Chapter 6: Lease of Offices at Miesian Plaza

Mr. Maurice Buckley (Chairman, Office of Public Works) called and examined.

We are dealing today with Appropriation Accounts 2017, Vote 13 - Office of Public Works, and the Comptroller and Auditor General's report 2017, chapter 6, which concerns the lease of offices at Miesian Plaza in Baggot Street, Dublin, which people will know as the former headquarters of Bank of Ireland. If they want to identify the building we are talking about, that is the new name on the old building. We are joined from the Office of Public Works by the chairman, Mr. Maurice Buckley. He is very welcome. I understand it is his first meeting with the Committee of Public Accounts.

Mr. Maurice Buckley

Yes, thank you.

He is joined by Mr. John McMahon, commissioner, and Mr. John Sydenham, commissioner. I understand Mr. McMahon has to catch an aeroplane in the afternoon. He deals with the heritage area.

Mr. John McMahon

Heritage, property maintenance and event management.

We are here for three hours. As he has an aeroplane to catch in the afternoon, we will try to deal with any questions members have on that topic in the next three hours. I understand that Mr. McMahon has a commitment. We are also joined by Mr. Martin Bourke, assistant secretary, and Mr. Mick Long, director of corporate services.

I remind members, witnesses and those in the Public Gallery to turn off all mobile phones. That means switching them to aeroplane mode. Switching them to silent mode is not sufficient because they can still interfere with the recording system.

I advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If a witness is directed by the committee to cease giving evidence in respect of a particular matter and he or she continues to so do, the witness is entitled thereafter only to a qualified privilege in respect of the evidence. Witnesses 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 any person, persons or entity, by name or in such a way as to make him, her or it identifiable. Members are reminded of the provisions within Standing Order 186 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. We expect witnesses to answer questions put by the committee clearly and with candour. We have not fully experienced that with other witnesses in the past and it is an issue we will be getting stronger on as a committee. If there is information and the witnesses are not specifically asked about it but they know it is very relevant to the topic, we would ask them to share it with us. Witnesses can and should expect to be treated fairly and with respect and consideration at all times, in accordance with the witness protocol.

We will start by taking the Comptroller and Auditor General's opening statement.

Mr. Seamus McCarthy

Thank you. The 2017 appropriation account for Vote 13 - Office of Public Works records gross expenditure of just over €394 million. Appropriations-in-aid were almost €34 million, resulting in net voted expenditure of just over €360 million. The surplus for surrender at the year-end was €4.6 million. The appropriation account is presented under two programme headings: flood risk management, on which a total of €75 million was spent, and estate portfolio management, in respect of which the total expenditure was €319 million. The graphic that is shown on screen outlines the main areas of expenditure in 2017.

In addition to activities funded by the Vote, the OPW acts on an agency basis in the property management area, mainly managing capital works projects on behalf of other Departments and agencies and leasing accommodation for small State agencies. The associated expenditure is reflected in the accounts of the client Departments and agencies. Total expenditure handled by the OPW on an agency basis amounted to €84 million in 2017.

I issued a clear audit opinion in regard to the appropriation account but drew attention to procurement in 2017 to the value of €812,000 that was not compliant with public procurement rules. This is disclosed by the Accounting Officer in the statement on internal financial control.

The OPW signed a new, 25 year lease in May 2017 in respect of large office premises at Miesian Plaza in Baggot Street, mainly to accommodate the Department of Health and the Department of Children and Youth Affairs. Even though lease payments were incurred from December 2016, the premises remained unoccupied until May 2018. Chapter 6 of my report examines the issues that gave rise to the delay in occupying the premises and a number of other matters related to the lease.

The Miesian Plaza lease represents a very significant commitment of public funds, with annual rent starting at €10 million and subject to five-year rent reviews in line with inflation over the 25 year period of the lease. The examination found little evidence of the key elements of a standard business case that should support the commitment of that level of public funds. In particular, there was little evidence of detailed evaluation of other options, no economic appraisal was carried out and the full costs and risks associated with the project were not documented and considered in advance.

In March 2016, the OPW board approved the lease on the basis of the terms negotiated by consultants on its behalf. At that stage, it was envisaged that, allowing for a fit-out period of eight to ten months, the premises would be ready for occupancy in the first quarter of 2017. As it turned out, the first occupancy was achieved only in May 2018 and full occupancy was achieved only in July 2018. We estimated that the delays that occurred from March 2017 resulted in ineffective expenditure on unoccupied premises of around €11 million.

There was extensive engagement between the OPW and the two main client Departments in seeking to achieve timely occupancy of the leased premises. The main issues that gave rise to delay were finalisation of the number of staff to be accommodated and agreement on the layout of the accommodation and on shared facilities. Currently, Miesian Plaza does not have capacity to accommodate all of the staff of the Department of Children and Youth Affairs and the expected future staffing needs of both Departments. Currently, the OPW targets a space allocation of 12 sq. m per person. In Miesian Plaza the space allocation achieved is 15.3 sq. m per person, about 27% more than the target level. The report recommends that the OPW review its approach to agreeing accommodation needs with Departments and that it should establish standards for space allocation and fit-out that take account of the business needs of different categories of occupant.

The examination also identified an issue with the area of the premises to which the agreed rental rate was applied. There are different standards for measuring property which result in different reported areas for a building. The rental rate agreed for Miesian Plaza was based on what is known as the net internal area. From 2016, a new international property measurement standard was introduced and measurement of Miesian Plaza on this basis resulted in a larger reported area. The rental rate agreed should have been adjusted pro rata to reflect the change in the basis of measurement. However, this did not happen and the signed lease applied the rate per square metre negotiated on the basis of the net internal area to the larger area, as measured by the new standard. We estimated that this error resulted in annual rent that was €344,000 higher than what was negotiated. After taking account of inflation, the projected additional cost to the Exchequer is of the order of €10 million over the 25-year term of the lease. At the time of finalisation of the report, the Office of Public Works stated that it had engaged with the landlord with a view to rectifying the matter.

The examination team reviewed a sample of 20 other live OPW leases with various start dates, and identified one other possible excess payment case in that sample. This involves a 20-year lease entered into in 2006 where confusion about measurement appears to have resulted in an excess annual payment of some €141,000. I understand the OPW is examining that case.

I thank the Chairman.

I invite Mr. Buckley to make his opening statement.

Mr. Maurice Buckley

I thank the Chairman for introducing my colleagues. I am afraid we do not have gender balance at this particular meeting but we do in the organisation.

We have got used to that.

We would be more surprised if there was a gender balance.

Mr. Maurice Buckley

The previous time we were here, the chairman and one of the management board members were female, which was 25% of our representation. Temporarily at least, we have taken a step backwards but not in the whole organisation.

I thank the Chairman for the opportunity to present to the Committee of Public Accounts the expenditure and works of the Office of Public Works across its different areas of activity. The OPW is the lead body responsible for flood risk management and the stewardship of the nation’s national monuments and historic properties. Through these activities, the OPW interacts with and supports communities and local authorities in every county in Ireland.

The third primary area of OPW activity is the management of the State’s modern property estate, including accommodation for Government staff and numerous specialist facilities such as Garda stations, courthouses, laboratories, data centres and customs infrastructure, which has become topical again now in the context of Brexit. I provided an information briefing on Garda accommodation in advance of this meeting. Later in this statement, I will address the matters raised in Chapter 6 of the Comptroller and Auditor General’s report titled, Lease of Offices at Miesian Plaza.

The OPW is responsible for a range of other important functions, including the State art collection, the day-to-day running of Áras an Uachtaráin and organising State visits and events. Recent examples of events include the May referendum, the visit of Pope Francis in August and the upcoming inauguration of the President.

As Members are aware, flooding is a natural phenomenon which can cause widespread damage and have a devastating effect on communities, property and infrastructure. We have to think only of the poor people in Spain who suffered a disaster of flash flooding in the past couple of days when ten people lost their lives. This risk is likely to increase in the future due to rising sea levels and other potential effects of climate change. The Government has recognised these risks and committed €1 billion of capital investment to flood risk management over the next decade.

The OPW has responsibility for leading and co-ordinating the implementation of the national flood risk policy, which involves the development of a planned programme of works. In 2017, the OPW completed the largest study of flood risk ever undertaken in the history of the State, the catchment flood risk assessment and management, CFRAM, programme. The CFRAM programme involved analysis of flood risk across 300 designated communities, including 90 coastal areas and the production of 29 flood risk management plans with a prioritisation of those measures that can manage the assessed flood risk nationwide. It includes building our capability to protect 95% of properties assessed to be at risk through 118 new flood relief schemes in addition to the 75 schemes that are complete or under way.

This capital programme was launched on the 3 May 2018 and we are now moving into the detailed development and implementation of these measures with the local authorities. During 2017, the OPW carried out capital works at a cost of more than €45 million, including the completion of major projects at Bray and Foynes; the substantial progression of construction on schemes at Bandon, Skibbereen, the River Dodder, Claregalway and Dunkellin River; the provision of more than €2 million to local authorities to carry out minor flood works; the commencement of new schemes in Athlone and Templemore; and the progression of design work on a large number of other major schemes to be implemented in the coming years. In addition, the OPW maintains all arterial drainage schemes completed by it under the Arterial Drainage Act 1945. This investment involves providing ongoing protection to 263,000 ha of agricultural land through the annual maintenance programme for 11,500 km of river channel, including 800 km of embankments.

My office manages a range of other measures to tackle flood risk, including the OPW minor flood mitigation and coastal protection scheme in partnership with local authorities. A total of 500 projects have been completed under this scheme protecting 6,500 properties, two thirds of which are outside the CFRAM study areas.

The OPW continues to support and co-ordinate sectoral led work on non-structural solutions to help protect and-or mitigate flood risk. Key to these solutions is the development by Met Éireann, in conjunction with the OPW, of a national flood forecasting service. Also, a new website, www.floodinfo.ie, has been developed by the OPW. This is an important resource in supporting emergency response planning by local authorities and empowering people and communities to plan and respond to their flood risk.

As caretakers of the built heritage estate, the OPW is responsible for the management, conservation, maintenance and presentation of some 780 national monuments and 70 OPW managed heritage sites. Responsibilities include the day-to-day management and presentation of 30 major historical properties, gardens, parks and arboreta.

The OPW has consistently been of the opinion that the importance of the State’s national heritage cannot be overestimated, either in a cultural or economic sense. This is especially true in the context of rural regeneration and is borne out by the increase, year on year, of the number of visitors to these sites. The OPW enjoyed a very successful 2017 with a record total of 7.9 million visitors to OPW managed heritage sites. The leading visitor sites continue to do remarkably well, including Dublin Castle, Kilmainham Gaol, the Rock of Cashel and the Phoenix Park, the largest city park in Europe and an enormous green resource for the people of Dublin.

In addition, a strategic partnership with the Department of Culture, Heritage and the Gaeltacht and Fáilte Ireland has enabled the OPW to develop and enhance tourism investment possibilities within the cultural and heritage estate. The broad focus of this programme is to enhance the visitor experience at sites managed by the OPW, with particular reference to less visited sites so that a greater volume of increased footfall on a wider base can be sustained. This will ensure that we continue to increase tourism numbers and the generation of Exchequer revenue.

Efficient and modern accommodation is a key requirement for the successful delivery of many Government priorities. Estate management by the OPW is an all encompassing discipline of strategically aligning the use of State and leased property with Government priorities while ensuring value for money through the optimal use of resources. Estate management includes the acquisition and disposal of properties and leases, essential property maintenance, necessary development and retrofits and the provision of storage and mechanical and engineering works to more than 70 different client Departments and public bodies. In order to facilitate the management of that portfolio the OPW is developing a much needed estate management system which will shortly go live in the office.

The system will provide centralised information to staff, which will allow for effective and efficient estate management planning in the commercial environment within which the office operates.

On climate change, members will be aware that the recent Citizens' Assembly recommended that the State take a leadership role in addressing this risk through mitigation measures, including retrofitting and renewables generation on public buildings. The OPW portfolio consists of more than 2,500 properties and the total investment was €319 million in 2017, which included the fit-out of several properties, including Miesian Plaza.

I will now turn to the Comptroller and Auditor General's chapter on the lease of offices at Miesian Plaza. The lease was part of the OPW accommodation strategy to move staff from Hawkins House, a large, end-of-life building, to a fourth generation energy-efficient building that could support almost 1,000 staff. Miesian Plaza, at approximately 15,000 sq. m, is the largest lease acquisition that the OPW has secured in recent years and has 936 workstations. The imperative of acquiring a new headquarters for the Department of Health arose from the deteriorating condition of Hawkins House which was constructed in the early 1960s. In addition, the lease on a property on Mespil Road which accommodated the Department of Children and Youth Affairs was due to expire and could no longer cater for the expanding requirements of that Department.

Following a review of the available properties in what was an exceptionally tight market, Miesian Plaza on Baggot Street was identified as the most suitable option for the Departments of Health and Children and Youth Affairs and certain units of the Departments of Finance and Public Expenditure and Reform. Central to its acceptance as a potential location was its proximity to the Houses of the Oireachtas. The OPW retained an independent professional negotiation team to determine if a satisfactory commercial arrangement could be concluded. Following several months of engagement with the landlord, the negotiation team secured a 25-year lease at approximately 15% below the prevailing market rent. With the addition of five-year rent reviews linked only to the consumer price index, the deal effectively insulates the State against any significant or erratic market fluctuations in the medium term. In the context of the rising Dublin property market, which is related to Brexit, the OPW considers this index linking to be of significant benefit.

The large-scale permanent relocation of any group of staff is a challenging task. This was particularly complex in the Miesian Plaza project because of the physical and cultural challenges of moving almost 1,000 staff spread across four major Departments. It is a common misunderstanding that the identification of a building and securing of lease terms are effectively the end of the process and that people just move in. In fact, it is only at this stage that the fit-out process which transforms the building from a grey shell to a habitable modern office and takes up to ten months can commence. These issues were particularly intense in the Miesian Plaza project in light of the ground-breaking steps being taken relating to open plan work spaces and a dramatic reduction in the use of cellular offices. The project very quickly moved from one involving mere bricks and mortar to one encompassing human relationships and business process reform. In the OPW’s experience, it is quite common that staff and business considerations trump those relating to the physical building in terms of complexity and the time needed to complete the project.

Reflecting on the project, I suspect that some aspects, including the change management process, were underestimated by all involved, including the OPW. The protracted discussions designed to ensure buy-in and to bring everybody along on a difficult journey undoubtedly caused delays. The cost of the delay is very much regretted by the OPW and, I am sure, all those associated with the project.

It is rare for major projects to progress without some problems. The Miesian Plaza project experienced problems, including the aforementioned programme overrun and an issue relating to the application of a new measurement standard. Although those issues serve to lessen the very significant value negotiated, the demonstrable benefits of the overall deal and ground-breaking business transformation outcomes significantly outweigh all other considerations. The building secured by the OPW will serve as a flagship for the State’s property portfolio for the next 25 years while accommodating some of the most important Departments in a leadership in energy and environmental design, LEED, platinum-rated office accommodation.

I thank the Comptroller and Auditor General and his staff for their assistance and courtesy during the audit. I have no doubt that the committee and Chairman will have questions on the matters I have raised. I thank them for their attention and will attempt to answer any questions they may have.

I thank Mr. Buckley. At this stage, there are two issues of relevance to the committee relating to the OPW with which I must deal before we move to the members who wish to discuss the matters raised. At a recent meeting, the committee discussed the letter from Mr. Alan Morgan, which was forwarded to the OPW along with a request to provide the committee with a copy of the 2014 report. We expected to receive the report in advance of this meeting but have not yet received it.

Mr. Maurice Buckley

I understood that the committee asked for the response to the 2014 report, which was submitted. Perhaps that was a misunderstanding on my part.

The committee agreed to ask the OPW to provide a copy of the 2014 report referred to in the correspondence, as well as any correspondence between the OPW and the correspondent. The OPW submitted correspondence but not the report.

Mr. Maurice Buckley

The report is a lengthy document-----

That is fine.

Mr. Maurice Buckley

-----which was sent to the Comptroller and Auditor General several months ago.

I am asking in regard to the Committee of Public Accounts. Is the report 100 pages long? I have not seen it. How big is it?

Mr. Maurice Buckley

It is approximately 100 pages long.

The committee will be in session until this afternoon. I suggest that the witnesses arrange to contact somebody in the OPW and have the report emailed here so that it can be copied for the 13 members of the committee, or arrange for it to be copied and brought here. We always ask witnesses to have arrangements in place for making contact with their offices. Is it feasible for that to be done? It may take an hour or two but the committee will be sitting in the afternoon.

Mr. Maurice Buckley

Yes.

Does Mr. Buckley have an issue with us receiving the report?

Mr. Maurice Buckley

I have no problem with it in principle. Had I realised that the report was requested, I would have sought to submit it. Is there an issue in regard to the names of staff members and clients being mentioned?

No. Last week, the committee, while dealing with correspondence, publicly mentioned the name of Mr. Alan Morgan several times. It is on the public record of the committee. Mr. Morgan wrote to the Committee of Public Accounts in a public manner. There may be other names which were not mentioned at the committee but Mr. Alan Morgan’s name is on the public record of a previous meeting as the person involved. His name was mentioned and there is no reason for that not to have been done. However, the names of other persons involved have not and will not be mentioned in public.

I wish to clarify something because there are several documents relating to the OPW. The Chairman is referring to the 2014 report.

I will not mention any names. The Chairman is referring to the 2014 report.

That report was previously provided to the preceding Committee of Public Accounts.

Mr. Maurice Buckley

Yes, it was provided in 2015.

It was provided on 19 June 2014.

Mr. Maurice Buckley

Yes, by my predecessor, Ms Claire McGrath.

I was unaware of that. That is fine.

Mr. Maurice Buckley

The committee should have it on file. That might be helpful.

I was unaware that it is on file. I thank Deputy Kelly.

Was there a response from the OPW to the Committee of Public Accounts at that time?

Mr. Maurice Buckley

The then chairman of the OPW wrote to the committee in June 2015, as Deputy Kelly stated.

Mr. Maurice Buckley

It was 2015.

Sorry, it was 2015.

Mr. Maurice Buckley

I am not aware of any other dialogue or whether the report had already been reviewed by the committee at that point. I can check that. Several parliamentary questions on the report were tabled at that time. The original discussion regarding the 2014 report was fairly widely aired in this forum, the office of the Comptroller and Auditor General, in the Dáil through parliamentary questions and in public through the media.

Do members require a copy of the report? It is a big report and I do not know when people will have time to look at it. It is on file with the committee. I thank Deputy Kelly for alerting me to that.

We had asked for it last week.

There is confusion and there should not be any confusion. Is there one report or two reports? Will Mr. Buckley clarify that for the committee? As Deputy Kelly stated, there are later dates and earlier dates. What I read in the letter was that a detailed surveyor's report was submitted to the OPW in November 2017 and forwarded by the OPW to the Comptroller and Auditor General in mid-2018. Is that the same report as the one we are discussing?

Mr. Maurice Buckley

No, I will attempt to clarify.

We have limited time. We should have all of the relevant reports in order that we can ask relevant questions on value for money. There should be a list of them. To refer the previous Committee of Public Accounts committee is of little use to us because we were not members of that committee. We require a practical list of what reports have been done on various issues that will help us to ask appropriate questions to ascertain whether value for money has been achieved.

I call Deputy Farrell.

To help move this along, we have established that the report is on file with this committee. It should have been provided to the secretariat and that should have been noted at the previous meeting. I am sure secretariat staff have left the meeting to source that report. This will provide the clarity that Deputy Connolly and others require. We should now move on rather than go over this again.

Mr. Buckley said he gave a response.

We should keep going as we have the response.

The Deputy said we were given a response.

Yes, that is on file.

I am as anxious as anyone else to move on. I attempted to get a copy of the report through the secretariat. It predates our access to records. Can we have a clear summary or list of the relevant reports that have been done, rather than having members trying to find out which report is which and reading through correspondence and submissions. We need a list with bullet points of the reports. We will then decide whether to examine them in detail.

We will come back to that. Did Mr. Buckley indicate that he recently sent the committee a response to the letter?

Mr. Maurice Buckley

I sent a letter in response.

When was it sent?

Mr. Maurice Buckley

It would have been in the last number of days. We only heard about this matter on Monday so we would have responded probably yesterday.

We do not have that in our correspondence. We need that if that if it is Mr. Buckley's response.

Mr. Maurice Buckley

We can certainly check that. I can outline the timeline of events if that would be helpful.

We will come to that in due course. If Mr. Buckley has written to us this week and we have not yet received it, we need it.

Mr. Maurice Buckley

It is not that we wrote to the committee but we gave the committee a copy of two letters that we had issued earlier in response to the November 2017 report submitted by the gentleman in question, Mr. Alan Morgan.

When was that sent to us?

Mr. Maurice Buckley

Certainly this week, because this has all happened in the last two or three days but I do not know the exact time.

For the avoidance of confusion, we went through our correspondence and neither I nor the members are aware of this having arrived. Will somebody in Mr. Buckley's office email it to the committee straightaway and we will arrange for the secretariat to have it circulated?

