Vol. 350 No. 13
andMr. Coogan asked the Minister for Industry, Trade, Commerce and Tourism the cost of the new headquarters planned for the Institute of Industrial Research and Standards; whether the cost is within the initial budget prepared for the project; and if he is satisfied that such expenditure is justified in the current economic climate.
9.
asked the Minister for Industry, Trade, Commerce and Tourism the reason the report of inquiry into over expenditure by the IIRS has not yet been published; when it will be published; and if he will make a statement on the matter.
I propose to take Questions Nos. 8 and 9 together.
On 27 January 1983, I announced in the Dáil that I would have an indepth inquiry carried out into the cost overrun on the IIRS Administration-Information Technology Building known as the "A" Building, at Ballymun. The building which was commenced in 1979 was due for completion in 1982. However, in August of that year it became clear that, while the funds allocated to the building were almost entirely spent, the work was far from complete. The inquiry was undertaken by the Minister of State at my Department, Deputy Collins, with the assistance of a panel of advisers.
The report of the inquiry is, and was always intended to be, confidential and I do not intend to publish it. However, I did indicate that I would make a statement on the matter here in the House which I now propose to make.
The inquiry established that:
(i) When the first stage of the IIRS Ballymun building programme commenced in 1974, involving work amounting to £992,000, a contract was placed on the basis of competitive tenders. It also provided for the retention of the contractor for Stage 2 of the work which related to the "A" building, subject to satisfactory performance. This is a common practice and can be the most cost effective method.
(ii) The contract for the "A" building was based on a bill of approximate quantities. This provided an outline sketch of the estimated work and material that would be required but where the design of the project had not been finalised. The use of unfinished design work and incomplete costings, together with the retention of the contractor for Stage 2 of the building programme was not an appropriate method of undertaking such a large capital project.
(iii) The design team headed by the outside architect grossly under-estimated the cost of the building and did not bring this to the notice of the institute until August 1982. The Department were only then advised.
(iv) The board of the institute apparently gave only very cursory consideration to the "A" building project and accepted seriously defective reports on its progress and cost.
(v) The board and some members of senior management at the institute must be held to be negligent for: (a) failing to have the project fully designed and costed at a preliminary stage; (b) failing to examine in detail and to recognise the serious errors and inadequacies in reports furnished to them or to oversee the project properly; (c), failing to interpret information available to them which would have brought to light the under-estimation by their professional adviser; (d) operating an unsatisfactory method of determining the annual estimate for the institute's building programme.
(vi) My Department did not concern themselves with relating requests as they came for funds to the estimated overall cost of the building and must bear responsibility for not seeking the fullest possible information on the project.
The inquiry has clearly established that there were major deficiencies in planning and monitoring the construction of the building. I will shortly discuss with the board of the institute the question of appropriate disciplinary procedure. The report of the inquiry set out procedures to be followed by my Department and the semi-State bodies under its aegis on future building programmes. These procedures have been adopted with a view to avoiding a similar occurrence in the future.
Because of the manner in which the building was planned, the changes to the design that were made during construction and the degree of extravagance in fitting out parts of the building, the final cost of £7.9 million will exceed the cost of Government accommodation of a similar size. However, in its present condition the second phase of the building is unusable and, unless the situation is rectified, it would represent a wasteful use of Exchequer funds. Accordingly, the Government have agreed that the building should be completed and fitted out at a cost of £1.422 million. This amount has been provided in the 1984 Estimates for this purpose.
The level of office accommodation exceeds the current needs of the Institute. I have requested the institute to examine the possibility of using the excess space for laboratory use and to report to me at an early date.
I thank the Minister for such a comprehensive statement. He will appreciate that I initiated this inquiry a short time before I left the Department because it came to my notice in August 1982 when a request came in for an additional £1½ million.
I ask the Deputy to frame what he has to say in the form of a question rather than giving the history of the matter.
