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Thursday, 16 Sep 2021

Financial Statement 2020 and Related Matters: HSE

Mr. Paul Reid (Chief Executive Officer, HSE) called and examined.

This morning we have the first engagement of the new Dáil, with the Health Service Executive, HSE, to examine their 2020 financial statements. This engagement is limited to two hours. We will meet with the HSE again at the same time next week. For today's meeting, the HSE has been advised that the areas in which the committee has an interest include Covid-19 procurement and related expenditure, as well as the HSE’s integrated financial management statement and procurement system.

We are joined remotely from within the precincts of Leinster House by the following officials of the HSE: Mr. Paul Reid, CEO; Ms Anne O’Connor, chief operations officer; Mr. Stephen Mulvany, chief financial officer; Mr. John Swords, national director of procurement; and, Ms Mairead Dolan, assistant chief financial officer. We are also joined remotely from outside of Leinster House by Mr. John O'Grady, principal officer at the Department of Health. They are all very welcome.

Before we begin to engage, I ask members and witnesses to mute their microphones while not contributing, so that they do not pick up any background noise or feedback. As usual, I remind all those in attendance to ensure their mobile phones are on silent or switched off. Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the House, as regards references which they may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both Constitution and statute by absolute privilege. However, one of today's witnesses is giving their evidence remotely from a place outside parliamentary precincts. As such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does. The witness has already been advised of this and may have thought it appropriate to take legal advice on this matter. Members are reminded of the provisions of Standing Order 218, that the committee shall refrain from inquiring into the merits of a policy or policies of Government, or Minister of the Government, or the merits or objectives of such policies. Members are also reminded of long-standing parliamentary practice that they should comment on, criticise, or make charges against a person outside the House, or an official, either by name, or in such a way as to make him or her identifiable. To assist our broadcast and debates services, I ask members to direct their questions to a specific witness.

Where a question has not been directed to a specific witness, I ask that the witnesses responding state their names the first time they contribute.

I invite the Comptroller and Auditor General to make his opening statement.

Mr. Seamus McCarthy

The HSE's financial statements for 2020 reflect the exceptional challenges faced by the organisation during the year. Total expenditure in 2020 was just over €21 billion, an increase of more than €3 billion, or 17.5%, compared with 2019. The key driver for that increased expenditure was, of course, the HSE's response to the Covid-19 pandemic. At the year end, the HSE's operating surplus for the year amounted to €200 million. In accordance with the Health Act 2004, this surplus was retained by the HSE and carried forward to 2021.

As in past years, the bulk of the HSE's funding in 2020 came in the form of Exchequer grants from the health Vote, amounting to a total of €20.5 billion, including more than €1 billion in funding for capital projects. In addition, the HSE is permitted to retain employee superannuation contributions, which amounted to around €352 million in 2020. The main other source of income for the HSE was receipts of €328 million in respect of patient charges for hospital treatment or for long-term residential care.

Just under one third of the expenditure in 2020, or €6.45 billion, related to HSE salary and pension costs. A further €5.44 billion of grant funding was allocated by the HSE to what are called the section 38 and section 39 agencies. More than one fifth of the spending, or €4.4 billion, was on various non-acute schemes, including the medical card scheme and the nursing home fair deal scheme.

In Note 1(b) to the financial statements, the HSE has disclosed estimates of the expenditure incurred in 2020 on key items directly related to dealing with the pandemic. These included purchases of personal protection equipment, PPE, additional grant funding to section 38 and 39 bodies, payments to secure access to private hospitals, additional fees paid to doctors and GP practices, and additional laboratory costs arising from Covid testing.

My report on the audit for 2020 is longer than normal. In the report, I draw the attention of users of the financial statements to a number of unusual transactions for the year, or to significant matters disclosed by the HSE. To save time, I will only briefly outline the matters here, but further detail is given in the audit report, and the relevant sections of the financial statements are cross-referenced.

The Members will recall the efforts made, especially at the commencement of the pandemic restrictions, to secure supplies of appropriate PPE. The HSE spent more than €900 million on the procurement, transport and storage of such supplies. Much of the purchasing occurred in the early months of the pandemic when demand internationally outstripped supply and prices were abnormally high. At year end, a significant amount of the material purchased - around two thirds in terms of cost - remained unused and in storage. At the request of the Minister, the HSE engaged a consultancy firm to carry out an examination of the systems and controls employed in regard to the sourcing, management and usage of PPE items in 2020. The report on that examination was being finalised around the same time as the audit. I expect there will be important lessons from that examination on the effectiveness of procurement controls and stock management on the achievement of value for money.

I draw attention to two material charges in the financial statements in regard to PPE procurement that represent losses of value. First, the HSE has recognised a charge of €64 million in respect of the anticipated obsolescence of around 2.5 million disposable protective suits that were held in stock at the year end, and which the HSE estimates will not be used within their projected shelf life. The HSE has stated that the suits were purchased when there was a shortage of more clinically appropriate gowns.

Second, the financial statements include an impairment charge of €310 million, reflecting the change in unit prices between when PPE stocks were purchased, and the year-end. This represents a 63% write-down in value in the items in store at the year-end.

The statement on internal control also discloses that advance payments of €81 million were made to ten companies with which orders were placed for the supply of ventilators. The HSE had not dealt with any of the companies previously. Some of the orders were fulfilled but following testing, the HSE decided that the ventilators it had received were not suitable for use as intended. The outstanding orders were cancelled, and refunds were sought. At the reporting date, the HSE had not received value or refunds in respect of the full amount prepaid. A provision in the amount of €42.5 million was made in this regard in the revenue income and expenditure account. My office is continuing to examine the circumstances surrounding the prepayments and the related attempts at procurement of ventilators. Depending on the outcome of that examination, I may report further on this matter in due course.

In previous years, I reported that a significant amount of the normal procurement of goods and services undertaken by the HSE appeared to be non-compliant with the relevant procurement rules. The HSE has undertaken to develop systems designed to monitor and report on this, and has made significant improvements in that regard. The statement on internal control acknowledges that non-compliance with procurement rules remains a significant issue for the HSE and discloses that the estimated rate of non-compliant procurement in 2020 was 10%. However, I concluded that this may not be properly representative of the scale of the underlying problem of non-compliant procurement due to the exceptional procurement in 2020 and residual limitations in the HSE’s estimation methodology.

The statement on internal control also discloses that significant weaknesses in internal controls at one of the executive’s hospitals resulted in an alleged payroll fraud by an individual staff member that continued over a long period. The matter has been referred to An Garda Síochána. The HSE has been rolling out a single national HR and staff records system, and work on this was a significant factor in identifying the alleged fraud. The HSE is confident that full roll-out of the system will mitigate the risk of payroll fraud in the future.

As members are aware, in May 2021, the HSE suffered a very serious ransomware attack on its ICT systems resulting in severe disruption to the delivery of services and unauthorised accessing of personal and patient data. In the statement on internal control, the HSE discloses that internal audits had previously identified weaknesses in the area of ICT security controls and sets out the steps that were being taken to address the concerns identified. Because the security breach happened after the period of account, it does not impact the financial statements for 2020. However, it did coincide with and disrupt the finalisation of the audit of those financial statements. I would like to acknowledge the exceptional effort and flexibility of the HSE’s financial team and of my own audit team in working around the disruption and in finding ways to minimise the delay in making audited financial statements available.

I thank Mr. McCarthy for his statement. I ask Mr. Reid to give his statement, which is limited to five minutes.

Mr. Paul Reid

I presume the members can hear me okay. I am grateful for the invitation to attend today’s meeting to discuss the HSE annual report and financial statements for 2020, and other matters. I am joined today by my colleagues: Ms Anne O’Connor, chief operations officer; Mr. Stephen Mulvany, chief financial officer; Mr. John Swords, national director of procurement; and Ms Mairéad Dolan, assistant chief financial officer.

We have submitted information and documentation to the committee in advance of the meeting and I will therefore confine my opening remarks to the following issues, starting with the Covid-19 pandemic in 2020. Covid-19 was declared a pandemic by the World Health Organization on 11 March 2020, by which time the HSE had already initiated emergency management protocols and had convened its national crisis management team.

We set up several very large work programmes, advancing each one at pace and in parallel.

In the face of the most difficult market conditions imaginable our procurement team set about ensuring that we had enough PPE and hospital equipment. From an effective standstill position, we built a national testing and contact tracing service and, latterly, an exceptionally efficient national vaccination programme. We also prepared our hospitals to meet the additional demand, while safeguarding essential services. Finally, we entered into agreements with private hospitals and with GPs to support our acute and community services when we were in surge.

All areas of health and social care were impacted as a result of the pandemic. The committee will recall that in March 2020, on the advice of NPHET all non-essential surgery, procedures and other non-essential services were curtailed. This necessary decision was not without consequences for people, but it did allow the health system to care for patients falling seriously ill with Covid-19.

I am immensely proud of the commitment and the courage shown by our staff during this pandemic. Any perception that the HSE is slow or reluctant to change has clearly been demonstrated not to be the case. Our healthcare workers were enthusiastic adopters of new initiatives to protect our patients and the public. There has been some commentary that Covid-19 masked an underlying resistance to change in the health service. On the contrary, I believe that it brought out the best in all our teams in terms of flexibility, agility and adapting to change at pace. Front-line staff in particular bore witness to the tragedy of lives abruptly cut short by this pandemic. Very sadly, cherished colleagues also succumbed to the virus in the course of helping others. More than 5,135 people have died in Ireland as a result of Covid-19 and that is a sobering statistic indeed.

In terms of the financial outturn for 2020, the Covid-19 pandemic placed significant pressure on funding and expenditure during 2020. The HSE's overall reported income for 2020 of €20.265 billion includes once-off net additional funding allocation of just over €2.3 billion, of which just over €2.1 billion was used to cover 2020 Covid-19 costs, with the remaining €200 million allocated to winter plan funding. The additional funding has been used across a number of key areas and initiatives, most of which continue to be fundamental to the Covid-19 response, including: testing and contact tracing; GP Covid-19 response; the temporary payment assistance scheme, TAPS, for private nursing homes; the purchasing of private hospital capacity; the procurement of PPE and vital medical supplies; winter planning initiatives and activities; and capital costs in respect of testing centres, step-down facilities and enabling works to curtail Covid transmission. The HSE's annual financial statements for 2020 record a final audited revenue income and expenditure surplus of €200.7 million.

A major element of HSE expenditure in 2020 related to the successful sourcing of vital PPE supplies. The cost of this PPE exceeded €900 million, of which €738 million was charged to the income and expenditure account in 2020. Included in this charge is a figure of €374 million related to the write-down to net realisable value of year-end stocks, including the write-off regarding future obsolescence of protective suits.

