.

Chairman

There are 33 acres. On the last day we met, we heard evidence that there are three staff working there.

Mr. Paul O’Toole

Yes.

Chairman

How many staff are there now?

Mr. Paul O’Toole

There are two full-time staff and there are instructors coming in the evenings. The VEC tuition staff arrive during the day.

Chairman

Mr. O'Toole used the term "a couple of evening courses" in his evidence.

Mr. Paul O’Toole

There are four evening courses.

Chairman

What do they involve?

Mr. Paul O’Toole

I do not have the specific details but typically there would be 15 to 20 people on courses. I know of the numbers on the evening courses. This is not an ideal situation as the facility is not being used to the extent originally envisaged. We would like to increase utilisation of the facility. I acknowledge all the points in this regard. Having been given the centre, we are trying to the best of our ability, in very different and difficult circumstances, to ensure there is some utilisation.

Chairman

Deputy Rabbitte spoke about the madness that took place in respect of the acquisition of property. It was more than madness in that there has been a lot of sharp practice. Many strange things have happened around Tullamore and Birr in regard to FÁS. Has Mr. O'Toole carried out a review of all the papers and files relating to Mount Lucas, Birr and Tullamore? Can he look me in the eye and say all the procedures followed in regard to the three land deals were in accordance with all the proper procurement guidelines and other guidelines that applied at the time?

Mr. Paul O’Toole

I can say to the Chairman that the necessary approvals, at the correct level, were given for the purchases and development of Mount Lucas, the site at Birr and the temporary facility that was put in place. The executives at the time put forward their case to the board and the board gave the approvals. The paperwork supports that. I am not in a position to make a broader comment on that.

Chairman

Did the Department approve all of this?

Mr. Paul O’Toole

The Department gave approval in respect of Birr. I am not sure about the departmental engagement in respect of Mount Lucas. I can verify it but do not have the information at the moment.

Chairman

This ties in to other questions by Deputy Rabbitte about Mr. Hayden's correspondence to this committee, and about attachments to his correspondence to this committee. He spoke about an uneasy and poor relationship between the Department and FÁS. He said FÁS was acting almost autonomously of the Department although FÁS's annual funding, amounting to over €1 billion each year, was coming from the Department. He was basically saying the organisation was a law unto itself and used its political muscle and contacts to bypass the Department.

Mr. Paul O’Toole

Obviously I cannot speak to that time. What I can say is that we work very closely with the Department of Education and Skills. At the beginning of this year we received a communication from the Department of Enterprise, Trade and Innovation, which was then our lead Department, setting out its expectations in terms of the budget we were being allocated. It was requested that we report thereon to the Department regularly. We would have contact at all levels with executives. I am sure we have differences of opinion from time to time but we certainly will and do see the officials in the Department, and the Minister, as being very important stakeholders. We seek to work on those relationships and our practices in the appropriate fashion. I know from the board and from the interaction of the new board, that the board is very clear on that point.

Chairman

Can Mr. O'Toole name the people within FÁS who were directly responsible for the three land deals in the Birr-Tullamore area?

Mr. Paul O’Toole

Overall responsibility would have been with the director general. He would have-----

Chairman

Was that Mr. Molloy?

Mr. Paul O’Toole

Mr. Molloy. He would have had overall responsibility. I am sure there were various colleagues involved. I can get their names if the Chairman wishes.

Chairman

We should obtain them for the record. I do not believe in a tooth fairy, nor do I believe this was an act of madness, at a time when there was almost a gold-rush for land. We need to come to grips exactly with what was happening. The questions raised by Deputy Rabbitte are valid and we need more information, to say the least.

Mr. Paul O’Toole

Okay.

Deputy Michael D’Arcy

Did Hamilton Osborne King, or HOK as it is known, advise FÁS on the other two land deals, as well as the deal in Birr, County Offaly?

Mr. Conor Dunne

Ganly Walters advised FÁS on the leased offices in Birr. A peppercorn rent of €10,000 per annum is paid to Bord na Móna. Naturally, there was a huge capital expenditure on that site for the facility. I am not aware which property adviser was used, if there was any, for Mount Lucas.

Deputy Michael D’Arcy

Is it correct that the advice of HOK was to pay twice the original price?

Mr. Conor Dunne

It is in the Comptroller and Auditor General's report that HOK gave an initial valuation of the site. It came back, having done further work, stating the value was €300,000 per acre and it explained two sites adjacent, or nearby, had gone for that amount of money. This was in writing from HOK. It recommended the €275,000 per acre price.