I know but you have to put it into context. I will not be very long about it. This is a very serious matter and we are not getting the opportunity in the Dáil, as the Minister said, for a full debate on it. From what he said a pretty comprehensive inquiry took place.
Much as the Chair would like to see this matter being fully discussed it cannot be debated at Question Time. This would not be in order.
I will keep within the guidelines as much as I can. This is a pretty serious situation. There are a few questions I want to ask the Minister. This matter came to light in August 1982 when a request came in. I see the Minister has not exonerated the Department in relation to not putting in a request for payment. This is how I came across it during the cutbacks in 1982.
The Deputy is putting the Chair in an embarrassing position. I cannot simply sit here and allow the Deputy to continue like this.
I would be only too delighted if the Minister would agree to have even a very short debate in the House on this. It is very unsatisfactory from my point of view at Question Time. I would remind the Chair and the Minister that when I originally brought up this matter the Minister of State, Deputy Eddie Collins, said the matter would be put before the House for a discussion. It puts me in a rather awkward situation——
Perhaps the Deputy would frame that in a question.
Would the Minister consider putting it before the House? Is there anything more in it that the public and the Members of the House are not entitled to know about? There are lessons to be learned out of this. I am sure the Minister will agree with that.
May I just respond to what Deputy Reynolds has said? The formal inquiry consisting of a panel of advisers overseen by the Minister of State, was initiated by me. I am aware that Deputy Reynolds during his period in office was concerned about this matter and initiated some preliminary moves to bring the matter to the surface. I am not suggesting that he did anything less than fully perform his responsibilities in this matter. For the record, the formal inquiry was initiated by me. As far as the debate is concerned I do not have sole discretion in that. It is a matter for negotiation between the Whips as to what matter is the subject of debate in the House. If the Deputy wants to initiate a debate in Private Members time he is free to do so. There have also been occasions when the Government allowed some of their time to be used for debates on matters requested by the Opposition but it would not be for me to give a decision on that matter at this stage. It would be more appropriate, if that is what the Deputy has in mind, if he initiated moves through the normal channels.
We will take that up through the Whips and have a discussion on it. In case it might not come out that way, there are a few questions I want to ask the Minister. He says the architect grossly under-estimated the cost of it. Will he tell the House how much the architect's fees were for this project and if they have been paid in full? Does he propose to take any action against the architect who grossly under-estimated the cost of the project?
As far as the architects' fees are concerned, I recommended on receipt of the report of the inquiry that the institute should seek to negotiate a reduction of the fees for the project. This recommendation has been acted upon by the institute and I understand they have successfully negotiated a reduction in the fees. I naturally would not wish to comment further as to legal liabilities.
Has the Minister looked into it?
Of course I would wish the institute to pursue any legal means of redress they may have against anyone who may have contributed to the fact that this project, which was planned to cost somewhere in the region of £2.87 million when it commenced in 1978, has ended up costing £7.9 million. One must make some allowance for inflation but clearly there was a major over-expenditure.
Could the Minister say if there was a specific contract and a specific bill of quantities for this building?
I realise that my original answer was rather long and the Deputy may not have picked up every nuance.
I want straight answers to straight questions. There was an original contract but I understand there was no contract for the second portion. Is that correct?
Let me refresh the Deputy's memory. The contract for the "A" building was based on a bill of approximate quantites and this merely provided an outline sketch of the estimated work and material that would be required. The design of the project had not been finalised. The initial contract was based on approximate quantities and an unfinalised design, some parts of which were changed during the course of building. The fact that the design was unfinalised and that the bill of quantities was approximate led to the cost turning out to be a lot larger than the sum which was discussed at the time of the original contract.
Would the Minister agree that the use of poor approximations is not appropriate in the execution of Government contracts? Is there not a lesson to be learned from this inquiry as to project management in the public sector? Has the Minister any plans to institute a totally new procedure so that this type of thing, which has happened so often in the past, cannot recur? I am glad he is not putting the total blame on the IIRS. Obviously there is a lack of communication.
The Deputy should ask a question.