On the implementation of the 2021 National Service Plan, NSP, the 2021 NSP for the HSE was published on 24 February 2021 with increased funding of €3.5 billion, 21% up on 2019. This included an additional €1.68 billion for Covid-related costs. The remaining €1.8 billion represented an underlying increase of 10.6% in core health spending compared to 2020, which is well ahead of the average annual increase of 7.3% received across the years 2016 to 2020. A total of €1.1 billion of this additional investment will deliver permanent and enduring improvements in healthcare arising from the Sláintecare reform programme.

In terms of the summary financial position for 2021, the general Government planning assumptions for budget 2021 was level 3 across the country in terms of Covid-19 restrictions or better, for the full year, and no vaccination programme. The detailed targets within NSP 2021 were largely set in that context. The revenue financial position at the end of June 2021 shows a year-to-date deficit of just over €190 million or 1.9%, with a significant element of this being driven by the direct impacts of the third surge.

In summary terms, Covid-19 and the cost of responding to it has been significantly higher than planned for and this has, to a large extent, caused and been offset by regrettable delays in our capacity to progress with developments to permanently strengthen the health service. These developments will continue to be progressed to the end of 2021 and into 2022.

The cyberattack on the 14 May had a profound effect on the delivery of services across the HSE, and coupled with Covid-19, has put further pressure on our efforts to deliver new service developments. Based on the first six months data and a preliminary view of draft July data, the HSE remains on course to achieve a substantial break-even by the end 2021 on our overall revenue budget.

Subject to relevant assumptions, this would be the third year in a row that the HSE has operated within or marginally below its budget, having delivered small surpluses in both 2019 and 2020.

Service planning for 2022 will be significantly more complex than in previous years. Services have been reconfigured in response to the Covid-19 crisis and it is as yet unclear in some areas what the effect of Covid-19 will be on the overall capacity levels of HSE services in 2022. It is likely that many of the initiatives put in place in response to Covid will need to be continued for a variety of reasons in 2022.

I assure the members of this committee of the HSE’s commitment to implementing all aspects of Sláintecare. The board and the executive are united in our determination to realise Sláintecare's vision of a single-tier health service and social healthcare system where everyone has equitable access to services based on need and not ability to pay.

I thank Mr. Reid. I express my thanks and appreciation to him and the HSE staff for their efforts over the past year and a half. Front-line staff were tested and they stepped up to the plate.

The lead speaker today is Deputy Carthy, who has 15 minutes. The second speaker will be Deputy Verona Murphy, who will have ten minutes. All other speakers will have five minutes. I hope we are moving towards the end of conducting meetings virtually. I hope we will be able to do better in terms of time in the coming weeks and that people will be present in the committee room. As our time is limited, I will keep committee members to their time and allow them to come in a second time. I call Deputy Carthy.

I want to be associated with this committee's thanks to the staff of the HSE for their work on our behalf throughout the Covid emergency. I am going to deal with the issue of procurement but, before I do, I acknowledge that every member of this committee and every member of the public recognises that Covid presented unique challenges. Normal expectations did not apply but that did not mitigate the need for basic due diligence to be in place.

This committee has asked on a number of occasions when the review of the 2019 procurement will take place and I ask that question again of Mr. Reid.

Mr. Paul Reid

I thank Deputy Carthy for his comments, which we will relay to the staff and acknowledge in the context of procurement in general. We had been progressing the 2019 review in the early stages of 2020. Subsequently, major elements of our resources moved from procurement to Covid. Many resources were redeployed to support our front-line activities against Covid. Our assessment during 2020 was that we would do the assessment on the basis of the figures for 2020. We have done that assessment and it has been provided in the full report. We do not have the detail for 2019. We have made the pragmatic judgment that the best data available to be most efficient were for 2020. That detail has been provided to the committee.

Do I take it from that reply that a review of 2019 procurement will not be carried out?

Mr. Paul Reid

I will let one of my colleagues comment on that but, from my perspective that is the case. We want to focus on the detailed findings of the thorough and diligent assessment of 2020. That informs us better in terms of the big, key challenges we have in procurement. I acknowledge those challenges. There are legacy challenges that we are going to address through a range of initiatives. Our response will be based on the full detail of our assessment for 2020.

Does Mr. Reid understand that 2019 is a good base year because it was a year that did not involve the Covid emergency? That review would, therefore, be important to be able to assess the real lie of the land.

Mr. Paul Reid

I will make the point that we have always done reviews of our procurement process in any given year. We will continue to do so. The detailed assessment of 2020 that was done was intended to get a better and deeper insight across all services and divisions within the HSE. The assessment has given us those details. In terms of baseline activity, we have extracted great Covid-related detail. We can look at our baseline activity for 2020. I will ask my colleague, Mr. Mulvany, the chief financial officer, to make a brief comment on that matter.

Mr. Stephen Mulvany

The 2019 exercise we started would have been the first time we had done such extensive sampling of the entire procurement process across the HSE above the figure of €25,000. As the CEO has indicated, we could not finish that because of Covid. We did it for 2020. We acknowledge the point made by the Deputy in terms of Covid versus non-Covid. In the analysis for 2020, we have separated out Covid versus non-Covid and have provided those figures, so we would not disagree with the Comptroller and Auditor General's assessment that the overall figure of 10% is unlikely to be representative overall. We have already started the work and planning around the 2021 exercise. Our sense is that we need to focus on that. To be clear, going back to 2019 would not be practical but we are also very clear and upfront. We have lost ground due to Covid. We have fewer contracts under management and spend under cover now because of Covid and Brexit before it because we diverted our procurement staff as we then did. We see little value in going back to 2019 because we know we have lost ground since then. The focus is on what we are doing now, which is planning the 2021 exercise, which we will seek to do in more detail. As the Comptroller and Auditor General pointed out, we covered €25,000 and above, which is the norm in the public sector. We will go below €25,000 in what we are doing for 2021. It does not make sense to us to divert the limited resources we have to look at 2019. The aim is to move forward, do 2021 next and build on what we have done so far.

To be clear, we will never have a review of the procurement processes in the last full year pre-Covid. I know an €82 million computerised procurement system is being built. Do we have a timeframe for when this will be implemented across the entire HSE?

Mr. Stephen Mulvany

The integrated financial management system, IFMS, project covers financial management and procurement. As the Deputy noted, it is an €82 million capital approval. The briefing we provided indicates that the current plan is to have 80% of the public healthcare system, including the larger voluntaries, covered by quarter one of 2025. We can deal with more questions later but that is the intent.

Does Mr. Mulvany expect it to be within that budget of €82 million?

Mr. Stephen Mulvany

We do. We have spent about 20% of that budget so we are at about €15 million or €16 million of the €82 million. At this point, I am not flagging any threat to that overall budget.

In the 2020 procurement review, the HSE reported 91% procurement compliance but of course that encompassed the emergency procurement measures that were allowable as a result of the pandemic. What proportion of that 91% fell under emergency measures?

Mr. Stephen Mulvany

If we look at the sample exercise, and it is probably wrong to call it a sample because it was a huge exercise that covered €1.9 billion, we can see that within that, €1.3 billion involved Covid. If we ignore that, we can see €635 million involved non-Covid - what we call core. Of that, 82% was compliant. In other words, it was either competitive or it was compliant without the requirement to be competitive. Therefore, 18% was non-compliant.

We are told that the Minister for Public Expenditure and Reform raised concerns that some €1.25 billion that was spent by the HSE and had not been competitively procured could expose the State to legal action because it fell short of what was required under domestic and EU law. Do we have any sense of how many legal challenges are ongoing with regard to our procurement process?

Mr. Stephen Mulvany

That reference came from a meeting of the public sector interim procurement board, of which the HSE's head of procurement is a member. It came about as a result of us presenting the information, a summary of which I have given the Deputy there. As far as I am aware, although Mr. Swords can tell me more, one company is taking legal action against the HSE and there are a number in respect of which we are involved in or considering legal action concerning a variety of items, some of which have already been referenced in the opening statements. Only one company that I am aware of has taken legal action against the HSE.

I will go back to Mr. Reid, if I may, a Chathaoirligh. There is a distinction then - we can hear this in the CFO's responses - between being non-compliant and being non-competitive, and that presents a number of particular challenges. When you are in a process that is non-competitive, I think there is a need for additional diligence, even when we are in the midst of an emergency. We know that the HSE paid €81 million for 2,200 ventilators. We are told 1,735 of those were never delivered and none of them was ever used. Has the HSE managed to recoup any of that €81 million that we paid?

Mr. Paul Reid

I will make a broad comment first on procurement more widely and the issues around compliant versus non-compliant and competitive versus non-competitive. We acknowledge we have significant work to do on our procurement processes overall, and there has been a very significant commitment by the executive team on our board to set out a range of actions, which we have covered in the report to the Committee of Public Accounts so I will not list them off, but I want to acknowledge that upfront. It is something we are giving a lot of attention to and something the board is very focused on.

Specifically regarding the ventilators and recovery of cost, I will give a little context from my perspective first. I know the Deputy has covered this in his opening comments, but it is just to put into context what we were seeking, the volume we were seeking and the context in which we had to commit that spend. We all know that at the start of this we were dealing with harrowing images from across the world that we were all seeing on our screens. From an ICU perspective we do not benchmark strongly at all by international comparisons with our ICU facility. We know about the early forecasts, and I have covered in the opening statement the early predictions that if certain public health actions were not taken, there would be up to 40,000 deaths, potentially. We knew that was the context we were entering into. Specifically regarding ventilators, what was happening at that time was-----

I know. With due respect, I asked Mr. Reid whether or not any of that €81 million has been recouped. We accept the context.

Mr. Paul Reid

Okay. I appreciate that. Specifically regarding the €81 million spend, we can give the Deputy the full breakdown. The CFO will give it to him. A significant part of that has been recouped so far. We have covered the outstanding sum of about €42 million in the AFS. Since then it has decreased to just about €35 million. We are expecting imminently recovery of another €11 million; we expect to get that very shortly. That is the current status of that. Some other costs expended had been recouped as part of PPE supplies instead, but I will get the CFO to give the Deputy a full breakdown of where that stands right now. We are not letting up on some of this spend.

Mr. Stephen Mulvany

As the Deputy said, to the non-traditional suppliers we paid out €81 million. As was said in the opening statements, by the time of the report in the AFS there was €42 million of that for which we had not got value. That means there was €39 million for which we had at that stage got value. We had got either ICU machines, refunds or conversions to other materials such as PPE, so €42 million was the piece we were working on at that point, which was back in May. Today the figure is just under €35 million, so we have got value for some of the difference. As the CEO said, there is a further €11 million or €12 million which is imminently going to arrive in terms of value. The piece of the €81 million for which we have not got value, to answer the Deputy's question, very shortly will be €23 million, and we are pursuing all avenues to get that.