Deputy Michael D’Arcy

Did its fee note increase correspondingly to the amount?

Mr. Conor Dunne

I do not know. I will have to check that.

Deputy Michael D’Arcy

Mr. Dunne assumed earlier it was a percentage, which was the standard at the time.

Mr. Conor Dunne

I assumed it was a percentage because that was normally the standard at the time.

Chairman

In fairness to Deputy D'Arcy, will someone from the delegations telephone the office to find out the fee? We would like to have it for the context of today's proceedings.

Deputy Michael D’Arcy

A 2% fee on a €1.5 million deal would come in at over €30,000 whereas it would be half that for the lesser amount. If the land price increased, did the percentage for HOK decrease? If it did not, why not?

Were relocation costs paid to the 17 staff who relocated to Birr?

Mr. Paul O’Toole

Not to my knowledge. I do not think there were relocation costs. I apologise to the Deputy but neither I, nor Mr. Dunne, was in the agency at the time.

Deputy Michael D’Arcy

Yes, I appreciate that.

Mr. Paul O’Toole

We will provide the Deputy with any information he requests.

Deputy Michael D’Arcy

My concern is if the office in Birr does not remain open, these 17 staff will have to be relocated at further cost.

Mr. Paul O’Toole

We will provide the Deputy with that information.

Ms Brigid McManus

Generally, to my knowledge there were no relocation costs paid under the decentralisation programme.

Deputy Michael D’Arcy

That is one little bit of good news.

What oversights are in place to ensure courses provided by FÁS through training organisations are well run and the awarding of certificates is appropriate?

Mr. Paul O’Toole

I referred to it in my opening statement. We have carried out a review of our training standards and the efficacy of contracting arrangements with external providers. It is clear we need to make significant improvements in this regard. There is an imperative need to improve the arrangements already in place. Having reviewed their status, we introduced a set of new measures in September and will transition to them over the next several months to strengthen the overall monitoring and control of contracted training courses that we run.

Deputy Michael D’Arcy

How does FÁS filter candidates for the training organisations?

Mr. Paul O’Toole

For those unemployed, they will be either referred by the Department of Social Protection or, of their own volition, they will meet a guidance officer in our employment services offices. They will establish the skills they already have and those they may wish to acquire. Interventions will be proposed and suggested to them. Depending on the extent of their interest, they will then be placed on a waiting list to be assigned to the appropriate course.

This applies to both people on the direct training courses and on contracted courses. We start with a guidance intervention and work through to the actual contractor.

Deputy Michael D’Arcy

The theory sounds very good. What is it like in practice?

Mr. Paul O’Toole

That is the practice. We have had to rapidly increase the level of interventions. We have managed to do this. We changed our model rapidly with much more choices and possibilities with short courses, evening courses and a small grant provision if we cannot fit them into our direct provision, for example. We are coping with this large expansion reasonably well.

However, I admit there is still work to be done to ensure the effectiveness of course provision and that follow-ups and assessment are done to best practice.

Deputy Michael D’Arcy

Does this mean that the any-course-will-do approach no longer applies in FÁS?

Mr. Paul O’Toole

There is no any-course-will-do approach. We want a much closer relationship between an enterprise need, a labour market need and the skills potential of the individual. While we are responding well to the challenge we are facing, there is further work to be done to make that as tight as possible. We are attempting to help people keep some form of contact through a training intervention, with which we are succeeding.

There has to be a closer relationship, however, between the skills we are helping the person get and the opportunities in the marketplace. We are learning this very much as we go. The closer one can get the skills the person is acquiring to the need of an enterprise, the better the chance that person has of getting a job.

Large numbers of jobseekers with fewer job opportunities are encouraging a range of shorter interventions in which people are acquiring skills they did not have. Digital competency is required for many jobs. FÁS provides a large number of people with basic computing skills or the ECDL. Of itself, it adds to their skills competencies. Within the challenges of the marketplace, they probably need more to get a job, however. This is what we are trying to refine and get better at.

Deputy Michael D’Arcy

I know of two chartered accountants offered a standard FETAC level 5 accountancy course by FÁS. What is Mr. O'Toole's view on this?