We have been promised the two letters but were they in response to the surveyor's report?

Of 2017, yes-----

Mr. Buckley said two letters were sent to the committee in response to a 2017 report. Is that the position?

Mr. Maurice Buckley

Yes.

Was that the surveyor's report?

Mr. Maurice Buckley

This was a surveyor's report issued by Mr. Alan Morgan, our staff member, and a colleague in November 2017.

Those letters were sent to the committee and we do not have them.

Mr. Maurice Buckley

It is my understanding that they were. They are short letters comprising a response from the then director of corporate services to the report giving some outlines of the actions the OPW is taking. We can certainly get those very quickly and they are short letters, which are easily digested.

We will ask those to be emailed to the committee straightaway and we will get them copied and circulated. They are presumably not too voluminous. Is a letter was sent this week, we need to have it here in front of us.

To be fair to the clerk here, we did not get these letters. I have to ask Mr. Buckley a direct question through the Chair. Were these letters sent to the committee or not? Can he ask his colleagues?

Mr. Maurice Buckley

I am doing that and it will be checked.

Mr. Buckley's colleagues are checking by email and will be able to respond in the next few minutes. Within ten minutes we will need this sorted out either way. If it is an email, it should be sent to the committee and we will have it copied and circulated.

We should have copies of the reports as well as the letters.

That was the 2014 report.

Yes, but it was presented in 2017. Rather than trying to tease out if there is more than one report, can we have copies of all of the reports? Is that too much to ask?

The substantive report is the 2014 report.

Mr. Seamus McCarthy

The 2017 report is the substantive report. The origin of this whole series of correspondence, as I understand it, was a submission that was made to a Department of Public Expenditure and Reform consultation process on accountability. There were certain extracts from the report that was submitted by two staff members of OPW. Extracts were taken from that and sent to the committee because there were specific references to my function and to the Committee of Public Account's function. That kicked off a process which culminated in a substantive report in November 2017. The substantive piece of work that I believe Mr. Morgan is referring to is the 2017 report. I hope that is helpful.

Mr. Maurice Buckley

That is correct.

Would it be possible to get a copy of that email to us today?

Mr. Maurice Buckley

The only concern I have on that is that it may contain, and I believe it does contain, references not alone to other staff members' names but to various contractors and buildings and it may need to be checked either by the OPW or by the committee. In principle, the content is very similar. We are talking about the same issues. There is no problem in principle. This all happened in the last couple of days. Certainly, as I understand it, the letter of response, which gives some indication of the content as well, should have gone to the committee. If it has not, it will be sent in now. It is a short letter. If we were asked for the 2017 report, I was not aware of that and I apologise. There might have been a slight confusion with the earlier submission to the Department of Public Expenditure and Reform.

On a general point, this did not happen in the last few days. The report of the Comptroller and Auditor General includes a chapter on the specific issue of Miesian Plaza. The report should be with us. This letter that we presumably all received was sent to the Office of Public Works for comment following our previous meeting. There is a report, there are letters and there is the Office of Public Works response to this letter, at the very least. Can we get all of those documents?

Mr. Maurice Buckley

Absolutely.

I thank Mr. Buckley.

Mr. Maurice Buckley

To clarify, the two items are not related to Miesian Plaza.

Indirectly, they are related.

Mr. Maurice Buckley

Miesian Plaza is a file that was covered and prepared. We received first sight of that letter on Friday of last week.

That is the first issue I wanted to raise before we our work gets under way. The second issue is also related to the Office of Public Works. The Committee of Public Accounts issued its periodic report on 23 January 2018 and one of the issues it dealt with was the reopening Garda stations. One of the recommendations of our report was that the cost implications of the review to reopen Garda stations should be considered in the context of the 2018 Estimates. This need not be written down. The report was published by the Committee of Public Account. We recently received a response to our recommendation from Mr. Robert Watt, Secretary General of the Department of Public Expenditure and Reform, dated 18 July 2018. We sent a letter to his Department in January 2018 asking that the costs of reopening Stepaside Garda station and some other Garda stations be considered in the context of the 2018 Estimates, bearing in mind that the decision was made in June 2017. We reported on that in January 2018.

Mr. Watt's reply states:

The Minister for Finance and Public Expenditure and Reform is informed by the Department of Justice and Equality and An Garda Síochána that this recommendation is accepted in principle. The 2018 estimate provision for An Garda Síochána is long since complete. However, over recent months, An Garda Síochána and the Office of Public Works have been working to quantify the final projected costs to reopen all six stations. An Garda Síochána indicates that the estimated costings produced will be reviewed and discussed with the sanctioning authorities, the Departments of Justice and Equality and Public Expenditure and Reform, once concluded.

As Chairman of the Committee on Public Accounts, I find it totally unsatisfactory that the Secretary General of the Department of Public Expenditure and Reform took seven months to reply to our recommendation. We wrote to Mr. Watt early in the year to give him plenty of advance notice for this matter to be raised in the Estimates in 2018. He wrote to us in July saying he was sorry but the Estimates were over. The matter should have been encompassed in the 2018 Estimate, as recommended by this committee. Mr. Watt states that while he agrees in principle with our recommendation, it is too late. That is an unsatisfactory response and delay and we want to ensure there is accountability. Given that it may not have happened in 2018, I will put a question on it to Mr. Buckley now because this follows directly from the report we published. If we are to do our business, we need to follow through on our recommendations. Mr. Buckley says in his briefing note today that in February 2018 he received the final brief in respect of Stepaside. He said the OPW has to issue a notice to quit in respect of Stepaside, that it considered a modular solution and is now renovating the existing building, which it hopes to have completed by the end of June 2019. I have seen the Estimates announced by the Minister on budget day. What figure for the reopening of Stepaside Garda station is provided in the Estimates for 2019, given that none was provided in the 2018 Estimate?

Mr. Maurice Buckley

The cost of reopening Stepaside and the other six Garda stations would be provided through the Department of Justice and Equality under the Garda Vote.

To clarify, the public will be confused and Mr. Buckley will have to bear with me as I try to help the public. People think the OPW manages Garda stations and so on. In some cases it does absorb the full cost of some Departments, then some of the cost of the work it does is absorbed by the line Department, as in this case, by the Department of Justice and Equality. Is there anywhere that we can get a quantum of all the work carried out by the OPW through its own budget and, separately, the work it carries out, for which the costs are met by the Estimates of other Departments?

Mr. Seamus McCarthy

That was the point I made in my opening comments, that there was a total of €84 million of business undertaken by the OPW on an agency basis on behalf of other Departments and semi-State organisations.

Is the OPW the contracting authority for this work and is it then reimbursed? Will Mr. Buckley explain how the procedure works?

Mr. Maurice Buckley

There is a mixture of funding models. The OPW would look after existing Garda stations and their maintenance through its own budget but for capital works of any significance the money is provided through the Department of Justice and Equality Vote and we are the contracting authority.

The OPW is the contracting authority to carry out the work. Is the office reimbursed? How does the system work in layman's English?

Mr. Maurice Buckley

I will call in one of my colleagues to explain how the mechanics of it work.

Who writes the cheque for the contractor?

Mr. Mick Long

The OPW writes the cheque and is reimbursed or recoups it from the client. They are allied services provided on a free-of-charge basis to other Departments, or an agency service.

Is Mr. Buckley satisfied that the OPW can meet the June 2019 deadline to have these Garda stations opened? Has the OPW gone to tender or finalised tender documents?

Mr. Maurice Buckley

The procurement process and the works process are being managed at the moment but we have been in discussion with the Department of Justice and Equality about an envelope of €2.5 million to fund the works and that is in train.

Is that for Stepaside?

Mr. Maurice Buckley

It is for the six Garda stations.

The OPW must have an approximate breakdown of costs for the six stations. The only reason I ask is that the committee has done a special report on this issue and I am following through on that. Does Mr. Buckley have a breakdown of the €2.5 million, approximately, between the six stations?

Mr. Maurice Buckley

It would only be an estimate because as the Chairman mentioned-----

Yes, is there an estimate of this? We are not tying Mr. Buckley to the nearest thousand euro. Does he have an idea?

Mr. Maurice Buckley

Maybe €1.5 million would be an estimate for the Stepaside station. I did point out that we were considering a modular approach and in recent months the dialogue has changed to the possibility, which we welcome, of integrating the Garda requirement in the existing Stepaside building. I have not seen the impact of that on the budget. It might be a little less. I do not think it will cost more but it is certainly in the long-term benefit of the State to be working on an existing building rather than on something outside that and €1.5 million would be a good ballpark figure there.

I am not tying Mr. Buckley to that figure. We understand that it is only an estimate but at least we now have an approximate indication of the cost. Stepaside Garda station is the biggest cost element of the six Garda stations.

Mr. Maurice Buckley

Yes, there is more work to be done on that Garda station than on the other ones.

I raised this because we reported on this at the beginning of the year. Mr. Buckley is the first person to give a proper response to the committee's report issued last January and I thank him for that. It is a pity somebody else did not give us that information in the meantime. It is good to have it now.

At this stage I want to resume what should be our normal business for our lead speakers.

I read some of the reports yesterday about Miesian Plaza and could not believe what I was reading, particularly about the business case that was required under the public spending code. Would Mr. Buckley not agree that there were some major omissions in that?

Mr. Maurice Buckley

Yes, I would agree that the process was not followed properly. The Comptroller and Auditor General has made a recommendation to that effect in the report which we have accepted.

There is not being followed properly and there is making a complete hames of it. There is no evidence of a detailed consideration of other options and no cost-effectiveness analysis. No economic appraisal was carried out. There was no consideration of the lease, buy or build options. There is no evidence that the full costs of leasing Miesian Plaza were identified and evaluated, specifically fit-out costs, furniture, maintenance costs, operating costs, value added tax, VAT, and the cost of OPW staff involved in the project. The risks associated with the project were not set out. Issues arose with regard to agreeing the client Departments' accommodation needs and the effect on a practical completion date. All these matters were missing from the business case.

Mr. Maurice Buckley

As I said, I agreed the documentation is not as it should be and we have taken steps to rectify that. The content, however, and the management of the project I would defend. We did consider alternative options for the building and other options completely, other than renting a building. It was a balance of all the criteria and, from what I have seen of the internal processes, that was done very thoroughly and professionally but what fell down was the proper documentation and recording of that in the way that it should be done. As a Civil Service body, we accept it should be done in compliance with the best practice of the Department of Public Expenditure and Reform.

What alternatives were considered? I know the Comptroller and Auditor General identifies two alternatives.

Mr. Seamus McCarthy

The OPW explained to us that two had been considered.

Were only two options considered or were there more that the Comptroller and Auditor General is not aware of?

Mr. Maurice Buckley

We certainly would have done a trawl of the marketplace more than once to see what properties were on the market but the two that were explored in some detail were the former Central Bank headquarters in Dame Street and a building on St. Stephen's Green. For different reasons, some of which are mentioned in the report, neither was feasible or as cost-effective or attractive as the option chosen.

Was the OPW board made aware of those other options?

Mr. Maurice Buckley

I was not in the OPW at the time but my understanding is that they were discussed at management board level. I see my colleague nodding-----

That is confirmed. The board was made aware. Were they included in the documentation sent to the Department of Public Expenditure and Reform prior to the lease being signed? Was the Department aware of the other options that were considered?

Mr. Maurice Buckley

In the departmental submission, it would certainly have been part of the discussions. I will have to check the situation with regard to the documented submission. I will be able to revert to the Deputy on that in a matter of minutes after my colleagues have checked.

I would appreciate that. I want to know whether documentation was given to the Department. I presume that documentation on the other options that were considered was given to the board of the OPW and it was not simply a question of a discussion having taken place. I assume that a detailed, written report on why the alternatives were not runners was presented to the board.

Mr. Maurice Buckley

There would have been ongoing management board discussions at that time.

Yes, but apart from the discussions, is there a written, detailed report outlining the other options that were examined and the reasons they were not considered appropriate?

Mr. Maurice Buckley

I will check that with my colleagues, if I may.

Mr. Maurice Buckley

I have in front of me a submission to the OPW board dated 26 January 2016 outlining the full basis of the decision and the basis of the proposal to-----

That is in relation to-----

Mr. Maurice Buckley

This would have been submitted in advance of the proposal being sent to the Department.

That is in relation to Miesian Plaza, but what about the other options that were considered?

Mr. Maurice Buckley

It is not jumping off the page at me here but my colleague tells me that the then chairman would have visited at least one of the other options and the Department-----

I am very glad he visited and I am very glad that there were discussions about it, but I am asking if documentation was given to the OPW board relating to the other options that were looked at, with a business case outlined for not taking up those options. Is there any written documentation supporting that? What documentation was submitted to the Department? Surely there was more than a discussion on this? If other options were being looked at, surely the OPW outlined why they were not feasible and why Miesian Plaza was feasible. Mr. Buckley has said that there is documentation relating to Miesian Plaza and why that option was chosen. Is there documentation explaining why the OPW did not go with any of the other options?

Mr. Maurice Buckley

I will have to check and come back to the Deputy on that in terms of the detail of what documentation was there. The Deputy is asking very specifically for the documentation behind the discussions, so-----

Yes, because without documentation, I cannot do my job. If Mr. Buckley could get that documentation for the committee, I am sure one of my colleagues will follow up on it before I get to come back in again.

The next area I want to look at relates to the identification by the Comptroller and Auditor General of at least one other case concerning leases. We know that in relation to Miesian Plaza, there was a difficulty with how the lease was calculated in terms of floor space and the State ended up paying €344,000 more than it should have. I will come back to that particular project shortly but the Comptroller and Auditor General also identifies at least one other case in Galway where something similar happened at a cost of €141,000. Are there any other cases of which Mr. Buckley is aware, of which the Comptroller and Auditor General and this committee is not aware, where the same thing has happened?

Mr. Maurice Buckley

No.

Is that definite?

Mr. Maurice Buckley

That is definite.

On the Miesian Plaza case and the €344,000, the Comptroller and Auditor General's report says that there are ongoing discussions with the landlord to try to rectify the situation. Will Mr. Buckley provide an update on those discussions and to outline the progress made?

Mr. Maurice Buckley

The discussions are at an early stage because of the sensitivity of the matter. The Comptroller and Auditor General was looking into this and published a report on it. The discussions are ongoing. There has been an exchange of correspondence with the landlord but we have not reached a conclusion yet.

When does the OPW hope to reach a conclusion, because this is costing us money at the moment?

Mr. Maurice Buckley

It is very hard to predict these things. It depends on whether the parties accept that this is a simple discrepancy in the lease that needs to be rectified or whether they contest or dispute that. It is hard to give an exact timeline. We hope that it can be resolved very quickly and we intend to follow through on it-----

Is there a possibility that it may not be resolved?

Mr. Maurice Buckley

I am conscious that I am speaking in a public forum. We are engaged with the landlord and believe that there is a discrepancy that can and should be resolved. I do not know the other party's disposition on the matter and do not want to predicate that dialogue by taking a firm position on it here. I hope the Deputy understands my position.

Yes, but it was the OPW's mistake in the first place, was it not?

Mr. Maurice Buckley

It was an inconsistency in the lease, as presented to the OPW, that was based on a different measurement standard. The OPW fully recognises that it did not pick up on that inconsistency.

It was the OPW's mistake in the first place. Is that correct?

Mr. Maurice Buckley

We should have picked up on that mistake but we did not do so.

As a result, we are now paying €344,000 more than we should be paying.

Mr. Maurice Buckley

As a result, we are in a dialogue with the landlord retrospectively about a lease when obviously that should have been clarified on day one. I would have expected it to be clarified on day one and that would normally be the case. I would be hopeful that-----

We are in negotiations with the landlord to fix the mistakes of the OPW. Is that right?

Mr. Maurice Buckley

It is a question of clarifications to fix the lease. The lease was different from what was agreed and from what was our understanding all through the negotiations, and that has to be clarified. I do not want to use the word "mistake" and I do not want attribute it to the landlord either. It was a very complex, once-off issue involving a change of measurement standard. When one looks back through the file, as I have done-----

It is not a once-off issue. We know that there is another case in Galway where something similar has happened.

Mr. Maurice Buckley

This particular issue is a one-off, involving a change in measurement standard for the buildings. I have gone through the correspondence myself and it is quite clear that there is a degree of confusion, if I may say so, among both parties at that time. That slipped into the lease. It could well be that the confusion was not picked up by either party, but I cannot get into the detail of that dialogue now because that would be unfair.

This is the OPW. Nothing should be slipping into leases.

Mr. Maurice Buckley

Yes.

Would Mr. Buckley accept that nothing should be slipping into leases without the OPW's knowledge?

Mr. Maurice Buckley

Yes, absolutely.

The OPW is responsible for the State's infrastructure. Mr. Buckley is sitting at a meeting of the Committee of Public Accounts and is telling me that something slipped into a lease.

Mr. Maurice Buckley

Yes, I absolutely accept that, as do all of my colleagues. We can trace exactly what happened and how this was not spotted. One would expect the systems that are in place to pick up on such things. One can see quite clearly how the baseline data in our files became incorrect, and once that happened, all the checks and balances which we have in place as the largest property organisation in the State----

The system failed-----

Mr. Maurice Buckley

-----failed to pick up on it.

The system failed in this instance, for this particular project.

Mr. Maurice Buckley

At the tail end of recognising the difference in the measurement standard of the lease as presented at the end of the process, the system failed, yes.

What steps has the OPW taken to ensure that nothing else slips into any future leases?

Mr. Maurice Buckley

We have made a whole series of changes to tighten the existing systems and to introduce new systems to ensure that this cannot happen again.

When do those new systems come into effect?

Mr. Maurice Buckley

Most of them are in place already. We would have realised this point last year during our dialogue with the Comptroller and Auditor General and once the auditor started his work. We immediately assessed how this happened and looked at the checks and balances that we thought we had in place. Like any system, something happens to show a gap and that gap has been addressed. We now have an independent, final check of the lease package at the very end by someone who has not been involved.

A lot of this is a case of not seeing the wood for the trees. One can see quite clearly that because of staff resources, because systems we had in place since before the recession had not changed, and because we were trying to cover the same systems with fewer staff, as I mentioned in terms of not seeing the wood for the trees, a blind spot entered into the control process. Obviously, it should not have and we have put systems in place now so that cannot happen in the future.

I will come back to that, but I want to pick up on something in Mr. Buckley's opening statement. He said:

The Miesian Plaza project experienced problems, including the aforementioned programme overrun [which we are discussing] and an issue relating to the application of a new measurement standard [which we are also discussing].

He then said:

Although these issues serve to lessen the very significant value negotiated, the demonstrable benefits of the overall deal and groundbreaking business transformation outcomes significantly outweigh all other considerations.

Mr. Buckley can correct me if I am wrong but my reading of that is that we made mistakes but the overall benefits outweigh the mistakes. Is that what Mr. Buckley is saying to us?

Mr. Maurice Buckley

I am saying the OPW team took on a big, complex project and in my opinion did a very good job on the project. It was not perfect. There are a number of issues which Deputy Jonathan O'Brien just identified which we would like to have been otherwise but the assessed imbalance-----

Mr. Buckley says it was not perfect. I think it is far from perfect

Mr. Maurice Buckley

If I could just answer the question.

I think it is far from perfect when the Comptroller and Auditor General talks about ineffective expenditure of around €11 million.

Mr. Maurice Buckley

I can come back and address the specific points in detail. I would welcome the opportunity to do so. With the overall project we were pushing on ten different fronts and it worked very well in almost all aspects. There were a number of very important issues, as Deputy Jonathan O'Brien has identified, but that still allows me to say overall-----

Does Mr. Buckley accept the Comptroller and Auditor General's statement that there was ineffective use of €11 million?

Mr. Seamus McCarthy

That is what was used in relation to the period when the building was vacant, but the excess payment on the rent is an additional €10 million.

An additional €10 million is also involved. Does Mr. Buckley know how many hospital beds that €10 million would have opened?

Mr. Maurice Buckley

Absolutely, and what it would have done in the OPW brief. It is €300,000 per year. I do not dismiss the fact that it amounts to €10 million over the 25 years of the term, but even €300,000 would do a lot in the OPW Vote on the heritage side and, as Deputy O'Brien said, in healthcare, education, and other areas. I accept that fully, but I still come back to the same point, namely, overall this was a very good deal and, looked at in the round, the State is better off for having done it and it is also better off financially.

That is a matter of opinion. Is it correct that Miesian Plaza cannot accommodate all of the staff from both Departments?

Mr. Maurice Buckley

Yes, both Departments have expanded since the project started and not all staff are contained there, but that is evidence in itself of the work that was done to try to organise the building to accommodate the maximum possible number of civil servants. That is part of an explanation which I will give when the time comes in terms of why it took so long. Deputy Jonathan O'Brien can see there was good reason to have that dialogue because we were coming out of a recession and the Departments involved were expanding.

If we keep wasting €10 million, it will not be long before we go back into recession. How much time do I have, Chairman?

The Deputy has four minutes left.

On the lease itself, is it unusual that the OPW would not require a rent-free period?