That was a very long time to get that specific answer, and I am trying to be specific in my questions. Were any of the companies involved used by the HSE before or engaged with before? Is this the first-----

Mr. Stephen Mulvany

None of the companies in respect of which we had to pursue refunds was used by the HSE before but, separately, we had ordered 581 machines at a cost of €22 million from our regular suppliers. We had fully exhausted that before we went to the non-traditional suppliers.

There is an internal HSE document that identified risks with one particular vendor. In fact, of the nine parameters, three were deemed high-risk and there was a note in the document - this is prior to purchase - that there was a risk that expenditure of this magnitude would be wasted and that there were concerns about the quality of the machines. Did the HSE go to the effort of compiling a report on a potential vendor and then actually proceed with the sale despite those concerns being raised?

Mr. Stephen Mulvany

I do not have the specific detail of that case, but I will be clear.

We are in the business of managing risks. When it came to procurement of ventilators, the biggest risk was that of not having sufficient ventilators. It is one thing to talk about what the criteria are today but back then, looking at what we potentially faced, we and every country in the world were seeking to secure ventilators. At times we had to order more in quantities-----

Are any of the HSE guests aware of that case, involving Roqu? That internal document was widely reported. Is anybody aware of the specifics?

Mr. John Swords

That is subject to legal process. We are at risk if we disclose details of that. This is unfortunate. I cannot comment.

Okay. I move on to hand sanitisers. We know the case of Viropro. We know there were some basic red flags. The material safety data sheet the HSE requested and received did not match what was on the Department of Agriculture, Food and the Marine's biological register. In another case, the vendor had not provided a number of the product on the register; rather, it gave an application number. In these instances, were companies being asked to provide documentation but nobody was checking the basis of the documentation that was provided?

Mr. John Swords

We checked the documentation and the product met the world health standards. The area we are talking about is where we had them in quarantine and were waiting for a PCS document or clearance from the Department of Agriculture, Food and the Marine. That was subject to discussions between the company and the Department. We await the outcome. In the interim period, we have quarantined those products. They will be in use and, bearing in mind the context we were working in, we took in the products to our national standards. The Department of Agriculture, Food and the Marine has a requirement there. The company did not have that so we placed them in quarantine. We await the outcome of those discussions.

The HSE had already purchased the-----

Mr. John Swords

We had.

I go back to the previous point where it was mentioned we could not get a response with regard to Roqu because of legal issues. No legal papers have been served yet. Is that correct?

Mr. Stephen Mulvany

We are not in a position to discuss specific suppliers because of the commercial arrangements we are trying to progress in the interests of protecting the State. We are not going to be able to-----

Is it commercial or legal?

Mr. Stephen Mulvany

The two are often connected but we would not want to indicate which end of the spectrum it will end up on. Where we can, we are seeking to resolve things amicably by negotiation with the suppliers, many of which were under pressure. However, we also have to be robust in the interests of the public purse. Beyond that, it would-----

To clarify what my question was, I outlined what the HSE document identified with regard to this vendor and asked whether the HSE was aware of the internal document outlining that there was a risk that an expenditure of this magnitude would be wasted but continued with the purchase nevertheless. I do not think that would interfere would legal or commercial complexities.

Mr. Stephen Mulvany

We will have to agree to disagree.

So the witnesses will not answer my question.

Mr. Stephen Mulvany

We are not in a position to discuss an individual suppler because we are trying to reduce any amount of money the HSE has not yet got value for. We believe that would put that in jeopardy. We are happy to give a full account in due course.

Mr. Paul Reid

It was said the committee fully understands the context but it is really important that this is set straight. I saw my procurement team working 24-7 for months on end. We took a risk-based approach. This was not a normal market or environment. I said to the Deputy and other Oireachtas Members at the time that there was no doubt we would get 70% of the decisions right and 30% of them we would do differently again or even get wrong. I said I would not stand for any of our teams not taking rapid action during that period on a risk-based approach. There is no doubt there are some things we would do differently again but we did not shirk from taking action on procurement to protect lives, the public and patients.

I accept all of that. What I am asking is that if the internal report-----

Thank you, Deputy. I call Deputy Verona Murphy, who has ten minutes.

-----indicates that this has been-----

I thank the Chairman. I thank Deputy Carthy. In fairness, there are other members waiting as well. We had better get going. I thank our guests for turning up. I know this is difficult because we are still meeting virtually. I thank them and concur with everything Deputy Carthy said regarding the hard work they have done over a long period. I am sure it will have to continue.

I wish to pick up on the point made by Deputy Carthy regarding ventilators. What was the average price of a ventilator prior to the pandemic?

Mr. Paul Reid

I ask Mr. Mulvany to give the Deputy the average cost before the pandemic and now.

I ask for that to be done as quickly as possible, please.

Mr. Stephen Mulvany

The cost varies depending on the type of ventilator. Anywhere from €15,000 to €25,000 is the norm.

I am advised that the HSE was paying €28,000 prior to the pandemic. Does that sound right?

Mr. Stephen Mulvany

I would not disagree with that.

Okay. When the HSE was buying these ventilators, were the ventilators it was purchasing specced on the basis of the ventilator previously purchased at €28,000?

Mr. Stephen Mulvany

Yes. We did not change our ventilator specifications, to the best of my knowledge.

What was the average price the HSE paid for the 465 ventilators that were received of the 2,200 that were ordered?

Mr. Stephen Mulvany

The average price of what we ordered from the new suppliers, for the €81 million, was €36,936.

Were there contracts that were significantly less than that?

Mr. Stephen Mulvany

Yes. With our-----

What was the cheapest ventilator?

Mr. Stephen Mulvany

It was back towards the price the Deputy mentioned earlier and the range I discussed. Even during the pandemic-----

So there was nothing below €28,000. There were no ventilators purchased for less than €28,000.

Mr. Stephen Mulvany

That is not correct. A number of ventilators were purchased for less than that. Again, it depends on the type of ventilator. They vary quite a lot in price.

Mr. Mulvany just said they were all specced on the basis of the ventilators that cost €28,000. If that is the case, I cannot-----

Mr. Stephen Mulvany

My apologies, Deputy. I did not say that. I said I would not disagree with it------

That was the question I asked.

Mr. Stephen Mulvany

I said we did not change the specification. We have a variety of specifications for different types of ventilators. There are different types of ventilators. I am not an expert in that by any means.

Okay. Mr. Mulvany is telling me the figure for the cheapest ventilator was in or around €28,000. There were not significant numbers of ventilators purchased for less than that. That would have raised a red flag that there was something wrong. If 1,735 ventilators were not received, there must have been a red flag at some point.

Mr. Stephen Mulvany

In the context of the actual purchase price, whatever about what we ordered or the average, some of the ventilators were purchased at the lower end of the range I mentioned, that is, €15,000, €16,000 or €17,000 plus or minus VAT. As I said, a variety of prices-----

Did that raise queries? Did ventilators coming in at that price raise a red flag or was it just regarded as being down to the type of ventilator, as Mr. Mulvany said? Was that scrutinised?

Mr. Stephen Mulvany

Absolutely. It is important to talk about the context.

No, I am just asking whether that was scrutinised. Did Mr. Mulvany believe that was correct? The fact that we never got them did not raise a red flag. What is the reason that we never got them?

Mr. Stephen Mulvany

I think I am going to have to talk about the context to properly answer the Deputy's question, if that is okay.

In that case, I just want to move on because I am limited in time. We can come back to it. The question I have that seriously raises a red flag for me is why none of the ventilators was ever used. We got 465 and we paid for 2,200. According to the report, none of the 465 was ever used. Is Mr. Reid or one of the other witnesses able to answer that question?

Mr. Paul Reid

I can come in briefly and I will again ask Mr. Mulvany to come in too. We did use a significant proportion of the ventilators we had purchased before this from our traditional suppliers also. Very briefly, I know the Deputy said she does not wish to discuss context but it is important. First, we did not have sufficient ventilators by any guesstimate of what was forecast to happen. Second, the Deputy was asking what the individual unit cost prices for ventilators were and there are two points to make in that regard. There is a range of-----

No, I want to go back.

Mr. Paul Reid

If I cannot help the Deputy-----

I want to go back to this question. The HSE's internal audit report stipulates that none of the 465 ventilators received were used. Is that incorrect?

Mr. Paul Reid

Of the 465 which were procured from non-traditional sources, 365 of those have now been assessed, transported and given as part of Irish Aid's support to India together with other equipment given to support that country.

I have limited time. This is the Committee of Public Accounts and I am asking a simple question. Were any of the 465 units used because according to the HSE’s internal audit we did not receive the 1,735 that we paid for? Of the 465 that we received, none were used. Is that correct or is it incorrect? I did not ask Mr. Reid where they went. I will come to that.

Mr. Paul Reid

I was giving a very simple answer to a very simple question. Of the 465-----

Yes, and that would be a “Yes” or “No” answer.

Mr. Paul Reid

Would the Deputy allow me to answer, please? Of the 465 units, 365 of these have most recently been transported as part of Irish Aid. They were quarantined by ourselves and have been donated. I will make a very brief point on the other issue raised by the Deputy about red flags. The Deputy asked were red flags not raised about price-----

I apologise to Mr. Reid but where are the other 100 ventilators then?

Mr. Paul Reid

The other 100 are right now in storage, in quarantine by the HSE.

Are they fit for use or what is the reason that we did not use them? If they are in storage, in quarantine, why is this so?

Mr. Paul Reid

As we have set out in the report, this is because our assessment of them is that they would not be deployed in their current state, which is why we quarantined them.

What does Mr. Reid mean by “their current state”? Can he elaborate on that, please?

Mr. Paul Reid

This is in terms of their specifications as to what we believe is required to be deployed at that point in time. Sorry, Deputy-----

In terms of the specification at the time of ordering and the paying out of the money, it looks like we very much asked for forgiveness as opposed to permission. We are now paying for the storage of 100 ventilators that do not meet the specification of what is required. As I said, I have to ask these questions because this is the Committee of Public Accounts. I, like Deputy Carthy, understand that this was an unprecedented time. What I do not understand is trying to justify the fact that mistakes were made and continuing with the same mistake. I appreciate that 365 of these units have been shipped to India. Is it that these units could not be used here and have gone to India where they can be used? I am not sure why that is the case and why we have-----

Deputy Murphy, you have two and half minutes remaining.