Mr. Paul O’Toole

Offering a qualified accountant an opportunity to do an accounting technician module would not suit his or her needs. We are not able to get a perfect match in all cases. We have to supply what we can and tailor it as closely as possible to the needs and the potential of the individual. Given the vast numbers we are dealing with, we are not going to get it right every time.

Deputy Michael D’Arcy

I do not mean to be rude but having two chartered accountants on a course they could have taught is just continuing the waste. The course could have been offered to two other people who could have improved their skill sets. Instead, it appears to be a training organisation filling its courses to ensure it gets paid.

Mr. Paul O’Toole

If we have a mismatch like that, it must be addressed. However, we have quite a number of people professionally qualified in a variety of disciplines but who may not have picked up a particular skill. I am not going to stand over a situation that is, in effect, to offer an accountant to do an accountancy course again.

However, many people will step back from their own level and fill in a skills gap. An example could be an architect who had perhaps never done computer aided design, CAD, and would very much welcome doing it. That could be level 5 or 6 at FETAC level, but it is still a valuable component skill for the individual involved. It is not about the stepping back to do something different that fills in a gap, but rather tailoring the course intervention to the need of the individual as best one can.

Deputy Michael D’Arcy

Yes, and there are many examples of that. However, when that example was given to me in the last month, I could only despair having hoped that FÁS would not allow that type of mismatch to happen because there is no filter. Take it from me, training organisations are not filtering clients to shove them in the direction of the correct course to improve their skill sets, as Mr. O'Toole has just said, with, say, a professionally qualified architect who has all the artistic merits but perhaps none of the auto-CAD abilities. I believe this is something that he and his organisation needs to focus on, in particular.

I want to explore another point. With regard to those who have practically completed a FÁS module but might have one portion left to do, has there been any focus within the organisation on people with small portions of the course to complete to get the necessary certification?

Mr. Paul O’Toole

The most marked example of what the Deputy is describing applies to apprenticeships, which are both time and standards based and require at least four years spread over seven phases. Three of those phases are off-the-job training through FÁS and the institutes of technology, largely, and four of the phases are on the job. We are finding, with the recession, that the availability of the work experience portion is becoming problematic for apprentices in particular, but also for others. We have a range of interventions in place to try to help the situation. As the economy geared up in the earlier part of this decade, so did the number of apprentices. We peaked in 2006-07 with an intake of 8,000 and many of those are filtering their way through the system, but a significant number are struggling to find the work experience necessary to complete their apprenticeships.

We have, in agreement with the Department, put in place a number of interventions to help the situation, we are getting through it but it is a significant challenge. We shall be bringing forward further proposals in respect of 2011 that will enable in some way, either through the public sector or through helping private companies that can provide the relevant work experience, to get those people over the line. However, it is a significant issue.

Deputy Michael D’Arcy

Will Mr. O'Toole please explain in regard to the private sector?

Mr. Paul O’Toole

At the moment we have a redundant apprentice placements scheme. An employer who might not otherwise be able to take on an apprentice, and who is qualified to do this in line with a set of criteria will be given a subvention to the cost of employing the apprentice for the unexpired period of his or her on-the-job work.

Deputy Michael D’Arcy

That means the apprentice can be certified at the end of that period.

Mr. Paul O’Toole

That is correct.

Deputy Michael D’Arcy

What budget does FÁS have for that?

Mr. Paul O’Toole

In 2010 it is between €6 million and €7 million, from memory.

Deputy Michael D’Arcy

Are there any figures yet, for 2011?

Mr. Paul O’Toole

We have not got any, as yet. That will be subject to the budget process but we will be hoping for something similar.

Deputy Michael D’Arcy

What sort of time schedule is FÁS looking at to clear the backlog in terms of those who are awaiting places?

Mr. Paul O’Toole

The last figure I have is to the effect that the overall apprenticeship numbers are of the order of 17,000. Of that approximately 10,000 were in employment or training courses on or off the job, which leaves 7,000. Of that number approximately 3,000-----

Deputy Michael D’Arcy

To recap, there are 17,000 apprentices, 10,000 of whom are working their way towards the final position.

Mr. Paul O’Toole

Yes, they are either employed or in training.

Deputy Michael D’Arcy

They are working their way, however, to a place where there is an existing backlog. Is that correct?

Mr. Paul O’Toole

Not quite. If they are employed, we can facilitate their normal passage through apprenticeship. For example, this year about 4,000 apprentices will get their certification. That figure will be a combination of the mainly employed and some unemployed. I am trying to narrow down the core of the issue for the Deputy, and I apologise if I am being convoluted.