Mr. Maurice Buckley

It varies from lease to lease. In this particular case I think it was a very good negotiation position not to require a rent-free period.

Mr. Maurice Buckley

We had already agreed that the rent would be reviewed every five years based on the consumer price index, CPI, not on the basis of market rents, which means 1% or 2% depending on how the economy does. The total value of the project is going to be the same. In a good negotiation the developer is going to look for the total amount of money over the period of the project. If we were to take, for example, a one-year, rent-free period, it would mean the rent for the other 24 years would be correspondingly higher. In terms of the rent reviews based on the CPI, each time the index would be applied to a higher figure. We have done some internal calculations that show the State would have lost between €5 million and €6 million had we had a one-year, rent-free period on this lease. Our normal practice is to try to negotiate a rent-free period to allow for the fit-out and everything else, but in this case because of the CPI linkage, the circumstances surrounding the deal and the negotiation, what was beneficial for both parties and what was the best deal that could be obtained, we obtained a deal for roughly 15% below market rent. That was one of the factors in how we could do that.

Is Mr. Buckley saying that roughly €5 million was saved over the lifetime of the lease?

Mr. Maurice Buckley

Yes, that counteracts to some extent some of the other points in terms of the excess costs that have been raised.

We are still making a loss.

Mr. Maurice Buckley

The total cost of the project was around €300 million over the 25 years. At the rent rate we negotiated I would estimate that we saved between €40 million and €50 million to the State, or let us say, we would have saved-----

Mr. Maurice Buckley

If I could just explain, because it is a little bit complicated. Had nothing else happened, we would have saved €40 million to €50 million by negotiating a very competitive rent rate on the basis of the different points the Deputy raised. Unfortunately, because of the measurement issue, which we hope to clarify, but let us say we cannot, that has eaten into that €45,000 saving. The delay in occupying the building, which I would argue was about five to six months, so it is part of the €11 million figure the Deputy mentioned, but it is not the full figure by any means, has also eaten into that saving, but there is still a significant saving.

I appreciate that, but I have limited time. My final question relates to the external consultants employed by the OPW to negotiate the terms of the lease. Was that the case?

Mr. Maurice Buckley

Yes.

Did they conclude that a rent-free period and a lease-break option could be traded for a lower rent? Was that the advice of the external consultants?

Mr. Maurice Buckley

As I understand it, yes. Presumably, it was the consultants, in conjunction with our property management team, which was looking after the project on behalf of the OPW.

The difficulty I have is that we are also being told there was no economic appraisal carried out.

Mr. Maurice Buckley

Yes, that is correct. There was no formal economic appraisal.

How did the OPW know at that time, therefore, or did those involved just take the word of the external consultants? Was documentation provided by the consultants? Did they outline what could happen if the OPW required a rent-free period? Did they provide information on the other options? Was an economic appraisal done and presented to the OPW?

Mr. Maurice Buckley

There is a report from the negotiating consultants outlining the pros and cons of the various options involved.

Would the Committee of Public Accounts be allowed to have a copy of those reports?

Mr. Maurice Buckley

The Comptroller and Auditor General would certainly have seen the report as part of the audit. I would have to check what is in the report, in case there is anything that is commercially sensitive, but if not, I do not see why the report could not be provided to the committee.

Perhaps I am getting the consultants mixed up but if I am sure Mr. Buckley will be quick to correct me. Are they the same consultants the OPW employed on a previous project and then it was decided to give them this project as well? I think they were doing work on the Hawkins House project.

Mr. Maurice Buckley

There is an interlinkage. From our point of view, as a property transaction the two projects are intrinsically linked. While we were moving the Department of Health because of the deteriorating condition of Hawkins House, it also opened up a major redevelopment opportunity to make more efficient use of that property on behalf of the State. The evaluation of one and the other at that time was interlinked.

Is it correct that they were not initially employed to look at the Miesian Plaza project?

Is it not correct that they were looking at Hawkins House? Is it also not correct that the OPW then decided to extend it and give them the additional space and it did not look for any expertise but just decided to go with this particular consultant?

Mr. Maurice Buckley

I believe that to be correct. With the time that was involved and the fact that the projects were linked I believe that to be the sequence of events.

Would the OPW do that differently now given the figure of €325 million over five years which is under discussion here?

Mr. Maurice Buckley

No. I have to say again that it was very innovative and good that unusually this particular deal was negotiated without a rent free period and a break clause which were in the State's interest. To use those to trade for an attractive rent term was a job well done. Unless there is a procurement issue I would not wish to change the negotiation of that lease. The issues we referred to earlier happened later in the project.

On the procurement issues, can the Comptroller and Auditor General confirm whether it is okay in terms of procurement rules to hire an external consultant for one job and then tack on an additional one?

Mr. Seamus McCarthy

I do not have any particular difficulty with it given the scale of the expenditure there. Normally it would be expected that the OPW would have drawdown contracts to be able to commission those kind of exercises so from a procurement point of view it may not have cost any more had it been done another way.

I thank the Chair. I will come back in on the second round.

To follow up on one point, who spotted that the wrong measure was being used? The Comptroller and Auditor General mentioned-----

Mr. Seamus McCarthy

One of my staff members.

I am looking at paragraph 6.21 of this report on page 67 and it reads as follows:

In finalising the lease, the issue of the different measurement bases was considered. When reviewing the lease, the Chief State Solicitor's Office (CSSO) requested OPW to confirm with its in-house valuer whether IPMS was the appropriate standard for measurement in this case.

After all of this, the Comptroller and Auditor General is telling me that the OPW never even spotted the problem. This report indicates that it might have been the Chief State Solicitor's Office and-----

Mr. Seamus McCarthy

It spotted it and the potential for a problem and it alerted the OPW.

We are in a situation where the OPW are the people looking after the State's assets, leases and property and nobody in the organisation spotted this. It took the legal people who-----

(Interruptions).

Just let me finish.

This helps the Chair. On paragraph 6.21 of the report that has been given to us it states that the OPW then sought advice of the internal chartered surveyor who advised that it needed to be recalibrated. Internal people did advise the witnesses but they just did not act on that advice, is that correct?

The witnesses were made aware of this internally. The OPW apparently then ignored that advice and then the Chief State Solicitor's Office said there was an issue. How many people have to tell the witnesses there is a problem before they accept it?

Mr. Maurice Buckley

I would not use the word "ignore" as that was not the case, but the issue was raised and questioned by several internal staff and the Chief State Solicitor's Office around the end of the summer or the beginning of the autumn of 2017. Questions were asked about the measurement standard used and they were answered-----

This was after the lease was signed.

Mr. Maurice Buckley

The questions were asked and answered but the implications of the change of the measurement process were not captured in that series of questions and answers at that time. That is where the problem arose because once that was set in stone, a wrong understanding had crept into the file and that is why from that point on when the lease was being finalised it was missed by the checks because they were checking against wrong information.

The Chief State Solicitor's Office requested that the OPW check it out.

Mr. Maurice Buckley

Yes.

At what stage was that? Was that before the lease was signed or later on?

Mr. Maurice Buckley

That was around August or September of 2017 when the lease-----

The lease had been signed already.

Mr. Maurice Buckley

No I am a year out it was August to September of 2016 so the lease was signed in January 2017-----

Mr. Buckley is now telling us that this issue was well known for almost 12 months before the contract was signed. This issue was there from August 2016 and when was the lease signed?

Mr. Maurice Buckley

The lease was approved in January 2017 and it was finally legally sealed in-----

This was well known for six months.

The payments started in December.

Mr. Maurice Buckley

I was just about to say that we were aware of the issue right from the beginning. The committee will have to allow me to explain because it is a little bit complicated, but it is important that I explain it. In 2016, first of all the Royal Institution of Chartered Surveyors introduced the international property measurement standard 3, IPMS 3, standard and it was mandatory for its members in the UK and worldwide from January 2016. The corresponding adoption in Ireland by the Society of Chartered Surveyors Ireland was one month later and it was mandatory for chartered surveyors to use this new code from February 2016. It must be understood that the Miesian Plaza transaction was just in full swing at this stage. The terms had been negotiated under the old system and there was a discussion and an agreement. The agreement is where the confusion arises. The agreement was that the final lease documentation should be based on floor area measured to the new IPMS 3 standard. Where the confusion arises is that what was not picked up on early enough were the implications that might have for the rent rate and the lease value. In the normal run of events-----

That was obvious. The OPW should have changed the amount of square metres involved. The concept of saying the implications of changing the square metres of what was being rented was not realised is obvious.

It crept or slipped in.

Mr. Maurice Buckley

If I may explain that - I refer to the relevant chapter in the report and paragraph 15, 6.15 - we started the process with an indicative area of 13,293 sq. m for the office accommodation. That was the figure in circulation at the time of the negotiation. That was based on marketing material and an assessment of the area based on drawings. This was a renovated building.

Did the OPW do due diligence on that?

Mr. Maurice Buckley

We did. This was a point I was trying to explain.

It clearly did not. It would have been spotted a year before the contract was signed if it had.

Mr. Maurice Buckley

If I can explain to answer the question.

We are only interested in this one point because it appears to me that even though the OPW was aware of it, it carried on regardless and it took the CSSO really querying it to-----

Mr. Seamus McCarthy

They were doing the due diligence on the contract.

These are people who are not property experts. They are the OPW's professional legal advisers and the Comptroller and Auditor General probably calculated the extra cost. In fact I do not know who calculated it. When was it calculated and by whom?

Mr. Seamus McCarthy

We calculated that.

Why did the OPW not calculate it when it became aware of the situation? The onus should be on the OPW to calculate the correct-----

Mr. Maurice Buckley

We did and we engaged with the developer as soon as we were aware of the issue-----

The Comptroller and Auditor General said that he calculated the potential extra cost to the Exchequer.

Mr. Maurice Buckley

In fairness that is the-----

That is an independent office. The OPW cannot rely on the Comptroller and Auditor General to do the OPW's work.

Mr. Maurice Buckley

Once the issue was identified-----

What date was that identified?

Mr. Maurice Buckley

That would have been in conjunction with the audit-----

Mr. Seamus McCarthy

It was April this year.

Mr. Buckley just said that these standards were in operation from February 2016. That was two years ago.

Mr. Maurice Buckley

Yes and believe it or not-----

We do not believe it, Mr. Buckley can take it as a "not". Go on.

Mr. Maurice Buckley

I will say it anyway because it is correct. Despite the efforts of the Society of Chartered Surveyors Ireland, the new standard is still not widely accepted and used in the Irish market. It takes a long time because long negotiations, long leases etc. are being dealt with. The OPW has the attitude of being once bitten twice shy and is very much on top of this issue but in the wider property market in Dublin and Ireland I would say that it is still causing confusion left, right and centre.

To finish the point I was making, I am not a property expert but my colleagues are and I would have thought that the square metres should be constant because a building is a building but it actually changes from what is measured in the drawing to what is finally measured on site. That measurement only took place in December 2016. All of this dialogue and querying between my staff and the CSSO had already happened and then the measurement took place and there was a difference between the physical measurement and the drawing measurement of about 3.5% in area, as happens sometimes, on the old standard. We are used to dealing with that standard and it was negotiated through.

At the same time, the same measurement specialist measured the building under the international property measurement standard, IPMS 3. Normally, we would not expect a modern open-plan office block to be much different. Normally, it would be negligible but in this case because it was a renovated building it was actually quite significant. It was in the order of 3% to 4%. That is the point at which this went astray.

The OPW measured it after the renovations. Is that correct?

Mr. Maurice Buckley

We measured it after the renovation. It can only be measured-----

Who did the renovations? Was it the OPW?

Mr. Maurice Buckley

No, the landlord would have done that.

What was the renovation? Was it to put in additional insulation and thus make every room smaller?

Mr. Maurice Buckley

No, it was quite extensive. The building was almost taken apart. The full façade was moved. The block was extended. There are three blocks.

There was an extension to the building that we are hearing about now and it might have added to the increase. Is that accurate?

Mr. Maurice Buckley

The building was essentially, in layman's terms, almost dismantled. It was extended to some extent and reduced in size and built again to the very highest standard.

I am going to move on.

Was it extended or not? We need to know. I am not asking in layman's terms but in actual terms.

One speaker at a time, please.

Sorry, it is a pertinent point. With respect to Mr. Buckley, the question is: "Was it extended or not?" It is not a layman's term.

Mr. Buckley used the word "extension"

Mr. Maurice Buckley

Yes, I have.

It is not a layman's term. Either it was or it was not.

Mr. Maurice Buckley

The building was completely refurbished. I hope I am not wrong on this point, but the width of the building altered. As part of that refurbishment, those responsible extended the building by a couple of metres to make better use of space.

That is a material change to the fabric of the building and, therefore, the contract changes.

Mr. Maurice Buckley

No, sorry. This would all have been done and planned before the negotiation ever started. I am probably confusing everyone now. I am sorry about that.

It appears to me that the only reason for the resolution or bringing this to a head was through the actions of the Chief State Solicitor's Office and the Comptroller and Auditor General.

In fairness, we have it in writing. This is what I tried to say to Mr. Buckley. We have it in writing that, in February 2017, one of his own people advised him. That is what we have in writing. Is that the case or not? That is the question. The Chief State Solicitor's Office acted. The reason we are here today is that, in February 2017, Mr. Buckley was advised by one of his own people that the OPW were going to need to recalibrate this and OPW was about to make a mistake. Is that not the case?

Mr. Maurice Buckley

I think I have already explained-----

With respect, I do not think Mr. Buckley has explained it. We have been half an hour talking about how Larry Goodman did up the building before he offered it to the OPW. We know that. Let us get underneath that. Mr. Buckley has said he is not a property expert and that his colleagues are.

The point is made. I am probably eating into the time of Deputy Cassells and other members at this stage. I want to move on to the other members, in fairness.

I welcome the witnesses. I will start with chapter 6 of the report of the Comptroller and Auditor General on the Miesian Plaza offices for the Departments of Health and Children and Youth Affairs. The answers thus far have been insightful. These offices lay vacant for 18 months at a cost of €11 million. It was far from a good deal overall. That is not even with the basin point in the public sphere. I have one question. Can we have the €11 million back please? It is a simple straightforward question. Can we have the €11 million that the OPW squandered back?

Mr. Maurice Buckley

There is a delay. There is a period between December 2016, when the rent payment started for the building, and the occupancy of the building, as set out in the report, in April or May of 2018. There was 15 months. That period needs to be understood properly and it has not been as of yet. No matter what tenants do in a new building, they have to take possession of the building before they can fit out that building for whatever reason they want to use it. We could not commence any work related to the OPW or client Department occupation of that building until we had possession of it.

We are going to get into that.

Mr. Maurice Buckley

It is important. I must explain it now. It was referenced in the introduction from the Comptroller and Auditor General and in my introduction. The fit-out of a building this complex takes in the region of ten months. There was always going to be a ten-month period with no one in the building when our builders were, as quickly and efficiently as possible, preparing the building for occupation. When we get it, it is a shell or core and it is basic. It is the same as anything else. There was a delay – I am not saying there was no delay – but we must put a perspective on this. We needed approval to start the contractor on the fit-out in January 2017 as soon as we had possession. We were not able to give the go-ahead to the developer until July 2017 because we did not have sufficient agreement between the OPW and the client Departments. That is a six-month delay. We are renting the building for €10 million per year, so that is €5 million gross, and, if we take away VAT that is €4 million. One could attribute €4 million to the delay.

That is Mr. Buckley's claim. The constitutional officer of the State has said €11 million. The answer is "No". The two words Mr. Buckley has used are "not compatible". He also used the term, "quickly and efficiently". Then in the following breath, he said there was a delay. They are not compatible. The answer to what Mr. Buckley has said is "No".

That is my frustration with this situation and with so many other public bodies that come before the committee having squandered public money. The attitude is that they will hunker down, maybe say "Sorry" and get a rap on the knuckles . Then they are out the door until next year and life goes on. It goes on for the OPW but it does not go on as normal for thousands of our citizens because of OPW's actions. We do not talk about this enough. More specifically, as the Comptroller and Auditor General pointed out, there was a lack of action and failure to act. I have a hostel in my home town of Navan, close to the OPW headquarters in Trim, that has vacant sites. I am repeatedly told there is no money to provide that. I can tell Mr. Buckley that €11 million would do a good deal for that. I have a Garda chief superintendent who is looking for a divisional headquarters in Meath but there is no progress on that or even a straight answer from the OPW in respect of the site acquisition for that. The impact of the people in the OPW flittering away €11 million has consequences for whether money being available for services that the public desperately need.

Mr. Buckley has come before the committee and his statement referred to how there was a difficult journey to bring everyone along and how it undoubtedly caused delays. It was a difficult journey. Mr. Buckley should note they were not carrying their crosses to Golgotha; they were going from Hawkins House to Baggot Street. The fact is that rows were documented in the report about open-plan space, who would have an office or whether the water cooler would go in a given corner. That resulted in €11 million of ineffective expenditure. It is a complete and utter scandal. The attempt to say before the committee that it was a good deal is inexcusable.

Since there is ineffective expenditure on a grand scale at this level, the culture seeps down throughout the organisation. We have seen it with other bodies here and it has happened here as well. I will ask Mr. Buckley one more time about this deal. Is he seriously saying that this is a good deal that he is prepared to stand over?

Mr. Maurice Buckley

As I have explained, in the round this is a good deal and I do stand over it. I have also explained that we accept that it was not possible to conclude the planning of the occupation of the building more quickly. I said in my opening statement that we regret it and I think everyone does. That delay or overrun has cost approximately €4 million and not €11 million; I dispute that assertion. Any delay or cost is unacceptable. It does not matter if the cost was €40,000; it would still be unacceptable.

We have to look at the time available for what is a major business process change. I do not accept that it is anything to do with the distance between the two buildings. It has a great deal to do with the nature of the buildings. We are comparing a 1962 building, Hawkins House, with old-fashioned modular offices and a Department that has learned to do a good job in those circumstances. The Department adapted all its business circumstances and processes accordingly. Miesian Plaza is a far more modern office, but it does not simply happen overnight. One cannot simply move from one to the other. Every detail has to be adjusted and adapted. There is a process in place and there is a time for it.

I want to discuss that process and what the Comptroller and Auditor General had to say. Page 2 of the report refers to a significant commitment of public funds.

Why were there no documents detailing the risks associated with what Mr. Buckley has said was a significant project and a difficult journey? It is not the first time we have had bodies before the committee with no documentation corresponding to the claims made. At Christmas in 2016 we had NAMA in the same scenario. Can Mr. Buckley take me through why there is no documentation in respect of what was to be anticipated?

Mr. Maurice Buckley

I agree with the Deputy completely on the risk assessment for this and the other project. It needs to be made much more thoroughly and better documented. We have introduced systems since that time to do it in a more formal way. I put much value on that because it is the modern way of running businesses.

On the business case and the assessments made, they are also important. We followed the procedures of the Department of Public Expenditure and Reform. That is no excuse, but it is an explanation. The property market is dynamic at any one time. One does not have the ten or 15 options one might have in some other projects and has to move quickly. That is not an excuse, as we must still engage in the process. However, sometimes it has to be expedited to cover all of these matters.

Mr. Buckley referred to problems in the planning process. Will he take me through it?

Let us take the timeline in chapter 6.5 of the report of the Comptroller and Auditor General on the interaction between Mr. Buckley’s office and the Secretary General in the Department of Health and the issues which arose from 2016 onwards. A red flag was raised in October 2016 when the Secretary General wrote to the chairman of the OPW stating that, based on the plans provided, the Department of Health could not at that stage proceed with the relocation. Chapter 6.46 of the report of the Comptroller and Auditor General states: “The main issues were in relation to the open plan working environment and the allocation of open plan workstations to assistant principal officers, who at that time were accommodated in individual cellular offices in Hawkins House”. Will Mr. Buckley take me through the timeline of when all of these red flags were being raised in the build-up to the negotiations, the lease and so forth?

Mr. Maurice Buckley

During 2016 there was an intensive continual interaction between the OPW, the Department of Health and the Department of Children and Youth Affairs. The interaction revolved around the points mentioned. They were the critical building differences which would result in business process differences. In fairness to the Departments involved, they accepted early on that, in the nature of the building move, it would not be possible or correct to provide cellular offices for the same number of people or anything like it, as was the case in Hawkins House. The Departments agreed with the OPW that it was a big change and step forward for the public sector in general that a particular grade, the assistant principal officer grade, would be housed in open plan office space in Miesian Plaza. It was the first time it had been done on a large scale in the Civil Service or the public sector. It was at a time when we were recovering from a recession, dealing with a clawback under the Haddington Road agreement, while the Department of Health was dealing with issue after issue in managing the health service. We took on those issues, but it was difficult and took much negotiation during the year. I saw some difficult periods when people were trying to do their best in the public interest in representing different bodies. It was not just about staffing issues. It was also about management being sure its system could be run. We could not risk jeopardising the work of the Department of Health in the move. If it could not function properly for even one month, can one think of the devastation it would have caused?

I want to get into those issues. There were many issues at the time. People were losing their jobs and whether they were in a cellular or open plan office was not their concern. I acknowledge that in December 2016 Mr. Buckley initiated meetings to resolve the ongoing issues.