Mr. Stephen Mulvany

May I reply to the Deputy, please? Of the number delivered, we received 1,046 ventilators, 581 from traditional suppliers and all of these are in use. The numbers that we believed we needed were based on best estimates at the time. Those numbers changed as information became available to us. We had, therefore, sufficient ventilators from our own suppliers. On the balance of 465 ventilators, as the CEO said, 365 have been donated and very well received.

That means, Mr. Mulvany, that we ordered 1,735-----

Mr. Stephen Mulvany

We have not yet put 10% of what we received into use. We ordered in total much more than that in order to try to secure the numbers that we had been sanctioned for, which was an extra 1,900. As soon as our numbers became clear as to what we actually needed, and there is a great deal of context here both medically and ethically, which the Deputy does not want to hear-----

I want to hear it. It is just that we do not want to run out of time. I have no doubt that there is a good possibility that the HSE will need to come back here because I take Deputy Carthy’s point that if we cannot go back to 2019, I am not really sure how we are expected to learn lessons of where we are, going forward. I will move on-----

Mr. Stephen Mulvany

I will just finish. When the numbers became clear, we started cancelling orders to ensure that we were limiting the amount of money that the State was exposed to without value. As we said, we are making progress on further eliminating that lack of value.

I want to move on but I will come back in later, Chairman. Why was there a consultancy cost in the accounts for Ernst & Young? It received in payment €17.7 million for one year. Can Mr. Reid explain that to me, please? Why did he feel that there needed to be a report?

Mr. Paul Reid

I will come in there, please, Chairman. During the Covid-19 period we had significant extra consultancy costs across a range of different consultancy houses that support the HSE.

They were for a range of activities we had to put in place in our response to Covid, a range of supports we had to put in place, a range of testing and tracing processes we had to put in place across the country and for our supports in terms of some of the advice for our vaccination programme. There was a range of initiative supports from a range, not just EY Ireland.

Was anybody from EY Ireland in an assisting position on that basis, outside of the consultancy?

Mr. Paul Reid

To be clear, Ms Niamh O'Beirne, has been seconded to the HSE for the past couple of years in our support for Covid. The details of that secondment have been made very clear. She had no role in the selection of any of our consultancy costs because she would have been conflicted, and that is not the case.

She was seconded to the HSE at no cost but then EY Ireland was in receipt of €17.7 million over and above what any consultant would have received.

Mr. Paul Reid

I am sorry, but I am very unsure about what the Deputy is saying or alleging, but what I can say-----

No, I am not alleging anything. I am just saying that Ms O'Beirne was not in receipt of payment. The €17.7 million was for a consultancy outside of anything like Ms O'Beirne's role. Is that correct?

Mr. Paul Reid

I am clear about what the Deputy is saying now. Yes, Niamh O'Beirne was seconded to the HSE for a specific role-----

Was that before or after EY Ireland was asked to do a consultancy report?

Mr. Paul Reid

We have had engagement with consultancy, with EY Ireland and a range of other consultancies, well before and well after Covid.

I thank Mr. Reid.

I thank the witnesses for attending and for all their work during the pandemic, which is greatly appreciated by everybody. I will begin with a question for Mr. Reid relating to maternity restrictions. When will there be a return to pre-pandemic access in all maternity units and hospitals?

Mr. Paul Reid

This is something to which the HSE has given a lot of focus. We want to ensure that we get to very safe levels. I understand what the Deputy means when she refers to pre-pandemic. We have set out a total of nine criteria that we believe would bring us back to pre-pandemic safe levels. They are across three circulars set out by the chief clinical officer. We gauge and get feedback from the maternity hospitals about their compliance with those nine criteria. Our feedback is that, predominantly, all of them are compliant with them. There are exceptional cases where some maternity hospitals have had to have certain restrictions based on the significantly ageing infrastructure they have. In fairness, some of that would have been what was in place even pre-2019. We are very anxious and we recently met many of the patient advocate groups. We fully understand the frustration and hurt caused for women and their partners in terms of some of those visitations. We are anxious to resolve that to the greatest level possible. I will always qualify that by saying our clinicians, consultants and midwives have to take precautions for the protection of women and pregnant women.

I had a lot of understanding for that position, particularly in the early stages of the pandemic when we did not know what we were dealing with, when staff were at risk and where there were concentrated settings. However, many people are vaccinated now. The cross-party women's group in the Oireachtas had a meeting with patient advocates yesterday, some of whom were accessing maternity services as recently as two weeks ago. They have done an extensive analysis of compliance with the HSE guidelines in the hospitals around the country. They would contest much of what is being said with regard to compliance. A couple of examples give me concern. One is neonatal intensive care units, NICUs. That part of it is a conversation that, perhaps, has not been had as much as the conversations about stillbirths, early miscarriage and that side of the maternity experience. There is variation in respect of neonatal intensive care units and visiting. For example, the Health Protection Surveillance Centre, HPSC, guidelines make provision for that and say that visiting should be facilitated, but they do not say for how long. Do the guidelines make provision for both parents visiting at the same time in an unlimited way, depending on the severity of the child's condition in the neonatal intensive care unit? How many neonatal intensive care units are there, and how many of them are providing full and free access for parents whose child is at the most severe level of risk in a NICU?

Mr. Paul Reid

I will ask a colleague to confirm the total number of our neonatal intensive care units.

Across our 19 maternity hospitals, the very first criteria we set out included NICUs in order to ensure there was visitation for partners. That is one matter we are very strong on.

I am terribly sorry to interrupt but visitation for partners is a very different thing if it is an hour or two hours between 5 p.m. and 7 p.m., as it used to be for grandparents, compared with unlimited access to sit beside a very sick child. When we talk about visitation, that is one of the points of contention. It is about how much and the quality of it. We are talking about people who are now largely vaccinated, based on population figures, and staff who are vaccinated. It is that sort of detail that is really upsetting people.

Mr. Paul Reid

I fully understand this. I am on record as saying that we want to get this to the right level we need. The Deputy mentioned that the vast majority of the public are vaccinated. While that is true, we need to understand that there are still risks for pregnant women. We know that a significant proportion of pregnant women have not been vaccinated. We are trying to move this forward in a very real way with the support of the advocacy groups. The Deputy mentioned those.

On the specific issue of times, we would not define those to the level the Deputy mentioned for each of the 19 maternity units. We would expect the units to do that in a very reasonable way. We were very clear about what we wanted to see in the NICUs in one of the first four criteria we set out. We have set out another five since then, but that was in one of the first four we set out. I am sorry I cannot confirm if it is 19 NICUs.

I think it is 19. What level of progress has the HSE reached on those people who are not vaccinated coming into maternity hospitals, on the use of antigen testing and on checking those measures? Is that happening at all anywhere?

Mr. Paul Reid

My understanding is that antigen testing is not happening in all of those hospitals. In respect of the specific infection prevention and control measures we defined at the start of the pandemic for all hospitals, we just reissued last week a guidance document that includes maternity in terms of both infection prevention and control measures and visitations. We are very anxious to reduce any hurt that has been caused or any impacts on pregnant women and their partners. We will be consistent and relentless on this.

I will ask my colleague, the chief operations officer-----

I ask her to be brief. Deputy Carroll MacNeill has gone over time.

Ms Anne O'Connor

To support what the CEO said, we are very anxious to make this better, in a sense. We appreciate there has been a lot of hurt caused by this. Equally, we rely on all our staff to balance risk every day in terms of centres. All sides are doing what they can in assessing the risk on a daily basis. When it comes to visitors in general, we do not antigen test. We know people who are unvaccinated are still coming to our sites to visit. That is the reality, unfortunately. Again, sites are working with people visiting and with patients and their families to try to address that. To answer the Deputy's question, we are not antigen testing visitors.

There is a foreseeable demand for perinatal mental health services that will come from this. The Oireachtas women's group, which involves Members from all parties, met with advocates yesterday. We are very serious about looking for a timeline on how this will be brought back to pre-pandemic access levels. We will be in touch shortly.

I, too, join in thanking Mr. Reid and his colleagues throughout the HSE for the work that has been undertaken during this pandemic, for which there has been no playbook and no precedent. It was something that had to be managed in an emergency context and the level of care people received has, by and large, been excellent. I acknowledge that Mr. Reid has always made himself available to members of the Oireachtas on issues that have arisen throughout the pandemic. When certain matters arose within my constituency, they were responded to so I have to acknowledge that.

I will focus on non-compliance in procurement. The Comptroller and Auditor General's report states that the HSE is developing systems and is making significant improvements in that regard. That is to be acknowledged. I will focus on the more than €40 million that has been spent by the HSE to date across a range of services provided by Ernst & Young, PwC, Grant Thornton, Deloitte and KPMG, both pandemic related and non-pandemic related.

Does €40 million represent value for money for the taxpayer?

Mr. Paul Reid

I thank the Deputy for his opening comments, which we will relay. Regarding his question about value for money for the consultancy costs and Deputy Verona Murphy's questions, we fully respect the role of the Committee of Public Accounts and the Oireachtas in general in holding us to account for all spend. Regarding consultancy costs, I believe we have got value for money. It is always something we will go through thoroughly again. I believe that €40 million out of our total spend of €20 billion is a fair representation of the skills, competencies and expertise that we recognise we do not have within the HSE and that we recognise we need for a period of time to, in some cases, contract for some services or deal with emergency situations with which we have had to deal in the course of the pandemic. I am always committed to building skills and competencies in-house. Certainly if we look at what is happening with testing and tracing, we have leveraged all that skill back in-house but we had to engage some expertise to get us there. It is a similar situation with the vaccination programme and across a range of services. I believe that we will always continue to search and get value for money to the greatest extent.

We know that Ernst & Young has provided services to the tune of €12 million and that PwC has provided services for €5.1 million. A total of €17.5 million has been spent across the five companies up to March 2021. We know it is governed by a framework agreement. What we do not know, and this is what I am trying to get at, is how those individual contracts are managed within the work stream. We know that individual companies provide different types of services, as per the procurement rules. However, in terms of the scope of work, what is perplexing me is how Grant Thornton can receive €4.2 million for the year up to March 2021, Deloitte can receive €4.2 million and KPMG can receive €3.1 million. These are astronomical figures. What I do not have sight of and the taxpayer-----

The Deputy has one minute left.

How many minutes do I have left?

One minute.

What the taxpayer does not have sight of are the line-by-line accounting procedures in respect of how those hours are billed for. Please do not throw commercial sensitivity at me on this one because all of the consultancy houses have benefited remarkably from the provision of these services under presumably clear procurement rules. What we do not have sight of is how many people were seconded or deployed and how that is being managed internally by the HSE in terms of due diligence and managing the contracts and costs. There is no document anywhere I have sight of that shows me, or by extension, the taxpayer, the dynamics that informed those individual contracts in the public interest and in terms of protecting the "public purse", to quote Mr. Mulvany. This is an issue to which we need to return. We need more transparency.