Deputy Michael D’Arcy

I am sorry if I am not grasping it, but I am wondering whether the people with one module left are being given priority so that FÁS does not start another batch of 17,000 until the people stuck in limbo, and doing nothing while awaiting the final step towards certification, have been dealt with. They will have other options, then, following certification, whether they choose to emigrate or not. At least they will have the choice, but as long as they are stuck in this limbo, they have no choice.

Mr. Paul O’Toole

I understand the Deputy. We are prioritising that and enabling people who are unemployed and missing out on their level 5 experience to do their level 6 off-the-job training ahead of the time, so that they are not in limbo when matters pick up sufficiently for them to complete the level 5. The idea is to obviate the chances of their being stuck again because they cannot get their level 6. We have a range of measures and are very concerned that FÁS is doing its level best to ensure those apprentices get the craft exposure they need. We will qualify approximately 4,000 this year. The problem will peak between 2010-12, and the backlog of the big numbers will have worked through at that stage when we will be back to normal conditions, we hope.

Deputy Michael D’Arcy

Mr. O'Toole is saying, in effect, that the people stuck in this limbo will be there for another two years.

Mr. Paul O’Toole

Yes, I believe it will take another two years to work through the bulk of these people.

Deputy Michael D’Arcy

Has FÁS thought about any further opportunities for apprentices who need to be matched up with people who can give them their final work experience, outside its own structures, so that if people can make a match fruitful to both parties, an apprentice will get certified, while his or her employer gets a certain amount of additional labour that might be helpful to the particular business?

Mr. Paul O’Toole

We have, and that relates to the subvention we are giving to employers who meet the criteria, and can give an apprentice what he or she needs to get over the line. We are also working with colleagues in the public sector who may have appropriately qualified crafts people who are able to provide the necessary craft supervision. It is vitally important as we get through this issue as imaginatively as we can, that the ultimate qualification stands up. It is very important not to lose sight of that so that we are as flexible as possible without compromising the standard. That is the balance we are trying to achieve.

Deputy Michael D’Arcy

Nobody is talking about compromising the standard, but even with the subvention FÁS is still talking about 2011-12 being difficult years. Is that not correct?

Mr. Paul O’Toole

Yes, that is correct.

Deputy Michael D’Arcy

I just believe that FÁS needs to think outside the box somewhat further.

Chairman, I believe it is crucial that we get these men - they are nearly all men in the construction sector - certified so that they may expand their options. I should like to think that FÁS will prioritise that. It is certainly a priority for me, given the number of young men, mainly, who are stuck in this limbo. It is an appalling place to be. They cannot travel or emigrate, they are stuck here in that rut and I should like to think that FÁS will prioritise that, along with the Department, and that if there are areas within the private sector which can help, that it will consider that.

Mr. Paul O’Toole

I fully accept the Deputy's point. The commitment and passion of my colleagues to deal with these problems is profound. They know these people very well, having worked with them over the four year period of their apprenticeship. They have the same concerns as we all do, that we must not leave people stuck in limbo. I assure the Deputy that we will give this our best shot in as imaginative a manner as possible, without compromising the standard because ultimately that is the goal we must achieve. We have had some successes such as the decision of the ESB to take on 250 people in this position. We have also worked with the Air Corps, who have taken a number of people and we have placed a number of people overseas in conjunction with an EU programme. We are chipping away at the problem as best we can. We are being as flexible as we can. FÁS takes to heart the Deputy's comments because we also believe that. I know that our board, which overviews this issue, is equally concerned.

Chairman

Thank you, Deputy D'Arcy.

Mr. Conor Dunne

I have the information on the fee charged by Hamilton Osborne King for the valuation of the property at Birr. It was a flat fee of €12,100.

Chairman

On that point, I do not accept that simply because a person was doing a valuation exercise from Dublin would give a different valuation when he or she visited Tullamore. That company operated nationwide. In my view, that explanation does not hold water.

I wish to return to Empower training agency issue. I am mindful of the ongoing Garda investigation but on 11 November 2010, the committee heard evidence that the company had received payments of nearly €320,000 of public funding to deliver programmes. It was stated that FÁS was using its internal audit to investigate Empower training, which had been conducting courses on its behalf. One of the points raised was the question of 20 trainee name matches. I ask Mr. O'Toole whether it is possible that Empower training was claiming on the double from FÁS and Skillnets. Has FÁS drawn any conclusions in this regard?

