We are joined by the Comptroller and Auditor General, Mr. Seamus McCarthy, who is a permanent witness at the committee. He is joined by Ms Orla Duane, deputy director of audit.
The minutes of the meeting of 27 April have been circulated. Are they agreed? Agreed. There are no particular matters arising from the minutes, but any matters that arose can be raised as the meeting progresses.
We will proceed to correspondence. There are three categories. Category A consists of the opening statements and documents in connection with today's meeting. Nos. 2105A and 2117A are from the office of the director general of the EPA and are contained in our briefing document and opening statement. We will note and publish those. Is that agreed? Agreed.
The next item is correspondence from Accounting Officers and Ministers in follow up to previous meetings of the Committee on Public Accounts. The first item is No. 2092B from Mr. Ray Mitchell, assistant national director of the Health Service Executive dated 27 March 2019, providing documents relating to the national children's hospital development board. This item was circulated, referred to and discussed at last week's meeting, but we have to formally note and publish it at this stage.
There is other correspondence connected to that, to which I will come in a moment.
On related correspondence, No. 2115B is from Mr. Ray Mitchell, assistant national director, Health Service Executive, dated 12 April 2019. It provides the information requested at last week’s meeting on PwC's role in regard to the decision-making process to proceed with phase B of the new paediatric hospital and its subsequent role in carrying out a review of the escalation of costs. We will note and publish that but I want to comment on it because it is the issue I raised at the previous meeting.
We sought clarification from the HSE on this matter, which I want to deal with now publicly. It is a matter that surprised me when we saw this item of correspondence on the previous day and it is one that has not been sufficiently highlighted even though it was hiding in plain sight. I will call Deputy Cullinane shortly to outline the situation but the position is that we had a briefing note on the previous day which we noted and discussed. The report was entitled The New Children's Hospital Programme: Options Going Forward. In November 2018, to support the decision-making process for the next stage of the national children's hospital capital development project, the HSE, at the request of the Department, considered the three options which we have all discussed, namely, giving it to BAM to remain on site, putting it out to tender or the third option which it did not want to pursue. It sought specialist, high-level input from a range of health, construction and procurement specialists in regard to providing information on this matter. When this report was produced it was a decision of the Government, not of any of the people directly involved, which was made in December 2018, to proceed with keeping BAM on site. Obviously, none of the people who provided information were at the Cabinet table and involved in the decision but they had a fundamental role in providing information to the decision-making process, which resulted in the Cabinet decision to move forward.
Inside the cover of the document given to us on the previous day entitled The New Children's Hospital Programme: Options Going Forward, prepared in November of last year, which we discussed, we see that the HSE, at the request of the Department of Health, had sought input from a range of advisers, including PwC. We sought clarification on that. We have it verified here now from the HSE in the document we are publishing today, which is No. 2115B, that PwC was engaged in the process advising the HSE on the Government decision in regard to what option to take as a result of the gross maximum price report that had been considered at that stage. We then find that in January 2019, PwC was commissioned by the HSE on behalf of the Government to conduct a comprehensive review of the escalation of costs at the national children's hospital and the contributory factors associated with that.
My view, as Chairman of the Committee of Public Accounts, is that it was inappropriate of the HSE to request PwC to carry out that report given that only two months earlier PwC, at the request of the HSE, was involved in the process reviewing the gross maximum cost and providing its professional and specialist input from a financial point of view to the HSE, which led to the decision being taken by the Government that the project would proceed with BAM. As Chairman of the Committee of Public Accounts, I alluded to that last week. We sought confirmation on it. The HSE has confirmed now that PwC was engaged by the HSE in regard to the options going forward and, two months later, the same company was engaged by the HSE at a cost of approximately half a million euro to examine the cost escalation. That is a gross conflict of interest as far as I am concerned.
The HSE was very wrong to commission PwC to do both reports. The HSE knew about the conflict. I do not have the full report in front of me but I recall that in that report, and Deputy Connolly highlighted this on the previous day, PwC was not requested to give conclusions as to the best options but it has one page of conclusions in the report, at page 8, at the end of its executive summary. It was not asked to do that. It made a number of recommendations on the options going forward but the conclusion it arrived at was that at that point, the best option was to proceed with the option the Government decided on. We have PwC drawing a conclusion in a report and stating that the decision that was made as a result of its previous professional input to the earlier decision-making process was the correct one in regard to proceeding. I find it extraordinary that the HSE commissioned a report which facilitated PwC giving a conclusion that the earlier decision to proceed with the option of leaving BAM on site was the correct decision, given that PwC were the professional advisers who led to that earlier decision being made.
When the National Paediatric Hospital Development Board witnesses come before the committee in a couple of weeks after the break we will have the people from the HSE and the Department of Health before us also to discuss this conflict of interest. We know there is only a limited number of companies. They said they were on a procurement framework but they should have had the knowledge to not appoint the same company two months apart to engage in different aspects of the same project. I think I have made my point clearly. Deputy Cullinane indicated first and he will be followed by Deputy Connolly and Deputy Catherine Murphy.