Chapter 6.41 of the report of the Comptroller and Auditor General states the “OPW has a directive power in relation to civil service office accommodation [but] it did not exercise that power in this case”. That is an important point that I would like Mr. Buckley to consider. The Comptroller and Auditor General stated the OPW did not exercise that power because it felt “far more effective when engaging with client Departments in relation to office relocations” and “that directive powers are useful in certain situations but are a ‘blunt instrument’ and ... would not have dealt with the complete culture change associated with a move from ‘cellular’ to open plan layouts”. In his opening statement Mr. Buckley stated: “In the OPW’s experience, it is quite common that staff ... considerations trump those relating to the physical building itself”. What stage does it have to reach for the protection of the take from the public purse to trump the feelings of the people discommoded by having to look at someone across a desk, rather than being in an office? That goes to the heart of what Mr. Buckley said in his statement and the fact that he had powers at his discretion to bypass all of this nonsense of whether guys’ feelings were out of check because they were moving from a cellular to an open plan office. Modern companies do this all of the time. It is extremely frustrating to think the public service cannot adapt in the same fashion and that the net result was a loss of €11 million. No private company would even countenance such a scenario. A private company would tell its employees that they would not have a job the following morning if they did not get over their feelings. At what stage does protection of the public purse trump the ineffective use of money?

Mr. Maurice Buckley

The public sector can adapt and is adapting.

Not from this evidence.

Mr. Maurice Buckley

As I mentioned in my opening statement, it is about staff and business processes. I have put the emphasis on business processes. They have to work right and do. Let us look at the evidence. The staff are now in the building. All four Departments are reporting that it is effective and that they are seeing improvements in the climate in which they can do their business. They believe that, in time, they will see definite benefits in productivity and efficiency. It takes time in both the private sector and the public sector. My background is in the private sector. I have made several moves and they are planned several years ahead. The technology and processes have to be put in place. I am not saying staff are not important, but they are part of it. A body like a Department is nothing else but the staff in it. They are the people who are writing the policies. However, the business process has to work. Some are paper-based but will be IT-based. Teamwork, collegiality, the use of meeting rooms and the way we interact with visitors are different in a different environment. It takes a little time. There was engagement over two years, but it could only become intense once we had clear visibility of the type of building into which we were moving. We have put steps in place to assist our clients and ourselves in managing it and in order that we can tackle these issues more quickly, but it is always going to take some time. The 18 months it took in this case was not a bad result.

In October 2016 the Secretary General wrote to the chairman of the OPW stating the Department of Health could not proceed. In the following March the Department had still not agreed the layout of common areas in offices. This goes to the heart of the matter. There was the wrong attitude. What is the situation pertaining to the fact that not all of the staff from the Department of Children and Youth affairs can be accommodated there?

Mr. Maurice Buckley

Any relocation project takes quite a while to complete from beginning to end. We must pick a number on which we plan the business. In this case, we worked with the Departments and the numbers of staff they had at the time the project started. We allowed for a certain degree of expansion, say, 5% or 10%. We are in the business of providing accommodation, not empty buildings. We were certainly concerned, but there was dialogue because, credibly, the two Departments foresaw their numbers growing.

However, it is not our role to predict numbers in a Department. That is the job of Government. We dealt with the information available to us. It would be lovely if we had 100% of the two Departments in but 95% of both of them are in. There are certainly areas within both Departments where, at least on a temporary basis for a number of years, we can accommodate people at a second location but by and large, the core functions of both Departments are side by side in an efficient work structure. That is a success. I would be more worried if the Deputy asked me why there are 50 empty desks in that building.

I acknowledge that the OPW came to this process at the mid point but I find the whole thing disheartening. The Comptroller and Auditor General has spoken about the ineffective use of €11 million. Mr. Buckley has said that it was a good deal and is arguing the toss about whether it was €11 million or €4 million. It has real consequences for the lives of real people and that, ultimately, is what is so disheartening about this.

Cuireann an easpa ban iontas orm i gcónaí.

Mr. Maurice Buckley

Go raibh maith agat.

Níl a fhios agam an cheart "go raibh maith agat" a rá mar fhreagra ar an easpa ban, ach is rud eile é sin. I am looking at the spending review from the Department of Public Expenditure and Reform. It is a very good overview. I am not too sure about the conclusions. I wish I was here looking at the OPW in respect of the very important work it carries out. It looks after over 2,000 buildings and flood prevention and relief, which are extremely important. I am going home tonight to a city threatened by a storm and possible flooding. I really wish we were doing that. I have always had the greatest respect for the OPW on the ground. It is an extremely important Department so I really regret that we are now mired in this. It is really putting forward the wrong view of the OPW whose role is essential in any functioning democracy. It is responsible for 2,000 buildings. I wish we were here looking at what the OPW feels or how it is implementing Government policy in respect of the colossal spend on rents - €96 million per year. I do not mean to be disrespectful in any way but the OPW should have as an addendum "the Office of Public Rents" because we are now in the market and are actively colluding with high rents in a market. These are just my general comments.

I return to the specifics and I hope I have a chance this afternoon to return to the many aspects I would like to address such as flood risk. In respect of the report, we are here today because the Comptroller and Auditor General produced this full document. Unfortunately, the OPW's handling of the Miesian Plaza affair gets an entire chapter, which is very unusual. I have read the chapter and the comments on it. I have read everything at this point. One could have a sense of being overwhelmed. I will deal first with the problem relating to the extra €300,000 per year as a result of miscalculations. It reminds me of when NAMA came before us and the debate was pushed into what was the appropriate percentage to use, which is not really relevant. What has happened here is that there was a negotiated rent based on certain measurements - net internal space or something like that - and an agreement was reached. The OPW then had to use other measurements that were introduced in January 2016 that should have resulted in the rent being recalibrated.

Mr. Maurice Buckley

The same rent.

No, recalibrated in terms of the new measurements. I will go to paragraph 21. It is not the way Mr. Buckley is telling it; it was actually brought to his attention. If we look at paragraph 6.21, we can see that it was clearly brought to Mr. Buckley's attention. Paragraph 6.21 states that "in finalising the lease, the issue of the different measurement bases was considered." It states that before the lease was finalised, the Chief State Solicitor's Office requested the OPW to confirm with its in-house valuer whether the new measurement was the appropriate standard for measurement in this case. This is black and white. The paragraph goes on to state that the OPW then sought advice from one of its internal chartered surveyors who advised that if measurement under the new IPMS code resulted in a larger reported area, the OPW should ensure that the rate per m2 is recalibrated. Is that not right?

Mr. Maurice Buckley

Yes.

The OPW failed to do that.

Mr. Maurice Buckley

Yes.

Mr. Buckley has said that openly. Second, there is no confusion here with regard to extra space or the office being extended. No office was extended. It was the exact same building. It involved a different type of measurement but the overall area was the same.

Mr. Maurice Buckley

The building was the same.

And the overall area was the same. It just involved a recalibration of how to do it per square metre or square foot. That is all. There was no extra space. It was about whether the pillars were included or things like that. Is that not right?

Mr. Maurice Buckley

There were two steps.

No message is to go out here that there was confusion over extra space. There was no extra space. It was the exact same building - just a different way of measuring. The OPW did not recalibrate. It was advised to do so but it did not do so. The OPW did not discover that; the Office of the Comptroller and Auditor General did. Is that not right? The OPW's internal processes did not discover that - yes or no?

Mr. Maurice Buckley

We did. My colleagues tell me that the initial point was discussed-----

Which colleague will tell me when this was discovered before the Comptroller and Auditor General discovered it?

Mr. Martin Bourke

I commenced in the OPW in September 2017. There was a lot of talk about Miesian Plaza and the project - mainly in the media. At the end of 2017, I asked about it just to bring myself up to speed.

What is Mr. Bourke's role?

Mr. Martin Bourke

I am head of estate management. I asked that an internal review would commence on the project - mainly to bring me up to speed.

When did Mr. Bourke ask for that?

Mr. Martin Bourke

In November 2017.

What alerted him to look for an internal review?

Mr. Martin Bourke

There was a lot of talk, particularly in the media, about Miesian Plaza and delays.

Where or how did the Comptroller and Auditor General become aware of this?

Mr. Seamus McCarthy

In examining the documentation around Miesian Plaza.

Mr. Seamus McCarthy

It was around April of this year.

Mr. Martin Bourke

Around that time, in May 2018, there was a first draft of the-----

Mr. Bourke came in as a new person?

Mr. Martin Bourke

Yes.

As head of estate management.

Mr. Martin Bourke

A new role.

It was the media that alerted him to something being wrong.

Mr. Martin Bourke

There was a lot of talk.

So it was the media that alerted him. It was not the OPW's internal controls that alerted him. It was the media.

Mr. Martin Bourke

And in-house discussions.

The OPW's internal controls did not alert him that something was wrong and that a mistake had been made?

Mr. Martin Bourke

On the specific issue of measurement, the answer is "No".

Mr. Buckley spoke about this being a flagship building. I disagree with him and think that he should not have included that in his statement. What I would like have to seen in his statement were the issues outlined by the Comptroller and Auditor General - certainly the major issues with the figures being one of them. It would have been very easy for Mr. Buckley to do that rather than telling us it was a flagship building. It is not relevant in terms of the mistakes that were made and the cost to the taxpayer of €11 million and an ongoing €300,000 or something like it per year.

The next issue concerns the internal controls. The Comptroller and Auditor General looked at 20 samples. Of those 20 samples, he discovered a building in Galway. Is Mr. Buckley at liberty to name that building?

Mr. Maurice Buckley

It is an office building in Eyre Square in Galway.

Mr. Maurice Buckley

Fairgreen.

Is it the Intreo office?

Mr. Maurice Buckley

It is a Revenue building. Revenue is occupying it.

Is that the Department of Social Protection and Revenue or is it just Revenue around the corner? Mr. Buckley does not know. I might come back with specific questions separate from that. It is interesting because that building remained empty for a very long time. It was to be a flagship building in Galway with new modern hubs but it remained empty. Suddenly it was rescued by State rents over a process.

State rents have rescued a building in Galway. Social welfare is at one end and Revenue is at the other. It is a story for another day because it should have become a public building. It is now privately rented. This is what I would love to be discussing today but I have run out of time. We are now renting a building that should have been publicly acquired because there should have been a return to the taxpayer in Galway. Again, there was a problem. It was not a recalibration problem and it was not a measurement problem. What was the problem here?

Mr. Maurice Buckley

Again, that is being checked by my colleagues. As I understand it, from the report, the lease was closed on the basis of a gross internal area whereas the files referenced a net internal area. There is a very incomplete record as to which was correct.

So it was a matter of net and gross.

Mr. Maurice Buckley

Net and gross comprise a different matter.

Just one second. It was not a matter of two different measurements, but internal measurements – net and gross. As a result, extra money was also paid out on the rent. Is that it?

Mr. Maurice Buckley

Yes.

Was that discovered by the Office of the Comptroller and Auditor General?

Mr. Maurice Buckley

No, we were aware of that ourselves internally.

I think that arose from a sample of 20 cases that the Comptroller and Auditor General looked at. Did it not?

Mr. Seamus McCarthy

We certainly did a piece of work and identified that as a problem in that case.

Was the Office of the Comptroller and Auditor General alerted to that by the OPW or did it discover it in the course of its work?

Mr. Maurice Buckley

We were aware of that already.

My question is to the Comptroller and Auditor General.

Mr. Seamus McCarthy

We found an OPW document that had a reference to it.

What does "reference" mean?

Mr. Seamus McCarthy

It referenced the incorrect measurement having been applied.

Then the Comptroller and Auditor General identified the extent of that mistake.

Mr. Seamus McCarthy

No. The figure was actually calculated by the OPW.

How did the OPW discover it?

Mr. Maurice Buckley

We picked up on it ourselves. The Comptroller and Auditor General would have seen records in the file in which it will have been seen that the issue was already queried internally.

How did that happen? What process brought it up?

Mr. Maurice Buckley

It relates back to 2003. I do not have the actual chronology of the events.

Could I have a chronology of what exactly happened in respect of the building in terms of the mistake made?

Mr. Maurice Buckley

Yes. I have asked for that already.

Has the OPW commissioned an independent review?

Mr. Maurice Buckley

An independent review of what?

I do not know. That is what I am asking. Has the OPW commissioned an independent review into what happened?

Mr. Maurice Buckley

We commissioned, as Mr. Bourke explained, an independent review of the Miesian Plaza project.

What is the current position?

Mr. Maurice Buckley

That is well advanced. It is looking at all aspects-----

No, tell me. When will it be published? Who did it? I saw somewhere that it was to be published in September. This is October.

Mr. Maurice Buckley

To be finished in September.

Mr. Martin Bourke

It is very close to completion. I would hope that by the end of this month-----

Do not mind hope, now. What terms were set when the independent review was commissioned?

Mr. Martin Bourke

It was to look at the facts of the case and to report back.

Who is doing that?

Mr. Martin Bourke

It is a combination of an external person and an internal person. We have set up, as part of our new procedures, a governance structure, involving a governance person who has responsibility for looking at all aspects of governance in the OPW and monitoring adherence to the likes of the public service spending code, etc.

Please. Bearing in mind that there is to be an external review, an independent review, it is not quite independent.

Mr. Martin Bourke

There is an external person. There are two people - a governance person from inside and an independent person from outside who-----

Who is the independent person?

Mr. Martin Bourke

He is a consultant who is a quantity surveyor, barrister and trained conciliator.

A quantity surveyor?

Mr. Martin Bourke

A quantity surveyor, barrister and conciliator. Therefore, he is familiar with-----

What is being called an independent review is not really independent. It has an external person but it is actually an internal review.

Mr. Martin Bourke

It is an internal review being conducted-----

Mr. Maurice Buckley

It is possibly not in the language of the Committee of Public Accounts-----

I am using the OPW's language. It indicated one of the steps it was taking was to carry out an independent review. I saw somewhere it was to be published in September. I am asking about the independent review. It was not published in September and it is not independent.

Mr. Martin Bourke

I suppose it is independent from my property management people who were involved in the Miesian Plaza project.

I will come back to it because I am watching my time.

My last question, on the appropriation accounts, concerns a special note in regard to rent controls. Reference is made to Mr. Maurice Buckley, Accounting Officer, 17 September 2018, and to rents receivable. It is stated an internal review into rent collection controls was carried out in 2017. The review identified that there are weaknesses in controls, due largely to the scale and diverse nature of the portfolio. I accept not the weaknesses but the diverse nature of the portfolio. Also identified is the lack of a central register of all lease agreements. Who carried out that review internally? Why did it happen? Was it as a result of the activity of the Comptroller and Auditor General?

Mr. Maurice Buckley

No, we have a-----

Has the OPW carried out other internal reviews in regard to a lack of a register?

Mr. Maurice Buckley

We have a very active internal audit function in the organisation.

Did the internal audit function highlight this? Was it the internal audit committee?

Mr. Maurice Buckley

No.

Did it not highlight that there was no register of property?

Mr. Maurice Buckley

The lack of a sophisticated register of contracts, beyond property but including property, is the subject of a well-known action that the OPW needs to take. This has been the case for some time. The management board, in addressing that, is now at the point of completing that piece of work and putting in a contracts register. We are also, as I mentioned in my opening statement, putting in an entire estate management system, which is a very sophisticated piece of software that involves the approval of the Office of the Government Chief Information Officer and all that. Those items have been well known among OPW management for many years. We are coming to a conclusion now. They would have been highlighted by the internal auditor.

Lovely. I believe the analysis of OPW spending arose as a result of this committee highlighting rents repeatedly. In any event, a property asset management unit was established six years ago, in 2012. A steering group was set up. It finished its work in 2016. A property asset management delivery plan was set up in 2013.

Mr. Maurice Buckley

Yes.

Are there reports from all these bodies?

Mr. Maurice Buckley

Yes.

I presume there are recommendations highlighting difficulties that should be dealt with.

Mr. Maurice Buckley

Yes, and-----

It is now 2018, five years from 2013. Only now is there an internal review and only now a register. Am I misreading it? Am I being unfair?

Mr. Maurice Buckley

With respect, yes. We are talking about two different points. The property asset management delivery plan, PAMDP, relates to the full public sector property remit, which the OPW was asked to lead in 2013. That is a project with work items. To confuse matters further, there is a register of all public property owned by the OPW, local authorities and other bodies which has been created through that and will now be integrated into the new Land Development Agency as it comes on stream. That is one piece of work. The contracts register, about which I was speaking, was an OPW internal register dealing with OPW contracts. I refer to the OPW only, or to managing our own business.

In terms of rent and rent controls, and what is going out and coming in.

Mr. Mick Long

The second report is in terms of rents receivable. It is rents receivable rather than rents payable.

The rents receivable are much less than the rents going out.

Mr. Mick Long

Exactly. There was an internal review initiated in 2017. It is a combination of the Integra financial system whereby a sales ledger is being rolled out to different parts of the office in terms of issuing invoices and looking for inward payments in receipt. That is the rents receivable part of the office.

I asked for the report today, and so did the other Deputies. I refer to the report related to the subject of the letter we received. It would have been very helpful to have had that. We should have had it. One can take any side here but issues were raised way back. It seems that if those issues had been dealt with, we would not be receiving a special chapter from the Comptroller and Auditor General. This is a matter I will return during the afternoon.

There will be a second round after lunch.

I would say the Comptroller and Auditor General will have a bigger chapter the next time round.

I thank the witnesses for their attendance. I must run through many questions and I suggest a quick back and forth.

I presume Mr. Buckley feels there are not enough resources in the organisation to deal with what is going on. I presume resources is an issue. The competition for two grade 1 OPW valuer posts has concluded. When will they be filled?

Mr. Maurice Buckley

That I would have to check. I do not have that information to hand.

Can Mr. Buckley write back to us?

Mr. Maurice Buckley

Certainly.

Would any of Mr. Buckley's colleagues know? Who would know?

Mr. Martin Bourke

We have recently filled a number of posts at grade 1 and grade 2. What we have to do is look at the provisions now made in the Estimates for subhead A1 and what that will cover in the context of other demands, for instance, on the flood side, and, indeed, issues that are-----

That is fine. I am sorry, I have only a limited amount of time. The OPW has interviewed for these posts. The OPW has the funding for the posts because it has already interviewed.

Mr. Martin Bourke

We have already filled a number of posts.

Have these two grade 1 OPW valuer posts been filled? I understand they have not.

Mr. Martin Bourke

We have two existing grade 1 staff. We constantly review our staff.

Can the OPW write back in by next week and let me know if they have been filled, and if not, when they will be filled? That is all.

Mr. Martin Bourke

Yes.

I want to go through the chronology of what has happened here. As Mr. Buckley will be aware, Mr. Morgan wrote to us.

In March 2014, we had the submission by Mr. Morgan and a colleague in relation to the accountability board in the Department of Public Expenditure and Reform. On 19 June 2014, the OPW Chairman had a meeting with Mr. Morgan on the matter of the submission to the Department of Public Expenditure and Reform and five high-value cases were provided. In March 2015, the OPW surveyors made a submission that was distributed to the Committee of Public Accounts. On 25 May 2015, the Comptroller and Auditor General requested a response from the OPW to the Committee of Public Accounts inquiry. In July 2015, the OPW requested the surveyors who wrote this to directly investigate the previously identified five sample cases with a particular emphasis on certain areas. On 1 December, the OPW surveyors provided a detailed report on the same five cases for the OPW and that was brought forward.

The following is what I want to find out. In December last, these two individuals provided a detailed report on five cases of concern that they had been asked to investigate by the OPW and I want to know what has happened since. This report, of 1 December 2017, a copy of which I have to hand, is an extremely comprehensive report on five expenditure concerns. I refer to numerous occasions, I have the letters, on which Mr. Morgan wrote. On 8 March, he wrote to the Chairman asking where this was at. On 12 March, the Chairman's private secretary wrote back acknowledging the letter, and on 30 April, wrote back stating it was being looked at. On 8 May, Mr. Morgan wrote again to Mr. Buckley asking where this was at. On 7 June, he wrote again, stating he was concerned about the lack of information coming back. On 14 June, the OPW director of corporate services wrote back to Mr. Morgan stating basically there had been changes etc. I have read the letter, which does not really say much. On 2 July 2018, Mr. Morgan wrote to Mr. Buckley, as Chairman, again outlining his concerns and wondering why they had not been addressed, and stating he was willing to come in and speak. On 4 July, that was acknowledged. Then, on 2 August, Mr. Morgan wrote again, basically offering to assist and stating that the replies to date have been anodyne in nature and non-specific in their content. On 9 August, this was acknowledged and then, on 26 August, Mr. Morgan wrote again to the director of corporate services. There is the chronology, which I have read into the record, more or less.

I want to know, since 1 December 2017, after this report was published to OPW by two individuals one of whom has written to this committee, what Mr. Buckley has done about it. It has been the guts of a year. There are serious concerns raised in this report. To some of the members here on the committee, the letter that was written by Mr. Alan Morgan is one of the most extraordinary letters we have ever received. I want to know what Mr. Buckley has done.