Mr. Paul Reid

In terms of the specification of these contracts as they go out for competitive tender, they are very clear in terms of the nature of the drawdown costs or the services contracted for and associated factors, be it individual hours, cost or services drawn down. It is something we place considerable focus on in the HSE in terms of what is it is utilised for so that we do not have scope creep. Some of the consultancy houses referenced by the Deputy would bring a level of expertise, particularly in terms of laboratories and testing, that we did not have at the very start. Grant Thornton and others would provide a lot of operational capacity that we may not have in-house but I will ask Mr. Mulvany to talk about the detailed reporting level - our assessment of contracts as they are awarded.

I call Deputy McAuliffe, who has five minutes.

Mr. Stephen Mulvany

May I make a comment to Deputy Sherlock?

Mr. Mulvany may come in briefly.

Mr. Stephen Mulvany

We have different figures. Some €38 million for consultancy is disclosed in the annual financial statements, half of which is for Covid and half of which is not. As Mr. Reid said, our aim is always to have specific deliverables and to get clear weekly details of the hours of individual consultants. We typically operate from the Office of Government Procurement, OGP, framework, which sets out four or five tiered levels reflecting the levels of individuals and their different types of qualifications. I have experience relating to the financial aspects of the private hospital agreement. We monitor that closely. In fairness to the company, a certain amount of the work at the start of the pandemic was done either pro bono or at substantially discounted rates. For the entirety of the time we were dealing with that particular part of the private hospitals, we ensured that the rates were at or, in many cases, below the OGP framework. They were monitored every week.

I will return to the procurement of personal protective equipment and ventilators. The first two contributions by members were absolutely bizarre in not allowing the HSE to outline the context in which discussions took place and decisions were made. It is akin to two soldiers stepping out of the trenches as the smoke clears, being told they did a great job and invited to sit down so they can be told everything they did wrong. The HSE officials have not been allowed to outline the context in which they made decisions. We did not know the biological make-up of this virus. We did not know how it was transmitted. We did not know what therapeutics worked or did not work. We did not know the role of ventilators. Italian doctors were deciding between people living and dying based on the availability of ventilators. New York officials were pleading for ventilators from around the world. Staff around the world were begging for PPE and using bin liners instead. I will say to public servants across the State that, as a member of the Committee of Public Accounts, I would far rather they take risks to improve public services and protect people's lives than be looking over their shoulders for the prospect of "gotcha" moments at this committee. I do not believe that serves Ireland well.

There will inevitably be lessons learned from the procurement decisions that were made during that period of time. Should another emergency arise, what procurement protections have been put in place or is it intended to put in place? Is there a legal or commercial route to procure the outstanding €23 million or are our guests resigned to that being a bad debt?

Mr. Paul Reid

I thank the Deputy for his comments. I will ask my colleague to respond to his last question. He asked about learnings and I have a few brief things to restate in that regard. What I knew in February and March 2020 was that the public were scared. Our staff, healthcare staff and clinicians were scared when going to work. Decisions had to be made at pace. I told Oireachtas Members at the time that I would be sitting in front of them in the future and I would be accounting for the things we got right and things we will do differently in the future. One of the biggest scares we had related to our consultants, nurses and doctors making decisions about who would receive ventilation and who would not. We did not get to that situation and I am proud of our public service in that regard. We punched well above our weight and much stronger than many other countries across the world in terms of our procurement of ventilators and PPE. I was involved in teams who were on calls to China and across Asia on Saturday nights and Sunday mornings in order to procure PPE. I would get up again, after an hour's sleep, to arrange the logistics and distribution of all of that equipment. That is the pace at which we were operating and I am proud of the public service in that regard. Having said all of that-----

Have those learnings been put into a systematic approach for any future emergency?

Mr. Paul Reid

There are two aspects to the systematic approach. The first relates to having a pandemic workforce capacity capability. We did not have a pandemic workforce capacity capability at the start of this crisis, not only in terms of procurement but also in terms of testing and tracing capacity and a vaccination programme. That was also the case in terms of the whole range of our acute hospital and community supports. We have learned and embedded much of that.

The second aspect relates to procurement. That is reflected in a range of actions that are in the report.

I will not waste the committee's time by listing them again. There is a range of actions for procurement that will be put into our procurement plan which will be completed in the first quarter of next year. We know there are learnings and we are committed to them, both in terms of workforce and procurement. I ask my colleague to answer the Deputy's question about outstanding amounts owed.

Mr. Stephen Mulvany

The outstanding amount owed at the time of the annual financial statement that is before the committee was €42.5 million. We have fully provided for that. Effectively, we have charged it to last year. Any amount of that that we secure is a benefit for the current year. As we have said, so far, the figure is actually down to just below €35 million. There is another €11.5 million which we expect to get imminently. The piece that is still to be worked on is €23 million. I would not want to give any kind of expectation that we will get all of that, but I can assure the Deputy that we will pursue it and we are doing so through commercial and legal routes. We have appointed representatives both in Ireland and China to engage with companies. Where we can get agreements, we will.

There are legal and commercial routes to seek to secure some of that €23 million, but our success rate may be a different thing. Is that what Mr. Mulvany is saying?

Mr. Stephen Mulvany

Exactly. Most of those routes, whether they are commercial or legal, are based in China, so obviously there is an issue of complexity there. We have appointed Chinese representatives to work on our behalf.

I welcome Mr. Reid and his team. I appreciate that there was certainly a context to the events. That is important to note. We remember the sharing of ventilators in Italy and we appreciate that ICUs have been hugely under-resourced. Let us accept that that is the scenario we are talking about. I think every member of the committee appreciates all of the work done, particularly by those workers in the HSE on the front line.

In relation to procurement, we are being told that a number of legal challenges have been taken. One such challenge has been taken against the HSE. What is the nature of that challenge? I am not asking for a long response; I wish to know what it is about. A variety of items are being challenged. Can the witnesses provide us with the details of what four or five of those items are?

Mr. Stephen Mulvany

In respect of the company that is taking proceedings against the HSE, it is because we cancelled an order - appropriately, in our view - for particular medical equipment, namely, ventilators. That company is not happy with that particular action. That is the case where a company has taken action against us.

In the other examples, the challenges mostly concern ventilators and the pursuit of what we provided for the amount of money that we have not yet got value for. I stress that we are, and have successfully so far, adopted commercial negotiations. However, there is always the potential for these to become legal issues. The challenges typically concern ventilators.

Reading the KPMG report, a lot of the sourcing of PPE was done by desktop. I believe masks were the only items of PPE that were inspected. For example, there was an issue with 1 million units that were issued to healthcare settings. That related to hand sanitisers. Are there other issues? We saw all the efforts made, the Aer Lingus flight and all the rest of it, to get the PPE. I remember that perhaps a week after some of the PPE arrived, people were saying that some of it was not useable. Is any of that part of what is being challenged?

Mr. Paul Reid

I will speak briefly on what is being challenged. As the chief financial officer, Mr. Mulvany, has outlined, the main challenges specifically relate to ventilators. As the Deputy has quite rightly stated, on some of the early initial deliveries, a small number of the total delivery of certain PPE items was not up to the standard we specified and ordered. We immediately engaged with the suppliers at that time. For the record, it was one of the biggest orders that any country managed to secure at the time for PPE.

What was happening on the ground, and this is in some reports, was that as we secured those orders, other institutions and other countries were trying to outbid us on what we had secured. For the order that arrived on the next flight, we got replacements to the specification for the smaller number of items that were not specified correctly.

How many resolution processes are under way? Does the HSE have a ballpark cost for these?

Mr. Stephen Mulvany

The predominant processes are regarding ventilators. It is literally a handful of companies. The cost to date, which we are monitoring very carefully, is a very small fraction of the amount of money we are trying to pursue. We are being prudent on it.

What is the ballpark amount?

Mr. Stephen Mulvany

So far, costs incurred to date in negotiations and legal representations is approximately €300,000.

With regard to the data hack, I know it falls in this financial year as opposed to the last financial year. Do the witnesses have a ballpark figure for the cost to date of the hack?

Mr. Paul Reid

With regard to the cyberattack, we know of a range of costs that we have immediately incurred on it. There will also be a range of costs next year. We know we have an immediate range of costs relating to device replacements. We will have to replace approximately 30,000 devices that are not up to the standard we need on our network. The ballpark figure for this is a €30 million recurring cost. The immediate range of costs we have had include infrastructure, vendor support and the range of international support we have had to engage in terms of monitoring. That amounts to close to €20 million. We are seeing recurring costs that will be needed for device replacements and for 24-7 monitoring of our network, which we did not have in place. We do have it in place now. There are also the legacy networks and servers we will have to replace. We are awaiting a finalised report from the consultancy group working with us on the impact of the cyberattack. Ultimately, as I have said, we could see costs of €100 million being incurred in respect of this matter.

Deputy MacSharry is as láthair. I call Deputy Munster, who has five minutes.

A number of my colleagues have asked questions on the procurement of defective products and products that cannot be used because they do not meet the regulatory standards. Will the HSE confirm that there is no other product similar to the ventilators and hand sanitiser on which public money was spent and that cannot be used and is sitting in a warehouse or storeroom somewhere?

Mr. Paul Reid

Our specific primary focus in the Covid response was on ventilators, PPE and hand sanitiser, as the Deputy has just touched on. These are the items that we had to quarantine and not utilise stock. Inevitably, in the supplies we get throughout any year, we come across stock that is not up to standard. The normal commercial agreement we have is that it goes back to the vendor.

There is absolutely nothing other than the ventilators or hand sanitiser sitting in a warehouse or storage room somewhere that was purchased and not fit for purchase. Will the witnesses categorically confirm this?

Mr. Stephen Mulvany

In terms of the specifics, protective suits were also mentioned in the opening statements. We had to take a significant impairment because we had more than we were going to use. I will have to check where they physically are at this stage. I will ask the director of procurement. I am not aware that we have anything else. In general, as the CEO said in the context of specific large amounts of stock that are unusable, our expectation is we will use all of the PPE stock within its shelf life.

Outside of Covid-related equipment, is there any other stock that was purchased that was not fit for purpose and did not meet the regulatory standards and is now sitting in a warehouse or storage room?

