I am pleased to be here today before the Public Accounts Committee to present the 2013 appropriation account for the Office of Public Works and to answer any questions that may arise. I will first deal with today's item on Chapter 4: Accounting for Office of Public Works Agency Services, which the Comptroller has just spoken about. In order to update the members, I have provided a short briefing note to the committee on the actions implemented to date in dealing with the recommendations. As the Comptroller has said, the OPW provides many services on an agency basis to Government Departments. Funding is provided to the OPW by the sponsoring Department and ultimately it appears as a charge on the account of the client organisation. The value of these contracts and services where the OPW acts as agent, accounted for over €120 million in 2014 - the Comptroller has referenced €59 million in 2013 - with the main areas of investment being capital works on Government buildings, including schools, the leasing of accommodation for departments and agencies and the maintenance works on State-owned premises.
The chapter under consideration today looked at the extent of these agency services provided by the OPW and the procedures in place, in both the OPW and client Departments and agencies, in accounting for these services. The chapter, in its findings, highlighted discrepancies in the suspense balances recorded by the OPW and the client Departments in the annual appropriation accounts. In summary, the OPW has continued to work with client Departments to reconcile these balances. The biggest difference recorded in the report, of €7 million has since been amended in the principal’s appropriation account to agree with the OPW position at the end of 2013.
Together with this reconciliation exercise the OPW has implemented a process of making detailed statements available to clients on a quarterly basis to bring to attention the early identification of any discrepancies. These quarterly statements were issued to all clients in October 2014 and January 2015.
As highlighted in the chapter, the Department of Public Expenditure and Reform, “is satisfied that the OPW, as agent, provides a centralised service to a high standard of expertise which avoids potential problems in respect of procurement, contracting and inter-departmental competition that might arise if departments were to engage in construction projects on their own account”.
I am of the view, as I have mentioned in my response to the Comptroller and Auditor General, that a review of public financial procedures could be of benefit, identifying the optimum manner of funding these agency services so that they can be provided efficiently. In particular, when a contract is being placed by the OPW on behalf of a client, the certainty of funding required for the delivery of the project needs to be secured within the Estimates process, if necessary on a multi-annual Estimate basis. The existing annual Estimates process and cash-based accounting sometimes present challenges for Accounting Officers when funds voted to a Department in one financial year are not fully expended, albeit contractually committed, and even though the works may have been completed, with no guarantee that those unexpended funds will be made available in the following year. This creates an unnecessary pressure on principals to charge available funds to their Vote. I would suggest to the committee that this practice might be considered further in terms of robust, flexible, multi-annual budget and expenditure systems. I note that a report of the committee in October 2014 made reference to this. I welcome that.
I will now, in summary, refer to some important aspects of the work that was funded through the 2013 appropriation account and touch on the challenges that lie ahead in the two main areas of work for the OPW.
On flood risk management, as the lead agency for the management of flood risk in Ireland, the OPW invested €45 million in capital on this programme in 2013 and a total of €411 million from 1996 to the end of 2014. Major projects in 2013 included schemes completed at Clonmel, Mallow, Tullamore, and Carlow, and the continuation of works at Bray, Fermoy, and Ennis, with €2.3 million provided to local authorities under the minor flood mitigation works and coastal protection scheme. The strategy for flood risk management is being addressed through the Catchment Flood Risk Assessment Management, CFRAM, approach. This has involved an unprecedented level of surveying and analysis of each and every river catchment area in the country. The members will be aware that the roll-out of a public information and consultation programme is under way through public consultation days to bring this mapping exercise and the mapping of areas at risk from flooding to the attention of the public for their comments and observations.
This year much of the work in this area is focused on the development of the risk management plans for the 300 areas for further assessment identified in the preliminary flood risk assessment.
The National Procurement Service or NPS was established within the Office of Public Works in 2009 and was tasked with centralising public sector procurement arrangements for common goods and services. In 2013, contracts initiated by the NPS covered major procurement areas such as electricity and natural gas, uniforms and personal protective equipment. As the committee is aware, a Government decision of April 2013 agreed the outline plan for the development of an expanded central procurement function and from January 2014 the Office of Government Procurement has subsumed the NPS under its own Vote as part of the Department of Public Expenditure and Reform group.
The final programme, estate portfolio management, encompasses the management, maintenance and development of a large part of the State’s property portfolio including the care, protection and presentation of national monuments and national historic properties. The programme utilises a wide variety of project management and professional services such as architecture, engineering, valuation, quantity surveying and property management.
Expenditure under this programme in 2013 included the payment of rents on behalf of all Government Departments to the value of €97 million, a much reduced figure from the 2008 outturn of €131 million. The annual reductions in both the rental bill and the State's accommodation footprint continue to be achieved through a targeted lease rationalisation programme and a dynamic approach to property management which will continue to be pursued through the property asset management delivery plan, a priority reform area for the Government.
In 2013, some €54 million was expended on property maintenance, which includes the facilities management function of the OPW and the management and maintenance of cultural buildings such as Leinster House and Dublin Castle. However, in 2013, the OPW also assumed funding responsibility for all non-elective building maintenance on departmental property. Essential maintenance is now provided on a shared and prioritised basis to Government Departments from one central maintenance fund managed by the OPW.
The management, conservation and presentation of 780 national monuments and 30 national historic properties continues each year with a combined provision of 70 visitor centres accounting for an outturn of €36 million in 2013. I am glad to report that visitor numbers at these sites are steadily increasing with over 4 million visitors recorded at our heritage sites in 2013 and 4.4 million in 2014. There are, of course, many millions more unrecorded visitors. As part of the capital works programme in 2013, the €48 million invested included works at the Irish Museum of Modern Art, improvement works at Garda stations and Government offices country wide and a wide-ranging energy conservation programme.
Ireland hosted the EU presidency in 2013, with the OPW providing a facilities and conference management role at properties such as Dublin Castle, Farmleigh, Castletown House, the Royal Hospital Kilmainham and the Botanic Gardens, providing the Government with a centralised and cost-effective Presidency for the 245 events hosted in the six month period.
I thank committee members for their attention today and am happy to take any questions they may have on the 2013 appropriation account, the chapter on agency services, or any other matters they wish to raise.