Mr. Maurice Buckley

The dialogue with Mr. Morgan has been in train for a number of years. The first time these were mentioned was going back to 1999, well before 2014. As Deputy Kelly quite rightly points out - the Deputy's chronology is correct - the matters escalated in 2014 when they were formally raised with the Department of Public Expenditure and Reform as part of the review. At that stage, they were thoroughly investigated by the OPW, by my predecessor, Ms Clare McGrath. It was very thoroughly done. A good action, I think, was to involve the person, two members of staff, actually, at the time in the process. They are very experienced valuers. These are senior people. These are people who we would really respect and whose views we would take very seriously. I, personally, certainly would be concerned at the issues raised and want them addressed, and that was done in-depth during 2014-2015. Various conversations took place. Various reports and various interim feedback took place. As Deputy Kelly correctly states, in November-December 2017, a full report was issued. That report dealt with the same issues.

Mr. Maurice Buckley

On an initial evaluation, neither I nor my colleagues could see new issues raised and we felt that we had addressed the issues raised many times over. It is a very different organisation in 2017 and 2018 than what it was ten years previously.

The director of corporate services undertook to go through that report in forensic detail, and did so. It took some time. He pulled in expertise, as required-----

Mr. Maurice Buckley

-----and we replied. I should just explain these issues have been addressed for a long time. The Comptroller and Auditor General had been kept informed of the dialogue. A meeting was arranged in 2017. I think in July 2017, a meeting was facilitated by the OPW with the Comptroller and Auditor General and the two individuals concerned. We felt it was an ongoing process and very fully aired, and did not identify anything new. The November report was passed on to the Comptroller and Auditor General at the Comptroller and Auditor General's request in June of this year and that is where matters stand.

Let me provide an executive summary for those who are watching and colleagues. Essentially, the report that was done in November 2017 identified the five completed OPW property acquisitions to identify accountability vulnerabilities in the context of non-optimal outcomes. From that date until now, is there anything new to be concerned about in what happened in those five projects or anything that would result in a change in the manner in which the OPW does its business?

Mr. Maurice Buckley

Of course, I am concerned that a member of staff or a former member of staff should feel it necessary to raise these items again in the manner done with the Committee of Public Accounts. Of course, I am, as the Accounting Officer and as a leader of this body. I am not dismissing any points whatsoever. We will look at every aspect of any case or any other instance of misuse of public funds raised.

Is there anything in this document that concerns Mr. Buckley? If there is, I ask that he please tell us now. Mr. Buckley has not corresponded with him in any substantial way. By extension, I presume he feels there that is nothing to be concerned about.

Will Mr. Buckley say, once and for all, in respect of this report, that the OPW, and Mr. Buckley as chairman, has no concerns about any of these issues and that we will not be sitting here in a year's time with a report on what is in here from the Comptroller and Auditor General?

Mr. Maurice Buckley

I am concerned about all of the issues in the report-----

Why is Mr. Buckley not responding to him so?

Mr. Maurice Buckley

That is the point. I feel the issues have been aired and addressed and measures have been put in place to make sure that-----

That is fine.

Mr. Maurice Buckley

First of all, there are circumstances pertaining and where improvements in processes were necessary, that has been done-----

I am sorry-----

Mr. Maurice Buckley

Perhaps we should have kept in closer dialogue with the individuals concerned-----

-----I need the Chair's help. This is a riddle at this stage. We have this report. It went through a process-----

Deputy Kelly has the report. We do not.

I am sorry. I thought everyone had it. What I mean is that there is this report.

We asked for it this morning. I want to be clear.

I cannot guarantee it is the same version, but otherwise the committee can have it.

Is the report that Deputy Kelly has 2014 or 2017?

It is the 2017 one.

That is fine.

The committee is welcome to have it. I just thought that-----

No, I just want to clarify-----

I do not know if this is the full-----

I want to clarify it officially.

Have we got it?

Mr. Maurice Buckley

No. To be clear, in 2014, the same individual wrote to the Department of Public Expenditure and Reform as part of a review.

That is the submission.

Mr. Maurice Buckley

That document is with the committee from that time.

I understand that.

Mr. Maurice Buckley

I think it has been found and made available.

That is the submission but we sorted all of this out this morning. We want a copy of the report.

Mr. Maurice Buckley

That has not been provided. As I said earlier, I have no problem, in principle, providing it. It is with the Comptroller and Auditor General in the meantime.

That is no good to us.

Mr. Maurice Buckley

I appreciate that. The only issues I raise relate to commercial sensitivity and sensitivity in regard to the mention of other staff members. A process would need to be carried out, by the OPW or by this committee, to make sure the report was appropriately redacted.

We can help Mr. Buckley now. It can be sent to us in confidence. We can look at it here but we do not have to publish it. I want to be clear on that. The members get it but we do not publish every document we get. We got various documents from the Health Service Executive, HSE, that we chose to read internally and to not publish them or give them any parliamentary privilege. That option is available.

Mr. Maurice Buckley

With those assurances, I would be more than happy to share the report with the committee.

That is fine.

There is a timing issue. When a 100 page report comes in, somebody needs to go through it-----

We will not get through it-----

We will not get that done.

I do not mind. I would like to clarify. When are we going to get the report?

It will be before the day is out.

Mr. Maurice Buckley

We can arrange that.

We will discuss it the next day.

I will leave that. Can we stop the clock?

Mr. Maurice Buckley

I am told that it is 75 pages, before we state too often it is 100 pages. It is a large report.

It is a very large report. I have it here. I want to get back to the issue because this is turning into a bit of a riddle. We all know what happened with the Comptroller and Auditor General, this committee and the report that was done in 2014 and all of that. The OPW, subsequently, asked for this report to be done. Is that correct?

Mr. Maurice Buckley

That is correct.

That report was done in November 2017 by two individuals. One of those individuals is retired, at the moment, and the other is still working there. Is that correct?

Mr. Maurice Buckley

That is correct.

That report was then sent to the OPW. Following the OPW's request for it to be done in the first place, the report has since been sent to the Comptroller and Auditor General and he will do what he does best. I look forward to his report. I genuinely do. I want to know the following, however. There was a process in place and a request from the OPW to have this report done. The report comments seriously on five projects. How can Mr. Buckley come in here and not substantiate, in real terms, what has been done with this report? What has been done to guarantee to this committee that there was not a significant loss to taxpayers? What has been done to change processes in the OPW to ensure situations like this do not happen again? From what Mr. Buckley has said today, I have seen nothing that addresses those two issues.

Mr. Maurice Buckley

The issues were raised, as Deputy Alan Kelly said, in March 2014. We are now talking about it four and a half years later. It was not as if nothing was happening during those four and a half years. There was constant dialogue and multiple discussions with the individual involved and interim documents were reviewed on ad hoc basis before the formal submission came together. We were talking about matters that relate to a long time previously. Some are related to decentralisation, the purchase of the Thornton Hall site-----

That is all irrelevant.

Mr. Maurice Buckley

It is not irrelevant because these matters-----

It is irrelevant in respect of the response.

Mr. Maurice Buckley

That may be so, but these matters have been aired publicly and actions have been taken in public forums, initiated by public forms such as this committee. I also refer to the work of the Comptroller and Auditor General.

I disagree fundamentally with Mr. Buckley. Some of these matters have been aired.

Mr. Maurice Buckley

I accept that some of them have.

The issue of Thornton Hall has been aired quite a bit. We all know the taxpayer lost out massively. Some of the details of the others, however, have not been aired and certainly not with the knowledge in this report. This is down to a level of detail that has never been seen before. I am completely dissatisfied with the manner of the response being given here. I came in here to give Mr. Buckley a chance to respond. I have no confidence that the issues and the level of detail in this report have been addressed. I also have no confidence that the taxpayer has been protected and will be protected into the future as a consequence of the changes that have been made as a result of this. Equally, I have seen no correspondence to demonstrate that. I say this in advance. This report has gone to the Comptroller and Auditor General. I bet I will be proven right in saying that we will be discussing the issues in this report - I am not prejudicing anything that will happen - in a future report from the Comptroller and Auditor General. It would probably have been done this time around except that the issue of the new home for the HSE took up so much time and space. I expect the Comptroller and Auditor General will be doing the same thing for all of these cases as well. I also expect that will happen, dare I say it, with future cases as well. I am referring to the children's exploration station, the laboratory for the Department of Agriculture, the opera house in Limerick, the Revenue headquarters in Cork and a number of others as well on top of this. I am saying this today. Here is an opportunity in advance for Mr. Buckley to tell me what actions have been taken to ensure that lessons have been learned from this and there has been acknowledgement that mistakes were made.

Mr. Maurice Buckley

As I said to the Deputy, we have responded completely and openly with the individual concerned and with various public bodies, as we outlined, over the last four and half years about these historic issues. I agree some of them are public knowledge and some less so. It is hard to go through this without tackling each item individually. I do not think that would be fair because the committee does not have the information yet. I do not know how I can go through it. I will certainly address any questions the Comptroller and Auditor General might have-----

I was interrupted earlier. I have one last question I want to ask on Miesian Plaza and then I will come back to this. The change in the measurement protocol slipped in or fell in, or whatever phrase Mr. Buckley used earlier in an unfortunate choice of words that I will not hang him on. Is there any documentation that warned that the change in the measurement protocol was going to cause an increased rent and, as a consequence, care needed to be taken? Is there any internal documentation that shows that and, if so, why was it not dealt with? If there is documentation, will Mr. Buckley provide it to the committee?

Mr. Maurice Buckley

I have already said there are several instances where, internally, different members of staff involved in the process raised questions on this issue. There was also one case triggered externally by the Office of the Chief State Solicitor.

Was there a warning?

Mr. Maurice Buckley

Some of them are quite specific. In retrospect, there is no doubt at all. I said that openly. I am not trying to defend this. In retrospect, it is clear that this should have been picked up at the time. It was not. It should have been picked up at the final review of the lease.

Unfortunately, it was not, but it is being addressed now with the developer and will be followed through. It has to do with the timing, with the measurements and with the lack of experience at that stage anywhere in the market of the implications of this measurement change.

In regard to this documentation, with respect, I find Mr. Buckley's answers to be deeply concerning. As far as I am concerned, on the issues raised here, the lessons have not been learned to the level I would have expected. I cannot be guaranteed the internal changes have happened in the OPW. By extension, I do not have any confidence as a result of what I have seen in this documentation with regard to responding to the author. Despite the deep concerns the author expressed to the OPW, it has not responded. Second, I predict that the projects and the purchases outlined here will have to be looked at in the future by the Comptroller and Auditor General, just as the newly purchased headquarters of the HSE were looked at. The fact Mr. Buckley is not getting into the detail of this, and the fact he is not willing to go through the loss of money to the taxpayer to the level that is required, and to respond to the author, for me, is deeply worrying.

There will be a further opportunity to come back in the afternoon. Before I call Deputy Cullinane, it would be helpful to the Committee of Public Accounts and the public at large to see the documentation Mr. Buckley has just referred to from various people in the organisation on the various aspects of this issue. What we really want to know about is governance. Somebody at a more senior level must have decided either to disagree with it, or perhaps it was an uncomfortable truth they did not want to deal with at the time. They may have said, "If it goes one way or the other way, it is the toss of a coin, and if it works out at a higher cost, so be it. It is still good value for money", which Mr. Buckley seems to say the whole thing is anyway. They might have thought perhaps it was not a big deal if they got it wrong as they still were getting a great deal anyway. It would be helpful for us to see why the process was not followed through. At what level did somebody say he or she saw all of that and heard what was being said but that they were not going there? Does Mr. Buckley understand what I am asking?

Mr. Maurice Buckley

I do.

It would be helpful to you, as the new Chairman, to know about the blockages and why information does not always flow up the system. That is what people worry about in bureaucracies, where, the higher up you go, the information gets filtered. Maybe someone at a very senior level just decided to discount that. We do not know and it would be helpful to find out. Can you work on it and send on-----

Mr. Maurice Buckley

I certainly do not think it is the latter, namely, that the information was deliberately suppressed in any way, shape or form. We will put that together and send it in to you.

You can send that on next week. I call Deputy Cullinane.

I welcome Mr. Buckley and his staff. An awful lot of this has been made very complex, unnecessarily so, in my view. I just want to simplify and contextualise some of it, if I can. In terms of the documentation, we do not have the correspondence the Committee of Public Accounts received previously on what is before us. Just so I am clear, and the Chairman or the Comptroller and Auditor General might be able to clarify this, the Comptroller and Auditor General's special report deals with the Miesian Plaza and the failures in process that his office identified. That is fair enough and we will deal with them. The correspondence we have now got, which is PAC correspondence from a Mr. John Dowds and Mr. Alan Morgan, is from 2014, and there was a separate report at some point in 2017 that we will get. Certainly, the 2014 letter talks about multiple property transactions and then potential issues such as mistaken, superficial judgments by the surveyor, hidden but legitimate considerations, ignorance of the market by the negotiating body or person, poor negotiating skills, compromised negotiating positions and corrupt actions. We should say there is no evidence whatsoever of any corruption but that is what was said. Am I right in saying the concerns in the 2014 letter and the 2017 report were not in regard to the building that is subject to the Comptroller and Auditor General's report and it was a more general concern that these two individuals had? Is that correct?

Mr. Seamus McCarthy

That is my understanding.

Mr. Maurice Buckley

General concerns and the five specific cases mentioned. The individuals, who were at a senior level in the organisation, felt things could have been done better.

When Mr. Buckley says senior-----

Mr. Maurice Buckley

That is good; it is healthy. All OPW staff want things done very well, as we do.

It is only healthy if we learn lessons. Mr. Morgan was a managing valuer before he retired. Is that correct?

Mr. Maurice Buckley

A valuer, grade 1.

The issue is that a lot of the issues he raised in his 2014 letter are actually what transpired in 2017 and 2018 in respect of the subject matter of the Comptroller and Auditor General's report. Does that not concern Mr. Buckley?

Mr. Maurice Buckley

I do not believe they are the same issues.

Mr. Buckley does not believe they are the same issues. I am referring to the mistaken, superficial judgments by surveyors, hidden but legitimate considerations, ignorance of the market by the negotiating body or person, poor negotiating skills and compromised negotiating positions. Mr. Buckley does not feel any of those could be attributed to the subject of the special report.

Mr. Maurice Buckley

As we already discussed, we had expert negotiators involved in this deal. I think that, despite everything said, it stands up to scrutiny as being a very good property deal.

Let me unpick that, which is why we are here. Mr. Buckley has a job to do and we have a job to do, and the Comptroller and Auditor General has a job to do. I want to go back to some of the issues that were raised earlier because I was far from satisfied with Mr. Buckley's response. The first one is in regard to the reports which would have been submitted to the board when it was making a decision. Two alternative accommodation options were considered, namely, the former Central Bank premises on Dame Street and premises on St. Stephen's Green. In response to another Teachta, Mr. Buckley said those alternative options were presented to the board.

Mr. Maurice Buckley

That is my understanding, yes.

Was it Mr. Bourke or Mr. Buckley who stated that? I think it was Mr. Bourke, who was helping Mr. Buckley answer the question.

Mr. Martin Bourke

Yes. It was certainly before my time. I am looking at a submission to the board, which talks about Hawkins House, it speaks to the benefits of the Miesian building and of a rent review issue. There is then commentary on the marketplace-----

I will stop Mr. Bourke there. Although I do not know who gave him the information, Mr. Buckley said earlier there was consideration at board level of the two alternative sites. In what Mr. Bourke is reading out, there is no reference to St. Stephen's Green and no reference to the former Central Bank premises on Dame Street. I ask Mr. Buckley again: at what board meeting were the two alternative options discussed and in what context? Was documentation supplied to the board? Was it done in an oral fashion? Are there minutes of any meeting to show they were discussed?

Mr. Maurice Buckley

I have already explained the general context and the fact the previous Chairman visited one of those buildings in that context. To get the actual documentation, as Deputy Jonathan O'Brien asked, I will have to do a trawl of the meetings of the board at that time. It is two years ago but we can do that.

Visiting a building is not what I asked about. It is a very specific question. Section 6.12 of the Comptroller and Auditor General's report states "These [two alternative] options were noted in internal correspondence in August 2015 but were not formally documented in the submission to the Board in March 2016." They were not formally submitted to the board, and "formally" is the appropriate word here. What I want Mr. Buckley to do is come back to me with actual facts in regard to what and how these two alternative options were presented to the board. I would imagine the Office of the Comptroller and Auditor General asked for this information in the course of its examination and was not satisfied, which is why we have section 6.12.

Mr. Maurice Buckley

Yes, I will do that. I will find out what documentation is there.

This is part of the process failure. The primary role of the OPW is to procure office accommodation and then to allocate that accommodation. Is that correct?

Mr. Maurice Buckley

Correct.

How many staff has the OPW?

Mr. Maurice Buckley

In total, 1,700.

It has 1,700 staff yet it has to employ consultants to do carry out some of this role.

How is it possible that an organisation with 1,700 staff needs a consultant company to oversee the lease negotiations?

Mr. Maurice Buckley

Using best practice at all times and using independent advisers at all times improves the up-to-date knowledge available. We have expert staff, but it improves the up-to-date knowledge available. It gives a degree of transparency and a degree of control in the process

However, in terms of process-----

Mr. Maurice Buckley

One thing I would watch is that we do not overuse consultants, but-----

In terms of process, the OPW is allocated money which it spends by purchasing or renting sites and overseeing that process. It is important to have follow-through on the processes in place to protect the OPW, its staff and taxpayers' money being spent and also to allow the Comptroller and Auditor General do his job and for the Committee of Public Accounts to do our job.

I mentioned the alternative sites earlier. If a proper business case was formally presented for both of those, the Comptroller and Auditor General would have had that information and been able to make a better assessment as to whether the Miesian Plaza was the better option. We would be in a better position, but we are not in a position to do it. By not doing that, by not following due process, by not giving the board the information it needs, and by not having the business cases and the formal processes correct, the Comptroller and Auditor General could not do his job in making a proper determination. Does Mr. McCarthy believe that is fair?

Mr. Seamus McCarthy

I think that is correct.

That is the Comptroller and Auditor General saying that. Surely that is a fundamental failure in process. The OPW is the organisation responsible for ensuring there is compliance and no difficulties.

Mr. Maurice Buckley

I accept fully that the process should have been better documented and that the path and the different steps should have been more fully in place so that it would be easier to trace and easier to look back on. I have acknowledged that.

Mr. Maurice Buckley

There are recommendations in the Comptroller and Auditor General's report in that respect. There are actions we have taken in response and-----

Here is my concern. This comes up over and over again. We saw it with NAMA and different organisations. Sometimes I believe it is deliberate and intentional not to put these benchmarks in place because then organisations can do what they want to do or maybe it is easier for them. I believe it goes back to some of the correspondence provided in 2014. Mr. Bourke seems perplexed by my contribution. It is bizarre that the board would not have been given the information on the alternatives it should have been given. That is not some sort of minor oversight. It is fundamental to the Comptroller and Auditor General doing his job and for us to adjudicate as to whether we got value for money.

Mr. Maurice Buckley

The board of OPW comprises eight people who work together day in, day out. These alternative sites would have been thoroughly discussed and evaluated. The board members and all the expertise in that board would have been fully involved. I am confident of that. What we are talking about is a formal documentation of that process. I have said that I will check the records of the management board to see if documents were produced evaluating the two alternatives and if they were, I will make them available to the committee. We are talking about the documentation around the process. We are not talking about the evaluation itself. It is important to state that. That has not been called into question and I would not like it called into question. A thorough evaluation of alternatives did take place, but the Deputy is correct to say it was not documented in a way that makes it easy for the Comptroller and Auditor General and for the committee to follow.

If a thorough examination of the alternatives was carried out, I am sure the Comptroller and Auditor General would have reported that. He has not reported that a thorough examination was done. He said a lack of documentation was given.

Mr. Seamus McCarthy

It is more than just identifying the alternative office locations. There is the whole question of whether it is better to buy or to rent, and then the whole identification of the benefits, the performance parameters and so on.

And whether it is fit for purpose for staff numbers.

Mr. Seamus McCarthy

I am not looking for a perfect document that conforms to some sort of rigid standard. It is where the organisation encapsulates its thinking, assessment and expectation for these projects.

The requirement set out in the public spending code is there for a reason. On numerous occasions here, I have raised the importance of a business case for significant public expenditure. I am fully on board with the point the Deputy is making.

I accept that and I thank Mr. McCarthy. Those processes are in place to protect Mr. Buckley so that he does not have to appear before the committee to answer difficult questions, and then - I am not saying he is doing this - try to defend the indefensible. It is indefensible that the Comptroller and Auditor General feels the processes that should have been in place were not. In many ways, Mr. Buckley is obliged to do it. It also allows us and the Comptroller and Auditor General to do our jobs.

I refer to the lease and the difference between the lease terms negotiated and those agreed.

The Deputy has only a few moments left.

Mr. Buckley made an extraordinary statement earlier when he said that the mistake in the difference in measurements slipped into the lease. In fact, it was not a slip at all. People were aware of this. Section 6.21 of the Comptroller and Auditor General's report states:

In finalising the lease, the issue of the different measurement bases was considered. When reviewing the lease, the Chief State Solicitor’s Office (CSSO) requested OPW to confirm with its in-house valuer whether IPMS was the appropriate standard ... OPW then sought advice from one of its internal chartered surveyors...