Mr. John Swords

On that, we are monitoring our stocks very closely. As part of its audit, KPMG drew reference to procedures and so to which we have made significant improvements as we work through what we were doing. All of the products that we have are subject to stocktakes. There are two physical stocktakes that happen now. One of these will be happening next week in all the locations in which we have stock. We do not have-----

Sorry, time is limited, as Mr. Swords knows. Is there or is there not?

Mr. John Swords

No, we do not have stock that is not fit for purpose. We had some stock that has been donated and we work our way through that, but that has not cost the taxpayer any money. That is donated by other-----

There is no stock sitting there that was purchased and that did not meet regulatory standards.

Mr. John Swords

No, we do not have that. The products were inspected, and they are inspected on receipt.

There is nothing there and nothing would ever come to light.

Mr. John Swords

No, and that will be confirmed as we go through. We do cycle-counting on a weekly basis. We do stocktakes. We do physical stocktakes now.

Mr. Swords is saying that there is not. I thank him.

There were reports that the HSE might be sued as a result of the cyberattack which saw a significant amount of people's personal data leaked. How many people had their personal data leaked?

Mr. Paul Reid

On the interrelated cyberattack and data leaks, we became aware of one site-----

Time is of the essence. How many people had their personal data leaked?

Mr. Paul Reid

I was just going to answer the Deputy's question. We came up with one site that had data files on it. We estimated then that there were about 512 patient records as part of that. There are a whole set of other corporate documents that we have secured and that have been returned to us through the intelligence agencies of the State. That was the process that we engaged.

Deputy Munster has one minute left.

Does Mr. Reid have a total figure

Mr. Paul Reid

I gave the Deputy a total figure; I said there were 512 patient records. Along with that, there was a range of corporate documentation. Let me just be clear on the record. We can never be certain - that is part of the intelligence process that is ongoing by the agency of the State - in terms of what documentation may have been extracted from our servers, where that may have been located and who may have access to those data. From what we know so far, it is the figure I have given to the Deputy.

The 512 records are what Mr. Reid knows about so far. He has no real idea and cannot say categorically because he does not know. That is the answer, I suppose. Has any legal case been brought as a result of this?

Mr. Paul Reid

When the Deputy says I cannot answer, I have given the answer. I have given the Deputy the answer to the extent that I know it. What I cannot determine is what the intelligence agencies are doing.

In the context of legal cases, I am not aware if we have a specific legal case in relation to the cyberattack. We are engaged directly with the Data Commissioner and have been throughout this entire process.

In response to the colleague who spoke before me, Mr. Reid referred to outdated equipment. I suspect that is where he thinks the HSE's vulnerability was exploited. He also said the HSE is monitoring as of now. Does he accept there was a lax approach to security which would have had some bearing on this given that it is monitoring after the event and that systems were not updated prior to that?

Mr. Paul Reid

My own background is in networks and technology. Not every organisation has 24-7 monitoring of its network. The HSE did not have and certainly that-----

Does Mr. Reid think that other health services have that?

The Deputy has gone over time.

Is Mr. Reid aware of any other national health services that would have that?

Mr. Paul Reid

It is a weakness, and it is a weakness that we have to address. There is a whole range of other issues that, I guess, we will have to address which is being assessed by a report right now.

I call Deputy Colm Burke, who has five minutes.

I asked Mr. Reid if he was aware if other national health services would have that ongoing monitoring in place.

Mr. Paul Reid

I might have crossed with the Deputy, but I said "Yes". Some administrations would have and some others would not.

I call Deputy Colm Burke.

In effect, the HSE was lax in its approach to security. Mr. Reid would have to accept that, surely.

Mr. Paul Reid

That is a statement the Deputy is making. What I am saying is that there is no doubt that the complexity and sophistication of the criminal cyberattacks that exist right now are far above and beyond-----

That is all the more reason for monitoring, surely. Mr. Reid was aware of that prior to the attack happening.

We have gone over time.

I am not making a statement; I am asking Mr. Reid whether he accepts that a lax approach to this is not the way to go-----

Mr. Paul Reid

While I have to say-----

-----and that it may have contributed to it.

Deputy Munster should allow Mr. Reid to answer briefly.

Mr. Paul Reid

I am actually trying to answer the question. What I have said is that there will definitely be areas of weakness that we will have to address as part of this. There will definitely be findings indicating that we are at risk and exposed in terms of our network, and there will definitely be a whole range of actions we will have to take and investments we will have to make to protect it better.

I thank the HSE and all the staff for their work over the past 18 months. It has been a very challenging time.

May I raise the issue of procurement and its management? A complaint I receive from people working at local level in IT, which relates to all areas of procurement within the HSE, is that those making the final decisions are very much coming from the administration side and that there is a lack of connectivity between the experts on the ground and the decision makers. That came through in respect of the orders that went through for the ventilators. Moving on from ventilators but staying with IT, the comparison with hospitals in the private sector indicates the people who are involved in IT are very much involved in the decision-making process. The complaint is that in the HSE, that connectivity does not exist. I am wondering what can be done to make sure the people with the expertise have a huge influence on decision-making.

Mr. Paul Reid

I thank the Deputy. I will try to address the questions, which raise two points. First, the Deputy just described the classic challenge we all face. We do want to centralise and strengthen much of our procurement because a lot of what can happen is non-compliant and can occur locally. There is an ongoing challenge between trying to centralise and keeping local knowledge, but there is frustration over not being able to procure locally. That is an obvious challenge.

Specifically on our contracts, we engage significantly at local level in obtaining expertise, be it clinical expertise, medical expertise or specific IT expertise, in terms of defining the procurement contract itself. However, in terms of the issues around IT, equivalent private hospitals and others, and connectivity, we want to strengthen our procurement process through getting the local knowledge but having central oversight and control and a definition of what is procured in a more centralised manner. That will strengthen our procurement, and that will be part of the corporate plans that the head of procurement, who is here today, is finalising with each of the hospital groups and CHOs and, equally, at national level. That has to be part of the process.

The complaint made to me was that while people are asked to feed into the procurement process, they have no input whatsoever when the final decisions are made. Their concern is that the decision makers are not the people who have the expertise. They believe problems will continue to arise, particularly in relation to IT and new equipment, unless the structure is changed so people with expertise in the area are also involved in the decision-making process.

Mr. Paul Reid

I ask my colleague, Mr. Mulvany, to make a brief comment on that. I am conscious of time.

Mr. Stephen Mulvany

We would not accept that complaint. There can always be individual examples of where people were not happy with the input they were able to provide. We and our procurement teams put a lot of effort into involving experts, including local experts where we can, particularly in respect of the specification process and in respect of the evaluation process of the tenders. Taking the example of the financial system, which I was closely involved with, we absolutely are continuing to involve local financial and procurement people in specifying and evaluating.

May I ask about the IT section of the HSE?

It is a huge organisation. There are many big hospitals and the whole health service. Where are we in terms of a five-year or ten-year plan? What progress has been made? Have we clear targets set out for each year between now and 2026?

Mr. Paul Reid

Is the Deputy referring to procurement?

Yes, it is about upgrading IT and making sure that we keep up to date and make the whole health service more efficient in relation to patient records. We still have a whole issue relating to files which are manual. If someone, say in Cork, attends the Mercy hospital, then attends Cork University Hospital for something else and then attends the South Infirmary Victoria University Hospital for something else, there appears to be still a paper file in relation to much of that work. How far forward are we planning in regard to IT in this area of patient records and modernising the whole system?

Mr. Paul Reid

I will answer the Deputy's question on two fronts. First, in terms of the infrastructure, there is no doubt from the cyberattack and reports that emerge, we have 2,000 systems across the HSE, not all of which are interconnected. We have 4,000 servers across the HSE and at least 80,000 devices deployed on that network. What we must do is look at that infrastructure in a more effective manner. We must start to put some of that infrastructure into what is called "the cloud" so that we are not naturally exposed to our core infrastructure in the same manner. As an example, if you take the system deployed for the vaccination programme, it was the one process, the one system and the one service that was not impacted by the cyberattack, because that system was new, it was specified, and it was in the cloud. Part of that is putting more services, including Office 365, in the cloud.

In regard to patient records and data, we have a whole suite of e-health initiatives, some of which are major parts of Sláintecare, that will have to be invested in as part of the strategy for e-health initiatives. One opportunity we took during the vaccination programme was to get greater information on patient identifiers, single, unified health identifiers for patient records, through that process, and that has helped us hugely.

Have we set targets for, say, a five-year plan in this area? We need to plan this out. I accept it cannot be done overnight. Have we clear targets setting out what needs to be achieved?

Mr. Paul Reid

The Sláintecare strategy and implementation plan set out several clear targets over the course of the ten-year timeframe of Sláintecare in terms of e-health initiatives, universal health identifiers, and they are part of the Sláintecare plan also.

Can I ask about it in relation to the HSE? I know it is part of Sláintecare but is there a target for each year between now and 2026?

Deputy, we have gone over time. I will let you back in for a second round.

Mr. Paul Reid

We have an IT strategy which sets out-----

I call Deputy Dillon.

I thank all our witnesses and would like to repeat what my colleagues said in terms of the extraordinary efforts during the past 18 months. In regard to the commissioning of private hospital capacity, and the agreement put in place in 2020 to ensure that private hospital capacity was available to supplement the public system, and a potential surge, can the committee get an overview in terms of how that contract was negotiated and the involvement of the Department of Health?

Mr. Paul Reid

Yes, I will make some very brief comments on that. If Deputy Dillon looks back on 2020, there were probably three phases of our procurement and engagement with private hospitals. The first phase was literally seeking the full capacity of the private hospital system. That was purely on the basis that we knew we had just over 10,000 beds in the public system. All forecasts were saying we probably needed about another 7,000 or 8,000 beds capacity. That was based on forecasts of what was to happen. That was an agreement negotiated between the HSE and the Department of Health with the private hospital system.

Very briefly, and I will pass over to the CFO, the second phase of it was undertaken on a different basis. We moved from that first phase of full-secure to a more access to bed facilities to address non-Covid-19 care.

Equally, the stage we are at is that we have procurement contracts awarded based on certain specialties and activities we draw on now significantly. I will ask Mr. Mulvany to comment on the original agreement with the Department.

Mr. Stephen Mulvany

The lead organisation on the discussion and negotiation of the original agreement, which we refer to as the heads of term agreement, was the Department, heavily supported by the HSE, with input from other relevant agencies. Effectively, it was a very large insurance policy. In the end, €287 million was spent. What did we get for that? A bit like any insurance policy, one should not be unhappy if one's house did not burn down. We did not need all of the capacity we got but we got access to 2,300 beds and we got 16,000 procedures done in April, 17,000 or 18,000 in May and another 17,000 in June. Approximately 50,000 procedures went through those 2,300 beds in the three months. Effectively, it provided us with a safety net. Thankfully, because of all the other actions of the State, it was not needed at the level it could have been, but that is a good news story rather than a bad news story. We actually got substantial benefit from it as well as it being kind of a safety net that, thankfully, we did not have to fully use.