Mr. Paul O’Toole

We have drawn a conclusion that of four programme we did with Empower training, there appears to be an overlap of some of those people with people who were on a Skillnets course as well. On that basis, my colleagues in internal audit have come to the opinion that payments to the value of €92,500 to that company were inappropriate and should be returned. We have bills outstanding to the firm of €50,000, which we will offset, leaving a balance of just over €41,000 that we must recoup.

Chairman

As for the relationship between FÁS and Skillnets, have the lines of communication to eliminate this sort of stuff been strengthened?

Mr. Paul O’Toole

In fairness to FÁS, Skillnets referred the matter to us and this triggered the investigation we undertook. Since then, the internal audit function has been in constant contact with Skillnets and the chief executive of Skillnets and I spoke last week. We have sought to ascertain how we can ensure that our own controls are appropriate, through PPS number matching, as one can check numbers in this regard. We largely operate in separate spheres of activity but one of the conclusions we take from this and to which the Comptroller and Auditor General alluded earlier, was that we should ensure that if there is duplication of course, we should minimise the possibility of any potential fraud that may arise.

Chairman

Would Mr. Buckley like to sum up?

Mr. John Buckley

There have been three reports from the Office of the Comptroller and Auditor General on FÁS in the past year or two. There has been a substantial report by the committee itself. From our audit this year, in my opinion there has been a reasonable response to the recommendations in the existing reports. We need to ensure that all the responses, including sign-offs and extended assurance, moving away from boilerplate statements of internal financial control to more explicit assurance as has been done this year, be maintained and that the Office of the Comptroller and Auditor General validates this is happening. There is work for both the organisation and ourselves going forward.

I will not repeat the remarks on the possibility of duplication of services, when there is delivery through two different mechanisms on what is essentially the same type of service, that is training to people in employment. Clearly that must be addressed, both at the design and audit stages, that is, at both the front-end and back-end of the design of these types of operations.

Chairman

I thank Mr. Buckley. As I noted earlier, it is unfortunate that Mr. Gorman was not present to answer some of the questions that fell to Mr. Mulligan to answer. We will consider whether we should invite Mr. Gorman to appear before the committee as soon as he is fit to deal with the issues raised by Mr. Hayden's correspondence to the committee, which I mentioned earlier, as well as the contents of Mr. Gorman's letter dated 23 November 2010, that the committee received on the same day and which we agreed to publish today. We will decide when and how Mr. Gorman can come before us.

I stated at the outset we were looking at the legacy issues facing the present FÁS team. Having listened to the evidence, I believe that a far tighter ship is being operated at all levels in the Department and the organisation and that what happened in the past could not as easily happen now.

Having said that, there is a responsibility to review the situation in the Tullamore-Birr land deals and property rental and acquisitions and to ensure that all procedures were followed. Mr. O'Toole has given an assurance that FÁS will do that.

Mr. Paul O’Toole

We will do that and we have provided already to the Office of the Comptroller and Auditor General details requested by his office on the matters, particularly in relation to the acquisition of lands and the temporary premises in Birr. We have co-operated fully with his office and supplied the information he has sought in respect of that. I thank the Chairman for acknowledging that.

We have made significant progress on a number of fronts, but as I mentioned in my opening statement, we are acutely conscious we have more to do in ensuring the service we provide meets the highest standard. We do not attest that the job is finished but we are attempting to move forward to the best of our ability.

Chairman

In respect of Mr. Mulligan's evidence, he had a responsibility to be more familiar with his brief on the CDP programme. Arising from the evidence given by Mr. Gorman on that day, which has since proven to be incorrect, there was a responsibility to keep the committee informed of the real position that existed. I believe this constitutes another example of how this committee at times is not being taken seriously in its role to protect the interests of the public purse. We were let down by the fact that it took a third party who looked at evidence given here to inform members that this evidence was not entirely correct. Human nature being what it is, I understand that but this committee must also protect its role and its members believe it should be provided with the full truth and all the facts at all times when they put questions. That is all I wish to say.

That said, is it agreed to note the FÁS Training and Employment Authority Annual Report 2009? Agreed. Next week, the committee will consider Vote 10 - Office of Public Works, chapter 20, the National Convention Centre, and chapter 21, decentralisation.

The committee adjourned at 12.40 p.m. until 10 a.m. on Thursday, 2 December 2010.