Section 6.22 states:

The reason for not reducing the rent per m2 proportionately as a result of including the IPMS measurements in the lease is not clear.

My reading of this is that the Comptroller and Auditor General was not given a satisfactory answer by the OPW as to why that was not picked up and why that happened in the first place. Would that be-----

Mr. Seamus McCarthy

What I would say is that it was picked up. There was an issue here,-----

I should have said it was not acted upon.

Mr. Seamus McCarthy

----- but it was not acted upon.

It was picked up but not acted upon and the Comptroller and Auditor General was not given a credible reason.

Mr. Seamus McCarthy

I could not take it any further. I had no evidence of anything further beyond the fact that it was picked up.

How was it picked up and not acted upon with no credible reason given to the chief auditor of the State? How is that possible?

Mr. Maurice Buckley

The issue of the two different measurement standards arose during the year between the negotiation of the lease, which was at the tail end of 2015 and based on the internal net area standard current at the time, and the signing of the lease or the approval of the lease in January 2017, 14 months later. During that time the SCSI had brought in a new method based on IPMS 3 and had mandated its chartered members to use that from February 2015.

We know all that. I have one final question.

Mr. Maurice Buckley

It is critical to understanding how it happened.

We understand that; it is all in the documentation. The critical point is that it was picked up but not acted upon. When the Comptroller and Auditor General was doing his job examining this, he was not given a credible reason as to why it was not acted upon. Certainly if a credible reason was given, it is not in his report, which is unacceptable.

I have one final question and I will come back in on the second round. Mr. Bourke made an interesting observation earlier when he said that he was concerned about this in September 2017 when he took over his role and he sought an internal review in November 2017. I think he was just about to say that in May 2018 a first draft of that review was available. Is that correct?

Mr. Martin Bourke

That is right.

Why did it take from November to May for a first draft to appear?

Mr. Martin Bourke

There is a complexity in it. We had to retain somebody from outside. There was a process to go through there in terms of agreeing fees, etc. Then there is extensive documentation. I appreciate there is a failing in an amount of critical documentation, but volumes of files had to be trawled through.

Was that draft given to the Office of the Comptroller and Auditor General?

Mr. Martin Bourke

No, it was not because it was not finalised. It would be unfair on the people who were -----

Therefore, it is still not finalised.

Mr. Martin Bourke

It is still not finalised and-----

This is October.

Mr. Martin Bourke

----- as I was saying to the previous Deputy, we hope it will be finalised quickly.

In November 2017, Mr. Bourke sought an internal review but, in October 2018, there is still no final-----

Mr. Martin Bourke

If I recollect, the review started I think in January. After Christmas it started when we had retained the correct person to do it.

There is something fundamentally wrong in the OPW if Mr. Bourke can request an internal review in November 2017 and it does not start until early 2018.

He had a draft that he cannot give to anybody in May 2018 but we are in October now and we still do not have it. In April 2018, the Comptroller and Auditor General's office started looking into this and examining it. Is it a coincidence that his office began examining this in April 2018?

Mr. Seamus McCarthy

I think April 2018 was when we raised the specific issue about the-----

That was April and then a month later a draft of Mr. Bourke's report appears. Is that coincidental?

Mr. Martin Bourke

No. That is the timeline. In fact, the review and audit were running in parallel for quite a while, so both people were looking at the same documentation.

Mr. Maurice Buckley

If I may, my colleague is being responsible. He was appointed to the new role in September 2017. He saw that a major project was running through the office at Miesian Plaza with all the complexities that have been identified and took it upon himself to initiate a review so that we could understand the lesson to be learned.

I am going to make one final contribution because we had this previously with An Garda Síochána and Templemore. When issues come to anybody's attention that may be of relevance to the Comptroller and Auditor General's office, it should be informed, whether in draft form or otherwise. The OPW had a responsibility in this regard. If it had concerns and sought a report, it ought to have at least notified the Comptroller and Auditor General's office that an internal report had been requested, that it may take some time to do, and when and if that report is complete, it would be given to the office. Did that ever happen? Was Mr. McCarthy ever informed that an internal review was carried out?

Mr. Seamus McCarthy

No. I think it was only June of this year that we learned from the OPW that it was doing that review.

Would it be appropriate for the Comptroller and Auditor General's office to be informed?

Mr. Seamus McCarthy

Yes, we would welcome that kind of information and to be aware of examinations of that nature.

Why was the Comptroller and Auditor General's office not informed?

Mr. Martin Bourke

The purpose of the review was to inform me as to what was going on. People can comment a lot on one case or another, but I need to know the facts of the case. The purpose of the review was that someone would independently go through the documentation and the copious files, and there is no doubt that the initial draft in May, for instance, started indicating the measurement issue. That was the first time I became aware of that issue. Parallel to that, the Comptroller and Auditor General was proceeding with his inquiries.

I will pick up on that later.

The Deputy can pick up on that in the afternoon. I call on Deputy MacSharry.

The most recent speaker took 25 minutes, as opposed to ten.

I thank the witnesses for coming. My questioning is sometimes provocative.

The most recent speaker took 17 minutes.

The clock up there must be wrong.

I am going by my-----

The Chairman is eating in to my time.

Sometimes my questioning is provocative. It is nothing personal. We are all doing a job. I respect the witnesses have a job to do and I also have a job to do. Sometimes it might appear unnecessarily adversarial; please do not read anything into it.

The structure of the OPW is that there are three commissioners and Mr. Buckley is the chairman, and then there is a board beneath them comprising six more people. Is that the case?

Mr. Maurice Buckley

There is a board of eight, so five more.

In the Houses of the Oireachtas, we are used to phrases like assistant secretary, Secretary General and principal officer. To try and give us an analogy we might understand, how are people graded?

Mr. Maurice Buckley

The management board is at the grade of assistant secretary/director.

Are the three commissioners at Secretary General level? Is the chairman the equivalent of Secretary General?

Mr. Maurice Buckley

The chairman is the equivalent of Secretary General.

Is everyone else the equivalent of assistant secretary?

Mr. Martin Bourke

Yes, two.

There are eight in total?

Mr. Maurice Buckley

There is one other office in the organisation at the deputy secretary level.

What office is that?

Mr. John McMahon

State architect.

Is that Mr. McMahon?

Mr. John McMahon

No. He is not here.

Mr. Buckley mentioned that he is not a property expert but his colleagues are. What property qualifications have any of the eight board members?

Mr. Maurice Buckley

I have to check the qualifications.

Is the answer "None"?

Mr. Maurice Buckley

No. They are the most experienced people in property in the country.

I did not ask about experience.

Mr. Maurice Buckley

I will have to check qualifications.

There may be people who challenge that claim about their being the most experienced in the country. Has Mr. Buckley a property qualification?

Mr. Maurice Buckley

I do not.

Mr. Martin Bourke

I studied property elements as part of a master's in business.

Mr. Bourke did a master's in business and there was a module on property.

Mr. Martin Bourke

I have also studied with the SCSI as well.

What is the SCSI?

Mr. Martin Bourke

The Society of Chartered Surveyors Ireland. We brought in-----

Mr. Bourke, therefore, has no qualifications specific to property or property management.

Mr. Martin Bourke

Not specific to property, but in business I do.

Of course. All the witnesses have qualifications in their own fields. This is not personal. I am trying to get a picture. Of the assistant secretaries, is there anybody with a property qualification?

Mr. Maurice Buckley

I am not sure what the Deputy means by a "property qualification".

A property qualification would typically mean valuer, surveyor, auctioneer, member of the Irish Auctioneers and Valuers Institute, IAVI, member of the chartered institute of surveyors in England, member of the SCSI. Has anybody on the board a qualification of that kind?

Mr. Maurice Buckley

The Deputy is focusing on the one element of surveying and valuing.

It is the one element that is critical to the point we are discussing today. That is property management, sales, procurement, renting, letting, valuations and measuring.

Mr. Maurice Buckley

We have an office with any number of architects-----

I am talking about at the senior level.

Mr. Maurice Buckley

I am trying to answer the Deputy's question.

There is eight people at the senior level, as we established. Do any of those eight have those qualifications?

Mr. Maurice Buckley

The OPW has any number of architects, engineers and different, relevant-----

Mr. Buckley is misunderstanding me again. I am talking about the eight people at assistant secretary level, apart from the State architect's office, but the people who are on the management board to which Mr. Buckley referred.

Mr. Maurice Buckley

If the Deputy asking me specifically about the qualification of valuer, the answer is "No".

I said property-related.

Mr. Maurice Buckley

I would imagine the State architect would feel that-----

I specifically excluded the State architect. I am sure he is the man to design the building. He is probably not the man to value, or measure, or to determine what comparisons are best to be judged against. I am talking about the rest of the board of management. Has anybody got a qualification?

Mr. Maurice Buckley

The Deputy is talking about a chartered surveyor qualification. No member of the management board is a chartered surveyor.

There are no property qualifications at the level of management in the OPW.

Mr. Maurice Buckley

At the level of the management board.

Exactly, and that is an important point.

Mr. Maurice Buckley

That is eight people in an organisation of 1,700 people.

I understand. There are 1,700 people involved in property and we know that the eight at the top have no property qualifications.

Last year, the OPW advertised for a head of planning and estate management. Was that post filled?

Mr. Maurice Buckley

It was. That was the famous Mr. Bourke, beside me on my left.

Mr. Bourke got that post. Where did he come from?

Mr. Martin Bourke

I fulfilled a previous role in the OPW. Prior to that, I was deputy director in the national procurement service. Prior to that-----

What did Mr. Bourke do in the OPW previously?

Mr. Martin Bourke

I was in a number of roles. I was involved in procurement and project management on the building side.

On the building side?

Mr. Martin Bourke

Yes, capital construction projects.

How long was Mr. Bourke doing that?

Mr. Martin Bourke

Two and a half or three years.

What did Mr. Bourke do in the Public Appointments Service?

Mr. Martin Bourke

I was director of corporate services.

What did that involve?

Mr. Martin Bourke

Finance, HR, senior management recruitment and that sort of thing.

Would that have been open for anyone to apply, under the new rules, external as well as internal?

Mr. Martin Bourke

Yes. It was international.

I do not doubt Mr. Bourke's credentials. He got through that process and is the head of planning and estate management but he has no property management qualification, as we established earlier. Is that correct?

Mr. Martin Bourke

Yes, the job has a wide remit.

I have no doubt about that. Mr. Bourke might be doing the job better than anybody could possibly do it. I am establishing that he was recruited to do this job and he does not have specific qualifications. I am pointing that out as a fact.

Mr. Martin Bourke

To be clear on that point, I had specific qualifications. I had all the qualifications required for the job. That was not set by me.

Who did the job specification?

Mr. Maurice Buckley

I did.

What expertise has Mr. Buckley in setting a job specification for a State management position?

Mr. Maurice Buckley

I have expertise in managing the organisation so I pulled in the expertise-----

Would Mr. Buckley have thought, if he was looking for a head of estate management and property management-----

Mr. Maurice Buckley

Could I finish my answer?

-----and valuing that he might like to get somebody who was a management valuer elsewhere in the private sector or the public sector of another country?

Mr. Maurice Buckley

It is good the Deputy has raised this example. As part of the process, I went through the CVs of more than 50 applicants, some from the public sector but most from the private sector.

Mr. Maurice Buckley

Some were senior people in large well-known organisations in the private sector.

And Mr. Buckley decided against them.

Mr. Maurice Buckley

Hold on. Some had chartered surveyor qualifications but an awful lot did not.

Mr. Maurice Buckley

The property sector is different to architecture or engineering. There is not one simple clear black and white qualification that means one can be involved in property without-----

Mr. Maurice Buckley

There are many relevant qualifications.

This is according to the specifications Mr. Buckley himself wrote, as a person self-proclaimed not to have an expertise in the area. That is what Mr. Buckley said earlier. We also established he does not have a qualification. I want to move on from this. The message is-----

Mr. Maurice Buckley

I have just recruited an accountant without being an accountant.

The message is we have eight people in charge, none whom has a property qualification.

Mr. Maurice Buckley

None of whom is a chartered surveyor.

None of whom has a property qualification. They are not valuers either . Are any of them members of the IAVI?

Mr. Maurice Buckley

I do not believe so.

Would any qualify for a licence under the Property Services Regulatory Authority, PRSA, criteria if the OPW were to apply for one?

Mr. Maurice Buckley

No, but that is not the job they are doing.

Exactly, because that is what we do in Ireland. We set regulatory standards for everybody else except the people at the top. Mr. Buckley understands the point I am making. I agree he may have a team with access to the largest payable rent roll in the country, and who have access to the most square footage, at 800,000 sq.m or 900,000 sq. m, for civil servants, but we have chosen not to make it an essential prerequisite for officials to have qualifications. The point is made and I want to move on.

The difference between the international property measurement standard, IPMS 3, and net lettable area, which Mr. Buckley refers to as net internal area, is not rocket science. It would have taken basic common sense and not a degree to know that the OPW or its agents negotiated a lease based on net lettable area. That is measurement to the walls, which does not include service cores such as elevators and stairs, or pillars.

Mr. Maurice Buckley

Correct.

Crudely, IPMS3 does not include service cores but does include the pillars and is measured to the window. This accounts for the 3% or 4%. The OPW negotiates a price, directly or through its agents, with the owner or landlord based on net lettable area, effectively divided by the number of square feet, to come up with a per square foot area, and then multiplies this by the bigger area, which is IPMS3, thus giving a higher rent. Is this correct? Is that what happened?

Mr. Maurice Buckley

I have explained that three measurements are involved. The negotiation was done on the indicative area provided by the landlord at the time based on the drawings.

Yes, but then typically there is a joint measurement. This was done by Hollis. Is this correct?

Mr. Maurice Buckley

Yes. It was done in December 2017.

Is that the basis of what the OPW agreed to pay? Did it agree to pay based on the joint measurement? That is typically what happens.

Mr. Maurice Buckley

That is the particular point in question. There is a measurement-----

It is not in question. The OPW signed a lease. Did Mr. Buckley sign the lease? Is it the chairman who does so?

Mr. Maurice Buckley

The lease is approved by the board of commissioners.

Yes, but who signs it?

Mr. Maurice Buckley

There is a sealing process. I do not think I signed that particular lease.

Mr. Buckley is not sure whether it was him. Is it normally-----

Mr. Maurice Buckley

There is a legal sealing process.

I appreciate that but who signs it on behalf of the people?

Mr. Maurice Buckley

If I could just answer. The board of commissioners, which is the three of us, John McMahon, John Sydenham and myself, met and approved the lease in January 2017. Then there was a legal technical process-----

A legal technical process, yes I-----

Mr. Maurice Buckley

-----in sealing the document. That took place in April. I do not have to hand exactly who signed it.

Mr. Buckley does not know whether it was he who signed it.

Mr. Maurice Buckley

I can check in five minutes.

That would be useful. I am interested in knowing whether officials sign documents without reading them. This was not just, as Mr. Buckley said in his opening statement, one of the biggest lease deals ever done by the OPW. It was probably the biggest in the given year in all of Ireland. It is worth reading something before it is signed. I would not have the expertise of the big valuer firms but I know the difference between the two measurements and I know how they are done. Someone is responsible for this mistake. Some individual needed to have responsibility for making sure this was right. We have seen documentary evidence to prove to us this was advised from lower down to the top and was not acted on. What disciplinary process will follow?

Mr. Maurice Buckley

I accept the Deputy's point fully on responsibility at all steps in the process. I accept an element of responsibility myself in this because the Deputy is right. I chaired a meeting of the board of commissioners where we had a lease document and I asked questions so I could be satisfied it had been checked and was correct. In retrospect, I wish I had asked more questions and-----

Who advised Mr. Buckley on this? Surely he knows whether it was the responsibility of John, Mary or whoever to advise him but that person did not. He should ring HR, get the person up there and start a disciplinary process immediately.

Mr. Maurice Buckley

Unfortunately it is not as simple as one person. We are speaking about a large lease negotiated over one year. There were quite a few people involved.

Here we are again. This is what we consistently see here. It is the culture of systemic failure with no individual responsible. We are talking about €10 million. So far it has cost us €17 million because of the delay, and I appreciate Mr. Buckley is saying the OPW had to do the fit-out, and then there will be a payment of €344,000 per year after that. So far, nobody is responsible but we have established that nobody at the top is qualified in terms of academic qualifications.

Mr. Buckley said net lettable area and IPMS3 is a complex issue but it is not. It is basic banana maths except we are dealing with millions of euro of the public's money. A five year old with 20 cent in a sweet shop would not make the mistakes we are making as a nation with millions of euro. There is nothing specialist about the maths 101 mistake that was made in this deal, which cost people a fortune.

We can only judge what is provided to us in writing. We have it in writing that the OPW was told this in February 2017. With the best of respect to Mr. Burke and the experience he has in the OPW, the entire assistant secretary level in the OPW has no property qualification. I am the only licensed property professional in the room and I am on the Committee of Public Accounts. I have my licence from the PSRA. I am a member of the Institute of Professional Auctioneers and Valuers, IPAV. None of the witnesses is but they have significant experience, more experience than anybody else here in property. One thing is certain, if the person who made banana maths mistake that cost €1 million was working for Jones Lang LaSalle, he or she would not have made it to the end of that week. That person would be gone. People would be identified. As is the norm here, we take refuge in words such as "culture", "systemic failure" and "review". Deputy Connolly ascertained that there was internal review. An external reviewer has been brought in who will get a brief from the OPW and who will be able to give it some credibility through the fact there will be an outcome that states the OPW has new processes and procedures in place. Mr. Buckley mentioned this. What new processes and procedures have been put in place to prevent this happening again?

Mr. Maurice Buckley

There is a whole range. We have-----

I do not want to hear the whole range. Will Mr. Buckley give us a breakdown? Can it be emailed to us today? I am sure somebody in the OPW has it.

Mr. Maurice Buckley

Deputy MacSharry can refer to the report of the Comptroller and Auditor General. It is there in my response to recommendation 1.1.

No, I want to see what are the internal documents. If it is down the field where all of these professionals or somebody made a mistake, who made the mistake? What procedure now exists in the OPW to deal with the difference between IPMS 3 and net lettable area being X so it will not sign leases unless all of these things are calibrated.

Mr. Maurice Buckley

Those procedures are in place.

Mr. Maurice Buckley

They are listed.

Can we look forward as State and as a Committee of Public Accounts to a disciplinary process that realises tangible sanction against an individual or individuals responsible for costing the people money because of a basic maths mistake, which is not as complex as Mr. Buckley has outlined?

Mr. Maurice Buckley

I spent 30 years of my career managing in the private sector and the public sector and now I am managing in the Civil Service. I have never shirked from disciplinary measures when necessary. I have had to release umpteen people from their work at various times for various reasons.

I would say that was in the private sector somehow because I have never seen that happen in 17 years in the Oireachtas.

Mr. Maurice Buckley

On another day I will explain it to the Deputy. Yes, it was in the private sector but also in the public sector.

Can we look forward here to-----

Mr. Maurice Buckley

In this particular case, my colleagues and I looked at the circumstances involved and they did not merit disciplinary action.

I know that is frustrating for the Deputy but they do not merit individual disciplinary action, for the reasons I have explained.

How do we know that?

Is Mr. Buckley saying that this does not warrant disciplinary action? Is that the case?

Mr. Maurice Buckley

Yes.

This is what is wrong and I hope the media are picking up on this, although I acknowledge there are many other stories today with tribunal reports and everything. Mr. Buckley, as the head of the OPW, is telling me that this basic mistake does not warrant disciplinary action. That is shocking. I can tell Mr. Buckley if that was still his attitude and he was still in the private sector, he would be gone out of business.

Did the experts that the OPW secured to help with the procurement of the Miesian Plaza come to the organisation with a suggestion for a building that might work for it, or did the OPW go to them saying that this is a building it was interested in and ask them to negotiate on its behalf?

Mr. Maurice Buckley

I am not sure.

Does anybody know?

Mr. Maurice Buckley

Do any of my colleagues know?

Does anybody know?

Mr. John Sydenham

I can update the Deputy on that. The normal way we would do it-----

I am only interested in this specific deal, not the normal way.

Mr. John Sydenham

Specifically on this one, we would identify a building that is coming on the market, then we would engage the appropriate expertise.

Who identified this one?

Mr. John Sydenham

Who identified the building or the consultants?

Who identified the building?

Mr. John Sydenham

It was brought to the attention of our property people who have responsibility for-----

Who brought it to their attention? Did somebody at board level see on daft.ie that Larry Goodman had a building to rent that looked good and say, "Let us inquire about that"? Did the board asks its valuers at a lower level to look for a 120,000 sq ft building and see what they could procure from the market. Does it flow inwards and upwards like that, or does it come in from the top, and a deal is retro-engineered from the ground up?

Mr. John Sydenham

It is more akin to the Deputy's former scenario which is that there are various contacts. Our valuers will be aware what is happening in the market. Our property specialists monitor the market to see what is under development and consideration.