A total of 2,300 beds were utilised from the private hospital procurement process. Is that correct?

Mr. Stephen Mulvany

Effectively, we got access to all of the private hospital beds in those 18 hospitals, which was approximately 2,300. We never used more than approximately 45% of the capacity. Through that capacity, we got approximately 50,000 procedures done. The context for not using it is that this was an insurance policy and the good news is that we did not have to use it - we did not have to put those beds up to 70% or 80%. Value was achieved by having the safety net, getting 50,000 procedures through it and having access to the beds. The good news story was that we did not actually need them because the overall response of the State meant that we did not end up with the level of overwhelmed public healthcare system we could have ended up with.

As regards the outstanding patient waiting lists, they are hitting nearly the €1 million mark. Has the HSE or the Department given consideration to utilising private hospitals to reduce those waiting lists and for access to treatments and services?

Mr. Paul Reid

A straight answer in terms of timing is "Yes", as part of our plan and strategy to address waiting lists, which have been significantly impacted during Covid, as everybody knows. There are a few strands to it. One of those strands will definitely be how we engage private capacity and utilise it as part of addressing those waiting lists. We all need to recognise that there is a private health system in place that has significant capacity, capability and skills. Given the extent of the waiting lists we have, it needs to be about increasing capacity in the public health system and the private health system and also doing things differently. I will give a very brief example of that. In Citywest, we built a temporary hospital that is now used significantly for addressing some elements of the waiting lists, specifically and particularly in respect of children's waiting lists. We see it as being a combination of doing things differently, increasing our capacity in the public system and utilising capacity in the private system.

As regards the facility in Citywest, as I understand it, the cost was approximately €25 million in mid-summer. Obviously, the HSE needed a large facility and needed it quickly. It fitted the bill in terms of the location and everything else. Mr. Reid has confirmed that it is still in use as a temporary hospital. Does the contract for it have a break clause?

Mr. Paul Reid

Specifically with regard to the break clause, we have contracted for Citywest to the end of this year, based on the revised contractual commitment. From our perspective, the issue and the challenge for us does not relate to breaking the contract.

We see real value from the facility we procured in Citywest. You are correct, Chairman, that it was originally a step-down facility for hospital beds and an isolation area. We now have facilities for isolation, Covid testing, a vaccination centre and also some facilities that are clinically led in terms of addressing some of the waiting lists. From our perspective, the challenge is not specifically the break issue, but more the capacity we have acquired and how we might try to utilise that for the future.

So it is multi-use at present.

Mr. Paul Reid

That is correct.

What has been the average occupancy rate over the past 18 months?

Mr. Paul Reid

Is that for Citywest?

Yes, the average number of rooms being used.

Mr. Paul Reid

Specifically relating to the isolation rooms, it peaks differently so it is very hard to give an overall average, but during the three waves it was quite significant. I will ask my colleague, Ms O'Connor, to comment.

Ms Anne O'Connor

It has been nearly full at times. To break it down, the average would be just over 100. As of now, we have 98 people in the self-isolation facility which accommodates healthcare workers and people who test positive and who cannot isolate at home. The majority of the people there today are people who are self-isolating; 73 people just need the facility for isolation and then there are healthcare workers. The number has declined. It has ebbed and flowed in line with the surges and it has been extremely busy at times. Again, depending on the level of illness that exists, it sometimes functions as a real healthcare facility in terms of providing care. We would be absolutely lost without it, given what it has provided in respect of isolation. Critically, however, it is one of our busiest testing and vaccination centres as well.

I will ask Mr. Reid about something that was not on the invitation, but it is an issue that has arisen in a serious way. It relates to the national ambulance service. There are situations arising due to what is called "dynamic deployment", which is the term that is used, where a number of ambulances are chasing across the country to emergency cases. I will give an example. In Laois, ambulances have been sent towards the Carlow border, but when they are three quarters of the way there they are stood down, which is the term used, and told there is no need to continue as the patient has been picked up. An ambulance might then be sent to south Kilkenny. When it is almost in south Kilkenny it receives a similar call saying it has been stood down as the patient has been picked up and it is then sent to County Waterford. A similar situation arises in County Waterford and it is then diverted to another location. The 12-hour shift can end without it actually picking up a patient. Those situations are occurring.

I understand there is a working group examining this, but the situation has continued over the past couple of years. It has led to circumstances where people have been left waiting. In one case I had two years ago an elderly person was waiting in Clonaslee, which is 13 or 14 miles from Portlaoise hospital, for over two hours for an ambulance to arrive. There was a case recently of a serious accident in Portlaoise involving sport, but the local ambulance that was available was in Wexford at that time. That is what I have been told. People working in the ambulance crews across the country are raising these concerns with us. The dynamic deployment is not working. There cannot be a situation where people are clocking up over 400 km during a shift without picking up a patient. The old system, where it was completely localised, might not have been perfect but there has to be some local dimension to it.

There is also the point of having to pick up on every call. From what I am told, it allows the people in the control centres or the response centres to be able to tick the box and say that an ambulance has responded within 90 seconds, as I understand there is a 90-second target, but the problem is that people are being left waiting for an hour, two hours and in excess of two hours, while the ambulances in the area are 50 to 80 miles away. The system simply is not working. There have been several situations in counties Laois and Offaly where patients have been left for those long periods of time.

It is putting health at risk. It is putting huge stress on the ambulance crews. While I understand that we have to be open to new systems and new ways of doing things, this system is simply not working. Can Mr. Reid give me any reassurance that the system will get a serious examination?

Mr. Paul Reid

First, any situation where there are significant delays, like those the Chair just relayed, is unacceptable. I fully accept the credentials of the cases that the Chair just relayed. What I will say, Chair, is that I disagree that the system is not working. I am happy to facilitate a visit to our National Ambulance Centre in Tallaght, as well as its backup service in Donegal. I have been in it on numerous occasions. We have brought administrations from other parts of the world, including the UK. There is no doubt that the national ambulance system overall is one of the best in class. I fully appreciate the examples that the Chair has raised. However, it is not about ticking a box; it is about patient safety driving full deployment and best utilisation, based on the clinical cases that arise, on the availability of ambulances, and on the prioritisation of utilisation of fleets.

Chair, I fully accept what you have just said, none of which is acceptable. However, I will not accept that the system is not working overall. It is one of the best in class deployment systems you will come across. The centre staff themselves-----

Mr. Reid-----

Mr. Paul Reid

I can fully assure the Chair that they are not ticking boxes. They are taking a patient perspective.

Mr. Reid, can I just say that the front-line staff in the ambulance service are doing tremendous work. They are making huge efforts. They are highly trained and they are more skilled than they were in years gone by. I can see those improvements. We appreciate those improvements. I am saying that there are problems with the system. I hear this from ambulance crews, from people who are actually on the front line, and from people who work in hospitals. I would appeal to Mr. Reid that in the interests of patient safety, senior officials in the HSE and the Department of Health look at the system. I understand that working groups are looking at this the moment. That is what I heard and that was reported. Whether or not it is true, I do not know. What I am saying to Mr. Reid is that there have been examples in recent times, of which I am aware, in the area and the constituency in which I live, Laois-Offaly. Patients' health, welfare and, indeed, lives have been put at risk. That cannot continue. If there are faults in the system, we should not close down any discussion and say it is perfect. It is not perfect. I understand improvements have been made. However, given the way ambulances are being deployed, some of what has happened is absolutely crazy. Nobody could stand over it. It needs to be examined. I appeal to Mr. Reid, as the chief executive of the HSE, to at least give an undertaking to have those issues examined.

Mr. Paul Reid

I am certainly not closing down discussion or saying it is perfect. I invite the Chair and any members of the committee who would like to come out and see the National Ambulance Centre, so that they can get a greater insight into what the centre staff are doing, along with the tremendous work that all of our front-line ambulance services do. Certainly, we will take on board any feedback from here and, indeed, any feedback from any potential visits committee members would like to make.

Thank you. I call on Deputy Matt Carthy, who has three minutes.

I just want to go back to the issue of the ventilators. Out of interest, how many of the ten suppliers from China were actually Irish?

Mr. Paul Reid

Apologies, is the Deputy asking how many of the ten Chinese suppliers were Irish?

Mr. Paul Reid

The ten Chinese suppliers were-----


Of the ten suppliers from China, were any of them Irish companies?

Mr. Paul Reid

Did they have Irish agents? Is that what the Deputy means?

Were they conducted through Irish entities?

Mr. Paul Reid

I will get one of my colleagues to clarify. One obviously was.

Mr. John Swords

In our workings in securing-----

I am looking for a number between one and ten.

Mr. John Swords

I think all of them were, because the Industrial Development Authority, IDA, and Enterprise Ireland were involved in the acquisition. That is how we made the links through the then Department of Foreign Affairs and Trade, with the IDA and with the people on the ground who knew the markets. There was a question around due diligence. They actually knew the markets for the original equipment manufacturers. They had done some work on that for them.

The engagement was through that channel. I hope that answers the question.

Apparently there are no records or audit trails for the €81 million in orders for ventilators from China. That is according to the internal audit, which could not find any. It seems it is the same with contracts and, in some cases, purchasing orders. How can that possibly happen?

Mr. Paul Reid

Is this in terms of the audit of individual orders? We do have a financial trail and a stock trail of orders ordered, orders received and the status of any outstanding payments or otherwise.

Is Mr. Reid saying there are audit trails for all orders in respect of the ventilators?

Mr. Paul Reid

Certainly, the figures we gave the committee today, and that are part of the report we submitted, are based on what we have been able to track back for the individual spends on individual suppliers. The ventilators received or not received are what we are trying to track back in terms of spent and received. The data we gave the committee today are based on what we have assessed.

In terms of the €11.6 million Mr. Reid mentioned that will be repaid - "imminently" was the term used - who is that coming from?

Mr. Stephen Mulvany

That is coming from one of the China-based companies.

Mr. Stephen Mulvany

I would prefer not to mention that in public session. We can talk to our own people and talk to the clerk afterwards to see if it is appropriate to provide-----

Finally, legal proceedings were mentioned in relation to four suppliers of ventilators. Is it true that no legal papers have been lodged yet?

Mr. Stephen Mulvany

Again, I do not want to go into that. We are saying that we are working to resolve the rest commercially and through negotiations, initially. We are keeping all options open, including any legal options. As it happens, those negotiations are being conducted on our behalf by legal firms but we do not want to get into whether we will, or have, initiated proceedings at this point, as the Deputy can imagine, because there are lots of sensitivities. Our main aim is to secure as much of a refund as possible.