At what level is that?

Mr. John Sydenham

There would be various levels, including assistant principal on the administrative side.

I am interested in how this deal came about.

Mr. John Sydenham

It would have been brought to the attention of a specific individual who picked up that this was being developed, the identity of whom I am not aware. There is a constant monitoring of the market to see what is coming in the short, medium and long term.

Is the answer that OPW does not know?

Mr. John Sydenham

It is not that we do not know; it is that this would have come to the attention of an individual. If the Deputy is asking me whose attention it came to originally, I cannot say for definite at the moment. The normal course is -----

No, Mr. Sydenham must see-----

Mr. John Sydenham

Please bear with me. The normal course is given the scale of what we do and the scale of our operations, we are constantly looking at who is planning to develop-----

I get that, and I do not want to be disrespectful. I am sorry.

Mr. John Sydenham

Go ahead.

This is the biggest deal. I want to know did it come from the board down or did it come from the ground up?

Mr. John Sydenham

It came from the ground up.

Was that valuers?

Mr. John Sydenham

That is normal. It could come from either. In this instance, I am reasonably sure it came from our property section.

It came from the OPW property section. Was TWM engaged to advise?

Mr. John Sydenham

Correct.

Was that after OPW had selected this property, or did they play a role in selecting the property for OPW?

Mr. John Sydenham

As mentioned earlier, a number of options were looked at. Two other buildings were assessed as being candidate buildings.

Were they assessed internally?

Mr. John Sydenham

Yes.

I am only talking about TWM only now.

Mr. John Sydenham

They were brought on board to deal specifically with-----

Was it to deal with that one building?

Mr. John Sydenham

To deal with that one building.

Is there a property services agreement with them in line with the regulatory obligations?

Mr. John Sydenham

I cannot say for definite.

Can anybody tell me that?

Mr. Maurice Buckley

Not offhand.

Can we check it there is a property services agreement------

The witnesses will be able to find that out over lunch and tell us in the afternoon.

I will need to know then if there is a property services agreement signed with TWM in respect of their work on behalf of OPW relating to that building.

I am going to bring in Deputy Murphy in now.

I am just winding up. Under their own professional obligations, TWM has to get OPW to sign such an agreement and I am interested in getting a copy of that agreement for the committee. Can the witnesses ascertain if one exists at lunch time? If so, can we see it.? Before the answer is given to us that many witnesses try to give about commercial sensitivities, OPW can redact their fees. We are interested in everything else beyond that. I have more questions.

The Deputy will come back after lunch. I call Deputy Murphy. When she concludes, we will break for lunch.

I want to pick up on the issue of this building and others being brought to the attention of OPW. Are buildings of this magnitude for sale brought to the attention of OPW or is OPW typically constrained in respect of purchasing? Was that considered as part of the business case?

Mr. Maurice Buckley

There are always three options for consideration: lease, buy or build. We track the market at all times in those three respects.

For example, we are building on sites that we purchased or owned several developments that are intended for Government accommodation. There is one in Leeson Lane, one in Beggars' Bush-----

Why would OPW have not have considered the purchase or build option as the primary option, given that the Department of Health will still be here in 25 years? There is nothing transient about it.

Mr. Maurice Buckley

We would have considered the purchase option at the time. It is a combination of what is available on the market. At that time in Dublin - it is still is the case - most office buildings being built are pre-let. One would need to start with the developer almost before the developer starts the project. At the time, no such opportunity seemed to be presenting itself.

Even if it had, it is always a balance of what available funding is there. It is a difficult debate-----

What is the constraint on the OPW with respect to that funding? Does it go to the Department or is its funding finite in a particular year and decisions have to be made on that basis? Is it just a matter of being lucky as to the year one?

Mr. Maurice Buckley

We have an allocated Vote, as explained earlier, which deals with smaller projects. When something of this scale emerges, we go to the Departments of Finance and the Public Expenditure and Reform and seek the finance. If we felt it was prudent to purchase a building, we would see whether the finance was available to do so.

Did OPW do so with this project?

Mr. Maurice Buckley

In this particular instance, there was not a suitable object on the market to purchase at that time so the issue did not arise.

Typically, if one is looking for tenders, one looks for three. There are three buildings here in play. There was the former Central Bank, about which we are told that there are serious potential costs for full refurbishment. The second one is on St. Stephen's Green where a tenant was seeking a substantial contribution to recoup its fit-out costs. There were impediments with the other two options. In fact, therefore, only one building was seriously in play. Would that be fair to say?

Mr. Maurice Buckley

It is probably fair to say that one building outshone the other options available at the time, if I may put it that way.

There was no choice.

Mr. Maurice Buckley

The Central Bank building, for example, was in serious contention. It is an old building, however, and there were a lot of structural and technical issues and it was considered not to be a good choice. It is not that one could say in advance that there is only one option, but, as the Deputy rightly pointed out, there were not many options available at the time. Five or ten years earlier in the middle of the downturn, there would have been options aplenty to review and evaluate. At that time, there were three reasonable and credible options, but one clearly emerged as the preference among them.

It is not just a question then of renting this building. There are other issues, including a full repairing and insuring lease.

Mr. Maurice Buckley

Yes.

According to paragraph 6.31, the CSSO advised the OPW that the arrangement regarding relation to the maintenance to be carried out by the landlord was highly unusual and that the OPW would still retain responsibility for repairs and maintenance, even though it would be dependent on the landlord to carry out some of the work. The CSSO further pointed out that issues could arise where the landlord sold the premises, if the repairs and maintenance were not carried out satisfactorily, or if the landlord went into receivership or liquidation.

It is then stated that there is a side agreement in addition to the lease. Can Mr. Buckley decipher that side agreement? My understanding is that the OPW also has maintenance obligations. The organisation was advised of a potential problem with the landlord carrying out the work. What additional costs does the side agreement relating to this building entail?

Mr. Maurice Buckley

It is complex. It is to do with the maintenance and the split the Deputy has referred to. I do not have the exact breakdown. I do not know if any of my colleagues are in a position to respond.

Mr. Martin Bourke

I can help on that. The Deputy is quite right. The Chief State Solicitor's Office pointed out that despite the fact that we have full repair and maintenance obligations in respect of the building, an agreement was entered into whereby the landlord would carry out certain work. That is not unusual at all. I will outline the first reason it was deemed appropriate that the landlord would do it and there was no real need for an agreement.

I ask Mr. Bourke to put it briefly.

Mr. Martin Bourke

One can take the example of the cleaning of the outside of the building. The landlord has the equipment to do that on the roof. Rather than bring somebody else in, the most logical thing to do is get the landlord to do it. The landlord would have to produce an invoice just as anybody else would, so there is a complete governance-----

How much does this side agreement cost? Do we have that information? Are those costs factored in?

Mr. Maurice Buckley

They are factored into the maintenance costs.

Mr. Maurice Buckley

However, if the landlord does not do it, another window cleaner does and the invoice is presented. If it is a valid invoice, they get paid; if it is not, they do not.

Essentially the OPW gets the building in this condition, it carries out the refurbishment to suit the people who are going to occupy it and then carries out the maintenance. The OPW has paid the rent for the duration of the lease and it maintains the building for that time. The landlord gets the building back in pristine condition to renew a lease over whatever period. Is that what we are talking about?

Mr. Maurice Buckley

That is correct.

That reinforces the point about purchase as opposed to rent, but I will not say anything further on that. During the process of negotiation of the lease, was the floor space different? I ask for my own understanding. Was the floor space then different from what it was when the lease was finalised?

Mr. Maurice Buckley

Yes. I will be forever grateful to the Deputy, because I have been trying to get that figure in since the beginning of the session. In paragraph 6.15, the initial indicative area on which the ease was negotiated is listed as 13,293 sq. m of office space and 305 sq. m of storage. At that time, when multiplied by the figure agreed, that equalled an anticipated rent of €9,267,000.

What was it afterwards?

Mr. Maurice Buckley

When the measurement was done in December 2016 on the same basis of the net internal area, the result was 13,817 sq. m. This is outlined in paragraph 6.18. As the Deputy will see, there is quite a difference there, some 500 sq. m.

There is quite a difference there. The OPW negotiated something.

Mr. Maurice Buckley

Yes.

When OPW officials agree to something like this, they draw up a lease agreement, or legal people do it.

Mr. Maurice Buckley

We seek funding. We went to the Department of Public Expenditure and Reform for funding on the basis of that indicative figure.

Did the witnesses not notice the difference between the numbers?

Mr. Maurice Buckley

Of course we did. There is always a difference in those figures. That is quite a sizeable difference, amounting to 3.9%, but there is always a difference. When a developer is marketing a building, he lists a-----

I cannot get my head around one aspect of this. According to paragraph 6.15, the OPW agreed 13,293 sq. m of office space. The agency negotiated and signed off on that. Who draws up the lease in these cases? Is it the people who are leasing it, the Chief State Solicitor or the OPW's own solicitor?

Mr. Maurice Buckley

The developer's agents usually draw up the first draft of the lease. It then swings back and forth between the legal teams on both sides.

The OPW knew what the figures were.

Mr. Maurice Buckley

No.

Well, its agents knew the floor space was 13,293 sq. m when they negotiated it.

Mr. Maurice Buckley

Yes. That is why it is called the "indicative area". We knew it was in the ballpark of 13, 293 sq. m and we had a ballpark estimate of the money involved.

That is what the OPW agreed in negotiations.

Mr. Maurice Buckley

That is correct.

Mr. Martin Bourke

That was subject to remeasurement. Our valuers and property professionals will attest that measurement is one of the biggest issues in every deal on a lease. There is always a clause providing that the agreement is subject to remeasurement. Both sides of the table know that. It is a complicated issue in the profession but it is standard practice.

Mr. Maurice Buckley

I thank Mr. Bourke. I should have made that clearer.

It certainly was not clear to me. I could not figure out how one figure could be so substantially different from the other.

Mr. Maurice Buckley

There is a third measurement. To show how confusing it is, the measurement was made in December 2017. The lease negotiation was well advanced, the lawyers had been all over it and we still did not have an accurate measurement. Only when the building was fully ready, just before the lease is finalised, can an accurate measurement be made.

When the OPW was negotiating the lease, were the measurement criteria different, or were they the same as when the lease was drafted?

Mr. Maurice Buckley

This is the point. At the time it was negotiated, the lease was clearly based on net internal area in our opinion. Due to the SCSI guidelines moving to IPMS 3, by the time we closed the lease it was clearly based on IPMS 3. That much was understood and clear. What was not clear was the agreement to readjust the rent so that the total sum remained the same. That is where the issue we discussed this morning arose.

Is that provided for anywhere in the negotiated lease or the paperwork or was it just agreed with a handshake?

Mr. Maurice Buckley

As I have pointed out, we are in dialogue with the developer to rectify this point. As the documentation drawn up along the way is part of that dialogue negotiation, I should not get into the detail of it in a public forum.

Do the witnesses have documentation?

Mr. Maurice Buckley

Yes.

There is documentation to support that the expectation was subject to the remeasurement. The amount would not change.

Mr. Maurice Buckley

Yes.

Very well. The witnesses said this is a good deal overall. We are all aware of what Hawkins House looks like, what an awful building it is and the opportunity for redevelopment of that whole area. Some of it has started. However paragraph 6.35 refers to the delay in getting into the building, which added to the costs. The OPW disputed the quantum of the cost, given the refit and the other things that happened. Paragraph 6.35 shows that costs were involved in staying in Hawkins House. Was that accounted for in the amount the witnesses mentioned earlier? One cannot pick one and not pick the other.

Mr. Maurice Buckley

I know. We picked the higher cost. The higher cost is the Miesian Plaza building. One could say it was not costing anything to keep the civil servants in Hawkins House apart from the small maintenance costs, but there was an opportunity cost. The whole point was to take advantage of the new building and the new work environment. We took the higher cost. The Comptroller and Auditor General will agree we have not argued that the alternative had no rent associated with it.

What was the monetary cost? Costs of €331,000 were incurred between July 2017 and May 2018.

Mr. Maurice Buckley

Yes

That was the period between July 2017 and May 2018.

Mr. Maurice Buckley

Yes.

Mr. Seamus McCarthy

That is just ongoing maintenance costs. There were other costs.

What were the other costs?

Mr. Seamus McCarthy

We were unable to identify what those were. We knew that there were classes of costs. In addition, the Department of Health has stated that considerable work was needed to maintain the telephone system in Hawkins House. ICT capacity was also severely limited. It had ongoing additional expense as opposed to working with new telephone and ICT systems.

Was anything purchased that could be reused or was it just ongoing maintenance or upgrades?

Mr. Maurice Buckley

The Department of Health at the time was making a determined effort to avoid any purchases. That is the point about the telephone system. The Department tried to keep the telephone system going rather than spending too much money on it knowing that it would be moving to the new premises.

Mr. Seamus McCarthy

With regard to DCYA, there was an extension of its rental, but obviously it was getting something for that. It had the occupancy of the premises. It would not be fair to regard that as nugatory or ineffective because it got something. The opportunity cost was that there was a good building somewhere else that was not being used. That is where the loss was.

We will take a break for an hour. There are three issues to be dealt with. During the lunch break, it might be possible for somebody in the office to get the name of who signed the lease. Second, Deputy MacSharry asked about a service level agreement. Perhaps Mr. Buckley could get that even if he have to redact some financial details.

Mr. Maurice Buckley

The property services agreement.

That is the lease agreement, but Deputy MacSharry mentioned the name of the other company that was working with the OPW. The third matter is paragraph 6.12 with regard to the other options the OPW examined. It says, referring to the Central Bank and St. Stephen's Green, that these options were noted in internal correspondence in August 2015 but were not formally documented in the submission to the board in March 2016. Can Mr. Buckley get somebody to email some of that so we can see what level of assessment was carried out on that?

Mr. Maurice Buckley

I will not be able to do that over lunch, as it will involve trawling back through the management records of two years ago.

Okay, but I am formally asking Mr. Buckley to send it to us as soon as practicable.

Are we getting a report on all of this?

The 2017 report?

Mr. Maurice Buckley

There is a flurry of activity behind me. I do not know where we are with that.

Are we getting the report? The Chairman mentioned four issues. There is a problem with correspondence and I understand that.

Is the report coming to us?

Mr. Mick Long

The committee will get the report.

Is it the 2014 or 2017 report?

Mr. Mick Long

It has been sent twice this morning.

Then the secretariat will have it so we can circulate it.

That is great if it is there.

Okay. We will suspend the sitting for an hour.

Sitting suspended at 2.15 p.m. and resumed at 3.20 p.m.

As we are resuming in public session, I remind everyone to please turn off their mobile phones. The public is being very attentive to the proceedings of this committee this morning. My constituency office received several phone calls from people saying that they could not follow all of the debate because some people in this room are clicking their pens or affecting the microphones in some way. Those who are listening and watching attentively have not been able to hear the audio properly because individuals in this room are not aware of this. The phones calls to which I refer show that people are watching everything. Some of us are clicking our pens too loudly. I ask that people refrain from doing so in future.

Mr. Maurice Buckley

They can hear me grinding my teeth.

Exactly.

I wish to clarify the position regarding one item of correspondence we discussed earlier. There was confusion this morning about whether we had received the documentation for 2017. It was received during the week. The request relating to it was sent from the Committee of Public Accounts email account but the response came back to a different email address and it was not picked up. We did not receive the 2014 report originally - probably due to the size of the document or some other technical issue - but we have it now. We have everything we need and copies have been made for members. I must inform members that the document we received is not for publication. We can discuss it at a subsequent meeting or decide whether to publish it all or to publish a redacted version. As of now, it is a confidential document for members only. It is not for publication.

Mr. Maurice Buckley

Before we start, may I correct the record slightly from this morning? We were talking about the job description or job profile for the head of planning and estate management. I contributed loosely to outlining the job specification. The actual specification was written by the Top Level Appointments Committee, the Public Appointments Service and our HR department. It goes through all of that process. I am sure, however, that was understood.

That is fine. I am sure Mr. Buckley did not do it from scratch. Deputy Farrell has just texted me and has forfeited his slot. We will start with Deputy Connolly and then move to Deputy O'Brien.

I am actually under pressure because of the storm and the situation in Galway. I have a few practical queries. During this morning's discussion reference was made to the Galway building but I am a little confused about that. To which building in Galway was Mr. Bourke referring?

Mr. Martin Bourke

It is known as the Revenue Commissioner's building. I will find out for definite for the Deputy.

That is okay. The committee has already agreed to obtain a list showing a chronology of what happened regarding the extra rent being paid.

Mr. Maurice Buckley

We said it is under investigation. We will try to put that together. That is what the investigation is about.

Will Mr. Buckley clarify who is investigating?

Mr. Maurice Buckley

Internally. We are looking at it internally. It was-----

When did the investigation start?

Mr. Maurice Buckley

When the Comptroller and Auditor General published this in the chapter of the report.

I ask the Chairman that we come back to this. There is an internal review being carried out. When did it start? When will it be completed? Who is doing it? Is that clear? I do this through the Chair.

Mr. Maurice Buckley

Yes.

Mr. Seamus McCarthy

For information purposes, this is one of the five cases covered in the report.

I have not read the report. This is why it is difficult.

Mr. Maurice Buckley

I appreciate that.

Our guests will come back to the committee on that issue.

Mr. Maurice Buckley

Yes.

Okay. I have already touched on building and renting. Deputy Catherine Murphy also commented on this to some extent. It will cost more than €300 million - besides any mistakes made and the implications of those mistakes in the context of the new health building.

Mr. Maurice Buckley

Correct.

At what level has this matter been discussed in the context of purchasing buildings and value for money?

Mr. Maurice Buckley

The OPW does not have a specific written policy on purchase versus lease. I am not sure-----

So the OPW just follows Government policy, if it is Government policy.

Mr. Maurice Buckley

Government policy on this is really tied in with the state of Government finances at any given time and the availability of funding. The Government, no more than a business or anybody else, has limited funding available and must prioritise whether the funding is used for property in the areas of health or education.

If the OPW has no say, that is fine.

Mr. Martin Bourke

There is no policy in place. I understand that previously another person at this committee had referred to a policy. There actually is no policy, at least we are not aware of a policy. The decision-making relating to build, buy or lease is very much considered at the time the accommodation is required, but it is heavily driven by public finances.

It is heavily driven by the market. We are heavily driven by the market and there is no evidence of value for money in the context of this policy. I am not blaming the OPW for this policy-----

Mr. Martin Bourke

I understand that.

-----but there is no evidence. The OPW spending review by the Department of Public Expenditure and Reform looked at spending by the OPW on State rents. The report says that consideration should be given to "analysis of the effectiveness of the current model in meeting accommodation requirements, and, assessing if value for money is being obtained". An analysis of the effectiveness has not been done and we need further research on it. In a sense, the OPW is a symptom of policy in this regard, yet Mr. Buckley states that there is no policy.

Mr. Maurice Buckley

It is something the Government is examining and trying to formulate policy on. We will fit into that-----

No. The report, Analysis of OPW Spending on State Rents, is from July 2018. It was produced under pressure in response to the frequency with which the issue of rent paid for buildings is raised at this committee and, possibly, others. We are actively colluding with the market to make the rents higher. The OPW thinks that €300 million is good value for money. We have been through that and I will not go back into it.

Mr. Martin Bourke

If I, as the head of the estate, had access to capital to purchase, then I would purchase, especially in the city.

Does Mr. Bourke believe it would be better value for money?

Mr. Martin Bourke

In the long term, it would. It could, however, cost in the region of €100 million to €130 million to purchase some of these buildings. In the long run, over 30 years it would possibly be better value for money. It would be, but it is also about the availability, the budgetary process and whether the Department of Public Expenditure and Reform has the money to give it out now.

What is happening with the building that has been vacated?

Mr. Maurice Buckley

Is the Deputy referring to Hawkins House?

Mr. Maurice Buckley

We have received planning permission to redevelop the Hawkins House site. That is currently-----

What will it be redeveloped as?

Mr. Maurice Buckley

As a combination of offices for public servants and retail. It would be consistent with-----

Will the current building be demolished and a new building erected?

Mr. Maurice Buckley

Yes.

Will it be publicly owned?

Mr. Maurice Buckley

Yes, it will be publicly owned. It is Government policy now that we prepare the way for redevelopment with planning permission. The planning permission is sympathetic to that granted in respect of other buildings on that square. It is subject to funding and a final decision by Government.

The next step is to utilise that. It feeds into the general discussion the Deputy raised.

The public spending code has been in place for some years. Under that code one has to have a business case.

Mr. Maurice Buckley

The Deputy is correct.

Would the witness accept that the business case for the new health building was totally inadequate?

Mr. Maurice Buckley

The initial business case should have been much more complete. There should be a business case for any project worth over €20 million.

It has been detailed, and I am not going to go back into it. The witness has read the chapter and the inadequacies of the case have been outlined by other Deputies.

Mr. Maurice Buckley

We have accepted the recommendations of the Comptroller and Auditor General in that respect and improved our procedures already.

How many other examples are there of situations where there is no business case or where there is an inadequate business case which does not comply with the public spending code?