I am not sure who this question is for; it is probably for Mr. Reid or Mr. Mulvany. Prior to the cyberattack, were there any incidents of financial electronic payments for PPE gear being intercepted and not reaching their destination? I mean during the Covid pandemic; I do not mean years ago. Prior to the cyberattack, were there are any incidents of that nature?

Mr. Stephen Mulvany

Not that I am aware of and not that my colleague here is aware of either.

In Ireland, no moneys went missing or did not reach their destination where reports were made to the Garda.

Mr. Stephen Mulvany

Not that I am aware of unless the Deputy has some specific information on it.

No. Does Mr. Reid agree? It seems to have happened in other countries but we were lucky enough not to have any incidents of that nature.

Mr. Paul Reid

If the Deputy's question is in terms of the transfer of money or funds as part of our procurement process being intercepted and sent somewhere else, we have no knowledge of that happening to us.

That is great. It also means we must have a very secure system. Is it fair to say there was nothing to highlight the cyberattack prior to it happening?

Mr. Paul Reid

Sorry, is the question whether there was nothing to highlight in the cyberattack?

Is it fair to say that prior to the cyberattack there was no indication that our system was vulnerable?

Mr. Paul Reid

Even in terms of the cyberattack, it was not, and has not been, identified as a vulnerability in the transfer of funds. That is not something that has been impacted or highlighted by the cyberattack. Certainly, prior to the cyberattack and during the Covid pandemic, to swiftly answer the Deputy's question, we are not aware of any transfer of funds other than where they should have gone to some other person or persons.

On the Chair's reference to the ambulance service, disappointingly, I have to concur with him. While I also believe we have ambulance providers and those who deliver as paramedics, etc., who are wonderful people, there is a huge problem in relation to the service itself. I have reported many incidents from my office but have not received any responses. These are incidents where there was delay of more than six hours and there has been no explanation for that. That is in my locality. I am not interested in visiting the centre but I am interested in getting an answer as to why these things happen.

I know no service is perfect but I would appreciate if we could collaborate in some way to get that sorted.

I have two questions. First, given that the HSE is going legal in respect of four suppliers regarding ventilators, how many of those have had legal papers lodged so that the legal process has commenced? Second, reference has been made to the €200 million that was underspent in the budget that has come into this year. How much of that relates to things like vacancies in the service? Naas General Hospital in my constituency has vacancies for 50 nurses. Is this about the HSE being prudent or is it an underspend on resources necessary to deliver the health service? We have a huge waiting list with 900,000 people and additional waiting lists for things like speech and language therapy. What is the basis of the €200 million underspend?

Mr. Paul Reid

I will take the issue of recruitment and the CFO will cover the €200 million figure. On recruitment, we are anxious to and are recruiting significantly. That was impacted during the cyberattack because we had to cease all applications but since January 2020, we have almost 10,100 extra staff on the books. This year to date we have recruited 4,400 people and that is separate to about 3,000 people who were recruited as part of the testing and vaccination programmes. We have a significant budget to the year-end to continue recruitment. We expect another 3,000 people to be recruited. We wanted that to be focused on nursing and midwifery, as the Deputy said. It is a challenging market right now but since January of last year, we are up almost 1,800 nurses and midwives. We have the budget to the year-end to continue that. We are conscious of those vacancies and are anxious to fill them. It is a difficult market at the moment but we have funding. I will ask my colleague to speak on the €200 million figure.

Mr. Stephen Mulvany

The €200 million was not due to the HSE seeking to bring in a surplus. We always seek to operate within budget. It is much more a factor of the complexity of trying to plan and estimate, particularly in the year of Covid. Effectively, some of our services' activity levels were depressed, reducing some of our costs. We were not able to progress with as many developments because we were responding to Covid and that €240 million outweighed a small overrun of about €40 million on the Covid side. It was a balance between planning and estimation in the level of uncertainty around Covid.

To clarify, I have not said we have taken legal proceedings against four companies. That is the number of companies we are engaging with to get back the value we have not yet secured out of the figures that were mentioned. Our preference is to do that by negotiation and commercial discussions. We simply are keeping all options open, including those that could become necessary, but I have not indicated that we are taking proceedings against four companies.

On the HSE's financial statements in 2020, which were referred to earlier, the national lead for testing and contact tracing was seconded to the HSE from EY Ireland without charge. Is that correct?

Mr. Paul Reid

That is correct.

Reference was made earlier to the HSE having multiple contracts with various consultancies and that is fine. Was EY Ireland awarded any tenders specifically regarding contact tracing after the secondment accord?

Mr. Paul Reid

EY was awarded contracts related to testing and tracing, as were other consultancy houses. It was not just EY.

Did that happen after the secondment occurred?

Mr. Paul Reid

It happened prior to and post the secondment.

It had completed the data analysis on our contact tracing. Can Mr. Reid confirm when that tender was awarded? Was it directly before or was it after the secondment?

Mr. Paul Reid

We have a drawdown contract under which there were regular drawdowns prior to and during the Covid pandemic, prior to the appointment of the person the Deputy just named and post that appointment. There were regular drawdowns for required support during that period.

Will the Comptroller and Auditor General briefly give us his opinion on the hypothetical situation of a consultant being seconded to a State board and his or her consultancy then being awarded tenders?

Mr. Seamus McCarthy

It is very difficult to talk about a hypothetical situation. Obviously, controls should be in place to ensure that an individual was not improperly influencing award decisions. I certainly have no information regarding the matter the Deputy is discussing.

It is unlikely that we are going to that information. In budget 2021, an additional 1,250 community beds were committed to. How many were delivered? Some 600 of those community beds were intended to be rehabilitation beds. How many have been delivered?

Mr. Paul Reid

Would Ms O'Connor like to make any comments regarding community beds?

Ms Anne O'Connor

Is the Deputy asking about the number of beds?

Ms Anne O'Connor

Our winter plan for last year carried into our service plan for this year. We had planned to develop 612 public beds and to develop access to approximately 555 private beds through a contract. We have put in place 288 of the public beds and 479 of the private beds have been contracted. With regard to community-based beds, we have a considerable number of traditional long-term residential care beds around the country. We have been converting many of those to more rehabilitation-oriented beds to support discharge from hospital and to prevent admission to hospital.

Some 600 rehabilitation beds were committed to. How many of those have been delivered? How many of the 5 million additional home care hours that were to be funded have been delivered?

Ms Anne O'Connor

The 5 million was part of both our winter plan and our NSP. It is worth noting that, in our mid-year NSP review, we have reduced that down to 3.5 million additional hours on top of the base budget of 19 million because of the surge. We have now delivered more than 2 million and expect to deliver the 3.5 million by the end of the year. On home support, it is worth flagging, although it may already be known to the Deputy, that we have a significant challenge in recruiting home support workers, as do many of the agencies we fund. It is a serious challenge for us and is impacting on our ability to spend the available budget. We will have delivered 3.5 million of the just under 5 million extra hours that were funded as part of the NSP.

There is a shortage of 1.5 million hours. To get clarification, how many of the 600 rehabilitation beds have been delivered?

Ms Anne O'Connor

These are repurposed community beds. Of the 612, we have delivered 288 but there are again challenges in the context of infrastructure and staffing.

I thank Ms O'Connor for her reply. Before we conclude, I will revert to the issue of the ambulances for a moment, although only briefly because we are up against the clock. On Mr. Reid's point about visiting a centre, I have no problem doing that. I am sure that, when I go to a call centre - there is one in Tallaght and another in Ballyshannon - that I will see that it works efficiently, that a response will be given within the allowed time and that an ambulance will be mobilised to go to the scene of the accident or that an emergency call will get a response within the time allowed. I have no doubt about that. The system is there. I do not speak about ticking a box in any sort of glib way. I am saying that I understand that those response times are being met in the centre but that the problem is in the deployment on the ground. If somebody is lying seriously injured 15 miles from Portlaoise hospital, for example, and the ambulances from that general area are 50, 60, 80 or 100 km away, that creates a problem.

It creates a problem if there are several ambulances chasing the same emergency. That is what is happening. I have outlined the situation to Mr. Reid. I hear about these cases from ambulance crews. These are honest people who are concerned about patient safety. They will not gain extra pay for letting us know these things. I hear these things from people working in the ambulance sector across the State. They are honourable people who give their all. What I am saying to Mr. Reid is this is where the problem is and we cannot continue to ignore it. I have been raising this issue in the Dáil for several years and although Mr. Reid has done some great work as CEO of the HSE, I am disappointed with his response on this issue and I will continue to raise it. Ministers have to take this issue on board as well because human life and health and the well-being of patients has to be paramount. I ask Mr. Reid to reflect on what I am saying to him. I am not saying it to score points; I am saying it truthfully based on the knowledge available to me. I have a real concern, first for my constituents, but also for the wider public across this State. We have to try to do our best for them. I thank Mr. Reid for his reply but ask him to please reflect on what I have said. That is all I ask of him.

Mr. Paul Reid

As I said at the start of the meeting, I fully respect the credentials of all the examples the Chairman has given and that they have been relayed to him as specific experiences of people. Nobody wants to see these things happen. I agree with the Chairman regarding the staff of the National Ambulance Service. I meet them all regularly. They have been heroic. It is not just a paramedic response unit any more. The work they have done during Covid has made us all very proud and we are all anxious to address any issues that emerge.

I agree fully with Mr. Reid's remarks on the staff. Deputy Verona Murphy has asked a question that I ask our guests to take away with them. She is seeking details on the 465 ventilators that were received, when they were sent to India, whether any payment was received, what is proposed for the remaining 100 ventilators and the cost-effectiveness of storing the remaining ventilators. I do not expect Mr. Reid to answer those questions now. The clerk to the committee will send him a note on it. I thank him for his replies.

I thank our guests for joining us and I thank the HSE staff for their work in preparing for the meeting. I know a substantial amount of work is involved. I thank the Comptroller and Auditor General and his staff for attending the meeting.

Is it agreed to request the clerk to the committee to seek any follow-up information and to carry out any actions arising from the meeting? Agreed. Is it agreed that we will note and publish the opening statements and briefings provided for today's meeting? Agreed. We will resume our examination of the HSE's financial statements for 2020 at 9.30 a.m. on Thursday, 23 September. The committee stands adjourned until 9.30 a.m. on Tuesday, 21 September, when it will meet in public session to consider correspondence and any other business.

The witnesses withdrew.
The committee adjourned at 11.38 a.m. until 9.30 a.m. on Tuesday, 21 September 2021.