Mr. Maurice Buckley

I can only speak about our current work. My colleagues would confirm that any project we have that is worth over €20 million has a very thorough business case. We have introduced changes since that time. We have a very formal project procedure now through a mechanism called the project oversight group, which has very strict rules, not only covering the internal approval of projects but also the assignment of those projects to the different teams in the Office of Public Works, OPW, or externally. As a result of this report and our work over the last number of years - including a full competency and capability review since 2013 - many good new systems have been added within the OPW. I am confident that the current situation is very strong.

I am caught for time and have to go, but I want to say that being confident is one thing, but seeing the process on the ground being complied with is another. I do not believe that any public service should be demonised in any way, but I do believe they should be held to account. The lack of process here does not help. I do not believe the private sector is any better in this regard; in fact, I believe it is worse, but it is not subjected to the same scrutiny. To put my comments in context, the private sector has not served us well in Ireland. Fortunately there is a higher standard for our public service. I do not believe that it is correct to say that going private would be better. In my experience, it is not. However, serious process difficulties have been highlighted here.

I was a councillor for a long time and was there when the OPW was doing great work on the ground analysing the flooding situation. The big challenge was the plan to do something about it and to find the money required. Can the witness update us on that?

Mr. Maurice Buckley

As part of Project Ireland 2040, the national development plan, we have been given an allocation of just under €1 billion for the next ten years.

Can the witness put that in context for us? I am going home to a city that may be partially flooded tonight, according to predictions, and where people cannot get insurance.

Mr. Maurice Buckley

The money is to be used for 118 individual flood protection schemes all over the country which have been identified by the catchment flood risk assessment and management, CFRAM, programme. Some 50 of those schemes have been prioritised and will get going straight away. Mechanisms are in place to ensure we can work with local authorities, and we are working to increase our capacity to deliver those schemes. Each situation is being addressed, and very detailed information is available on floodinfo.ie. The Deputy can visit that site and look up County Galway, Galway city or any other area she is interested in and view a list of all of the schemes in place, where they are and what is involved.

Are the 50 projects prioritised under this scheme under way?

Mr. Maurice Buckley

The projects are under way but they are at the design phase.

I appreciate the availability of the website and I know that it is clear. Can I have clarification, through the Chair, on the 50 projects? I would like to know the breakdown of them, the money allocated to them, when are they going to start and when it is anticipated they will be finished, if possible.

Mr. Maurice Buckley

My colleague, Mr. Sydenham, might comment on that.

Mr. John Sydenham

We looked at the 118 schemes and we prioritised the top 50 based on a criteria of the maximum number of properties protected. Those schemes are progressing, because under CFRAM the preliminary design of these schemes has been completed. A body of work has already been done, and they will be moving forward to detailed designed stage-----

Can the witness provide that in writing for me? I have a particular interest in it, and people will be asking me about it in Galway. We have lived through flooding, and know that there is huge work to be done, with huge cost. I want to know about those prioritised schemes.

Mr. John Sydenham

They are all prioritised.

I would like to know about the timescales involved and how much each will cost.

I thank the witnesses for providing the services agreement. Was a brief provided to TWM?

Mr. Maurice Buckley

I am sure there was a brief, but I do not know how formal it was.

Mr. Martin Bourke

Is the Deputy asking whether there was a written document?

Mr. Martin Bourke

I can check that for him. There was obviously a verbal briefing given to TWM, but I am not sure if there was a written briefing.

The concern is that it would be foolish to take a negotiating position in which the landlord knows that the brief is to negotiate the best terms on one building, rather than knowing that the clients are looking at five different options. In this case, it might have looked at the redevelopment of Hawkins House, various blocks on the quays, the old Central Bank building and other possibilities. If TWM were sent out to negotiate the best terms it could, but the vendor or landlord knows that he or she is the only show in town, he or she will clean it out.

Mr. Martin Bourke

I am very familiar with the process. We are going through the exact same process in the city centre at the moment with another major building. The issue is that there must be tension in the market to ensure there is a drive on the price. The same thing is happening right now on another major building.

Is the witness saying that it did not happen on this occasion?

Mr. Martin Bourke

I did not say that, but the Deputy has asked a fair question about it.

This occurred in November 2015. The previous Chairman visited one of the properties. When did that take place? The witness knows the point I am making.

Mr. Martin Bourke

I understand the intentions.

The witness might have just been in his post, and perhaps the Chairman was not in his post. I know I have a very adversarial way of asking questions, but it looks a bit like negotiating class 101.

Mr. Martin Bourke

TWM is very professional and they carried out the negotiation.

Mr. Martin Bourke

It is top class.

Mr. Maurice Buckley

The OPW team managing-----

I am not questioning its expertise. They are all former DTZ people, and I know of them, but they are only as good as the brief they get.

Mr. Martin Bourke

I understand the point the Deputy is making, but I do not believe-----

It seems that its brief was to come back with the best terms it could get on one property. I would prefer if it was sent to three different properties, but it seems that the property had been selected internally. We can question the absence of certain expertise at the time, but the brief seems to have been to go and do a deal on that particular property. We were never going to have the benefit of their brilliance if the search was narrowed to just one building.

Mr. Martin Bourke

I understand the point the Deputy is making. The proof is in the pudding in terms of what was negotiated and where it now sits compared with the market then and now. We might be talking about 20% off the going rate in the market.

Not necessarily. I can provide some comparisons with some large-scale high profile buildings in the city which managed to provide rents that, when the incentives absent from this scheme are taken into consideration, cost well below €50 per square foot. They have achieved €46, €48 and €47.50 per square foot, with break clauses.

Mr. Martin Bourke

I would love to see the detail of those deals. If the Deputy is suggesting that a building of the quality of Miesian Plaza could be retained for under €50 per square foot, or €44 per square foot-----

We are talking about shell and core. I have been in Miesian Plaza since, and there is no question but that the fit-out is superb.

Mr. Martin Bourke

A property is about to go on the market on St. Stephen's Green, which I believe will be seeking €70 per square foot. I know that is just an advertised price. I am not saying that price will be achieved, but if there is a suggestion that if Miesian Plaza was on the market now it would-----

It is not a case of now. I am thinking of all of the deals done and people in situ.

Mr. Martin Bourke

Yes, absolutely, but it is about the quality of the deal. If we were sitting here trying to defend why we paid €80 per square foot or something like it, it would be game over, but that is not the case.

I appreciate that it is not the case; it is a case of we will never know because we only sent the OPW managing team to negotiate on one property.

Mr. Martin Bourke

I am prepared to accept that point - the Deputy is a professional in the area - but what I am saying is-----

I am not particularly renowned or anything; I just know some of the basics.

Mr. Martin Bourke

The Deputy is renowned. In fairness, what we are talking about is a €49 per square foot deal. What we are asking is the equivalent in the marketplace now. I know that it is a crude measure, but we are not talking about a figure of €50 or €51 but north of €60.

We are almost in 2019.

Mr. Martin Bourke

I totally accept that, but what we are talking about potentially is a 20% gain in the current market.

Mr. Bourke wanted some examples. I will give him a few. One is 1GQ on George's Quay in Dublin 2. The cost is €48 per square foot and includes car parking spaces. There is a break clause and one year's free rent. There is another 50,000 sq. ft unit at 1GQ and the cost includes car parking spaces. It is a 20-year lease, with a break clause after 15 years. There is 12 months' free rent. These are two examples. I have about ten examples-----

Mr. Martin Bourke

Yes. What I would be happy to do, with the luxury of having my phone turned on, is to come back with other properties that we would see as comparable with our deal to see how they would actually square up in the market. A specific question I asked of TWM, in anticipation of such an exchange, was where it would see the market going. It stated it was certainly moving towards a figure of €60 or in excess of it for an equivalent deal.

We are not going to solve it now. The bottom line is that it was poor practice not to go in. Whether the OPW decided off the record, privately and internally that the Central Bank or George's Quay, for example, was not appropriate, in its brief TWM ought to have listed the five options it was looking to have. We are all human and TWM is only as good as the target set for it. What I am suggesting to the witnesses is that we set the bar pretty low. Who determined that the offices had to be located close to Leinster House?

Mr. Maurice Buckley

That would be part of the specification of the client Department.

It was the client Department.

Mr. Maurice Buckley

Yes.

Does it have plenipotentiary status? Is it its call to say to the commissioners, "We want 100,000 sq. ft or 50,000 sq. ft and we want it on Baggot Street"? Is the OPW in a position to state, "Hold on one second, lads. How much space do you need based on 12 sq. ft per person?" On average, we are at a figure of about 16 sq. ft?

Mr. Martin Bourke

We are at a figure of 15.3 sq. ft.

Mr. Seamus McCarthy

In Miesian Plaza.

In Miesian Plaza, but the figure for the Civil Service nationally is higher, is it not? We are at a figure of about 25 sq. ft or something like it.

Mr. Martin Bourke

The figure is significantly lower in Miesian.

But it is still not where we want to get to, that is, 12 sq. ft?

Mr. Martin Bourke

That is a target.

Mr. Seamus McCarthy

We are operating at a figure of less than 12 sq. ft.

In the Office of the Comptroller and Auditor General?

Mr. Seamus McCarthy

Yes.

That is great. We will have to get the Comptroller and Auditor General bigger offices for the value his office is achieving, as I suggested.

Mr. Seamus McCarthy

When we moved in 2015, that was the standard that was negotiated.

Okay, but if someone comes to the OPW and says, "Hawkins House is being closed and we want 120,000 sq. ft." Is the OPW entitled to state, "Hold on a second. How many people do you have? Give us your general requirements"? Is it entitled to state, "To be honest, we have an option here for you and it will do you"?

Mr. Maurice Buckley

Absolutely. That is the negotiation - the discussion - that takes place. Very often we end up accommodating a unit of government at a different location, a different class of location, than what was requested initially.

Because of availability and the OPW might sometimes have property.

Mr. Maurice Buckley

Yes, absolutely. It is always a balance between different criteria. We are talking about two full Departments. The Department of Health has a senior Minister and three Ministers of State.

Why do they need to be beside Leinster House?

Mr. Maurice Buckley

The Deputy would need to talk to the Department of Health about that matter. All Ministers, Heads of Department, are within a reasonable distance-----

All Ministers have offices here too.

Mr. Martin Bourke

I think the significant thing about the Departments, particularly the Department of Health, is that they would be considered very much to be policy Departments. As I understand it, there is a Minister and two or three Ministers of State in that Department alone. I know from another life that it handles about 11,000 or 12,000 parliamentary questions a year, which is a phenomenal number. That shows how closely associated it is with the Dáil and the Houses of the Oireachtas. There is, therefore, a choice: do you go farther out of the city and have rafts of officials in taxis and particularly on overtime, constantly coming to and out of the Dáil, or do you take a prudent decision and decide that it is more sensible that they be closer to the Dáil with maybe someone else who is not in the Dáil as often being slightly further out? That is the balance to be struck. For instance, one would not locate a warehouse in the city centre; one would locate it out towards the M50 or farther out in the countryside. It is about the nature of the Department; the Department of Health, although there are others, is particularly policy-driven.

Parliamentary questions are not answered in that way. If one asks the Department of Employment Affairs and Social Protection a parliamentary question related to pensions, it is answered from Sligo. If one asks something to do with the Saolta hospital group, it will probably be answered from Galway. Telecommunication is instantaneous.

Mr. Martin Bourke

I understand that, but what I am saying is that it is symptomatic of the nature of the work Departments do, which requires officials, particularly those who service a Minister and three Ministers of State - there is also the Department of Children and Youth Affairs with another Minister - to attend to the work of Dáil Éireann.

We will agree to disagree but just on that aspect.

Mr. Maurice Buckley

The Deputy has to look back at decentralisation which followed that logic to its extreme in moving outside the city completely to large units. Rightly or wrongly, that policy has had to be largely reversed. As property people, we would always-----

Where was it reversed?

Nobody left the new offices in Portlaoise. I do not know what-----

Mr. Maurice Buckley

No, but Heads of Department, Ministers, Secretaries General-----

They never moved.

Mr. Maurice Buckley

Okay.

The policy of decentralisation has not been reversed.

Mr. Maurice Buckley

I appreciate the correction-----

The OPW moved to Trim.

Mr. Maurice Buckley

-----but in a perfect world-----

Am I right? Did the OPW move to Trim?

Mr. Maurice Buckley

We moved to Trim at that stage.

The OPW is about the only one that moved.

Mr. Maurice Buckley

The line Deputy Marc MacSharry is taking is very interesting because many of our professional valuers would take the same line, that purely from a property perspective, yes, of course, the further away we are from the very expensive city centre area, the better. The trouble, however, is that one has to balance this with the requirements of government. It is an international debate. Every country in Europe is trying to get the balance right between who has to be in the central government district and who can be a little outside it.

The rumour around the campfire is that the OPW is going to sell Hawkins House. Is that the case?

Mr. Maurice Buckley

As I said, we have planning permission to redevelop Hawkins House. If it can be funded and the Government agrees, that is our first port of call.

It is about 160,000 sq. ft.

Mr. John Sydenham

We are planning for use of 140,000.

Square metres.

Apollo House-----

I am sorry, but will Mr. Sydenham repeat the figure? I missed it.

Mr. John Sydenham

It is 140,000 sq. ft.

In planning for the replacement of-----

Is it 14,000 sq. m?

It is a little less.

It is about the same size as the property on Baggot Street into which the OPW moved. Is it going to mean more space than in the current building or-----

I am on a line that connects-----

I am sorry.

Apollo House is next door. Is that right?

Mr. Martin Bourke

Yes.

It is for sale at the moment.

Mr. Martin Bourke

That is correct.

What is the asking price?

Mr. Martin Bourke

Did I hear a figure of €37 million or-----

Yes, €40 million. Therefore, it is planning for use of about half of what the OPW has available, more or less, on that site. Let us say Hawkins House is worth €50 million or €55 million. If the OPW was to sell it, it would have to surrender half of the proceeds to the Exchequer. Is that right?

Mr. Martin Bourke

Yes.

That would leaves us-----

Mr. Martin Bourke

If we could reinvest it in the one year, we could actually retain all of the proceeds.

Mr. Martin Bourke

It would be difficult.

-----it will come looking for it, will it not?

Mr. Martin Bourke

Certainly.

The OPW would then be left with €27 million, or less than three years' rent at Miesian. Is that right?

Mr. Martin Bourke

Yes.

I realise this is not necessarily the OPW's decision but if the Department of Public Expenditure and Reform was here we would be telling it that, in terms of value for money, in comparison with three years' rent, the 60-year lifespan of 120,000 or 140,000 sq. ft that we would own at the end - we would not be leasing it or paying a mortage on it - is far better.

Mr. Maurice Buckley

I suppose that is down to the toing and froing of the property market-----

Who takes that decision?

Mr. Maurice Buckley

----and the development decisions that are taken.

Who takes that decision?

Mr. Maurice Buckley

We would take part in determining the pros and cons and evaluating the business cases of the different options.

Who calls it? Who makes the decision?

Mr. Maurice Buckley

The Department of Public Expenditure and Reform would certainly come into it very strongly in respect of the availability of funding.

Mr. Maurice Buckley

With regard to a project of that size, how to proceed could well be a Government decision or it may be within the scope of the Department of Public Expenditure and Reform.

Taking construction costs and everything else into account, it would probably come to approximately €30 per square foot. Would Mr. Buckley agree with that?

Mr. Maurice Buckley

I do not have that information to hand.

Mr. John Sydenham

It would be fairly low, yes.

Would it not? It is a no-brainer really, is it not?

Mr. John Sydenham

I would have to agree, subject to funding being available.

Good. As the Committee of Public Accounts, this is the kind of thing we need to be recommending. I am sure the Comptroller and Auditor General agrees. I want to move over to Harcourt Square for a second, where we have the ongoing debacle with An Garda Síochána. We had an issue with the lease some years ago. We had to try to get an extension to the lease and it was changing hands for approximately €40 million or €45 million. NAMA was involved. I believe Hibernia REIT has it now. The site has the potential to provide 360,000 sq. ft. Why did we not try to buy that? Was a case made to the Department of Public Expenditure and Reform to approach NAMA and say that this site could be bought for €40 million? The Garda does not need 360,000 sq. ft so it could have more than covered its needs and perhaps have provided for others. Was any case made?

Mr. John Sydenham

On one level, it is tied up in the availability of capital but the key issue with Harcourt Square in terms of a facility for An Garda is that it is coming to the end of its life. It has to be completely retrofitted.

It is a redevelopment site.

Mr. John Sydenham

It is a redevelopment site.

I agree with that too.

Mr. John Sydenham

We are faced with the challenge of relocating what are probably the most sensitive elements of An Garda Síochána. Its key units, including the drugs squad, the Criminal Assets Bureau, and the emergency response units, operate out of Harcourt Square. It is probably one of the most sensitive policing installations in the country. People are familiar with the ongoing change and transition in An Garda Síochána. It is in a constant state of flux. It is something at which we have looked. The opportunity to restructure the leases was mentioned previously. The strategy we have now developed is to leave An Garda there. We looked at temporarily moving it but the price we calculated was prohibitive. The strategy is to build a brand new building on Military Road, tailored to An Garda Síochána's unique accommodation requirements, so we extended the lease.

An Garda picked that road, did it not?

Mr. John Sydenham

The process we went through is interesting. We went through a formal evaluation of a number of sites. Some of them would have been on the perimeter of the M50. We were even looking at a major redevelopment of An Garda headquarters in the Phoenix Park. Looking at all the criteria, which include economic benefit, key elements within the assessment were operational requirements, particularly for elements like the emergency response unit. Out of all the assessments, that site was the one that came out on top. It had the added advantage of being in State ownership.

We then have the problems with costs, €80 million versus €105 million; with floors coming off; and with the site not being able to cater for the total needs.

Mr. John Sydenham

Again, there is a common theme emerging. If we had access to substantial capital, we could build a bigger building. The decision on whether we put an extra floor on it or drop the floor is a function of affordability. Once we capped spending at €80 million we were limited in terms of the height, so we had to drop a floor of the preliminary design.

Why do we not look to the Department of Public Expenditure and Reform if we are going to be back here in a couple of years' time saying that the Garda has to move again because it cannot incorporate everything and that it is looking for another building, or asking if there is any place in Miesian plaza in which the drugs unit could be placed because it cannot fit on Military Road? Should that not be in the public domain? If it needs to be €105 million then that is what is required because we need to go up two floors to have this capability.

Mr. John Sydenham

One has to have sympathy for the Department of Public Expenditure and Reform. We are one sector of umpteen sectors competing for the same limited supply of capital.

That is somebody else's problem. In fairness-----

Mr. John Sydenham

I hear what the Deputy is saying but we do have to-----

-----the Office of Public Works wants to provide for the need.

Mr. John Sydenham

We do, and we will always make a case. In terms of the Estimates process, we will ask for substantially more than is actually given to us but even in the justice sector there is a huge number of developments including a new forensic science laboratory and other major developments. There is €100 million gone on three major regional Garda centres - Kevin Street, Wexford and Galway. There is huge investment, but it is a finite pool. Anyone of us would say that if we could get money - and this also relates to the previous Deputy's questioning - it would colour our decisions on whether to lease or construct new facilities. The key issue with Military Road is that while, yes, we can meet the demands of An Garda Síochána, we are capped at €80 million.

Why does Mr. Sydenham not go to Hibernia REIT and say that it can have Hawkins House if it builds us 100,000 sq. ft of accommodation, or 200,000 sq. ft or whatever is required?

Mr. John Sydenham

It is a possibility.

The OPW should look at those possibilities-----

Mr. John Sydenham

We do.

-----or talk to NAMA about doing a site assembly between Apollo House and Hawkins House before Hawkins House is sold for €40 million. Then there would be even better potential for the OPW to go to Hibernia REIT or some other such company to say-----

Mr. John Sydenham

We have and we do. As I say, it is unfortunate that we are before the committee on a number of issues but, as an organisation, we do have these conversations. We had intensive negotiations with various entities. We actually engaged in a partnership with the owners of Apollo House. We used the same design team and went through the same planning process in order to defray costs. The designs of both buildings were in sync with each other so we got way above what we would have gotten if we had gone ahead on our own. We have had conversations with other developers who would be interested in doing an equity swap or developing an asset for us elsewhere, although not for a Garda facility which is highly specialised building. Once we tease through those possibilities, I do not think they are viable options. Apropos of the Deputy's previous conversation, Government Departments insist on being in the centre of the city - whether it is right, wrong or indifferent of them to do so - given their interaction with Government. That is essential.

The Garda also turned down Thornton Hall.

Mr. John Sydenham

It was too far out.

For operational reasons it was too far out.

Mr. John Sydenham

That is correct.

Operational reasons make for a good old excuse, do they not?

Mr. John Sydenham

With respect, I cannot comment on the Garda's view of operational requirements.

The Garda stations came up earlier on. I was focusing my own mind on other things. Mr. Buckley mentioned that six stations had been approved for reopening. Was that it?

Mr. Maurice Buckley

That is correct.

Did he mention €1.5 million for Stepaside? Did that come out earlier on?

Mr. Maurice Buckley