What disciplinary action does the Minister propose to take against people who were negligent in not matching the request for funds against estimates for the job?
I heartily agree with the Deputy's implication that the procedures disclosed are quite unsatisfactory. The report of the inquiry contained certain recommendations about future contracts designed to avoid a recurrence. While I was unaware of this over-run, as the Minister for Finance I was responsible for setting up a committee on cost over-runs in public sector contracts. When they reported to the present Minister for Finance last year they laid down a new set of procedures. These procedures are now operative and will contribute to the avoidance of a recurrence of this type of exercise. I would make no attempt to defend what has happened in this instance. I am concerned at negligence in all quarters, both in the institute and in my Department and on the part of professional advisers. I will be considering all of these together. I will be initiating discussions with the board of the institute in regard to disciplinary procedures there and I will also discuss with the people in my Department the question of what would be appropriate within the Department.
Would the Minister confirm that there was no obligation on this institute and that generally there is no obligation on a semi-State body, to obtain sanction or permission from the relevant Department if they wish to involve themselves in substantial expenditure in the development of office blocks for their own use? If there is not such an obligation, will the Minister take steps immediately to ensure that any semi-State body or other body using public funds would be obliged to obtain sanction before embarking on any contract?
It would be wise to provide that expenditures, particularly on office accommodation, by institutes of this kind should be subject to prior approval by the Minister. That should be the pattern. I can see that in the case of capital expenditures of a kind more specifically related to the normal functions of the institute, as distinct from office accommodation, there would perhaps be need for less stringent requirements. I would point out that the institute have to obtain sanction each year for their estimates, broken down as between capital and current expenditure. That procedure always affords the Minister and the Department an opportunity to question or halt projects which in their view represent bad value for money. It would be appropriate to have special procedures in regard to such things as office accommodation, which are outside what one would normally regard as an appropriate area of delegation to the board. That would be my considered opinion. However, I would need to do some work on the precise methods of making it operate.
Would the Minister agree that the real problem is that there was not a specific contract and a specific tender for this job? When the application came to me for additional expenditure in August I refused to sanction it and set up a preliminary inquiry. I am glad the Minister took up the instruction I had given for a full inquiry before I left office. It reveals that there was no specific contract for this building, that it was a carry-on of a previous contract, that there was no specific tender and that it was grossly underestimated by the architect, who claimed £1 million in fees. Am I correct in that figure?
I have already indicated that there has been a substantial——
Is the figure right or wrong? The Minister should not hedge. It is taxpayers' money. Is it £1 million or not?
I will put the first question which concerns the architects' fees——
We have now reached the stage on this question when we are debating the Minister's answer. That is not in order.
I am asking questions. I listed them one after another and I will sit down for the Minister's reply.
The Deputy is making long statements on matters arising out of what the Minister said and what the Deputy did when he was Minister.
The Minister also made long statements. I am entitled to put the record straight in relation to the wrong spending of public money. I will not accept responsibility for that. I am trying to pin the responsibility where it should lie.
I ask the Deputy to cease speaking when the Chair is attempting to speak. I ask him and all Deputies to conform to the rulings of the Chair. Question Time has got out of control because it is not being used as such. Rather it is being used as a platform for debates.
That is why I asked for a debate which I consider necessary.
Perhaps a debate is necessary but the Chair is not expressing any views on that matter other than to point out that this is not the time for a debate.
I want answers to some straightforward questions. First, what was the figure of the architects' fees? Was it £1 million or something near that figure? Secondly, what penalties will be imposed in future procedures which the Minister has referred to in respect of people who over-spend on particular projects? Thirdly, will the Minister agree there was no specific contract for this building and that there was no specific tender for the specific job? That is where one of the real problems arose in relation to over-expenditure.
In regard to the last part of the Deputy's question, the answer is yes. In regard to over-expenditure in future, we have initiated procedures as a result of this inquiry and as a result of the report to the committee dealing with cost overruns in the public sector which I initiated with the Minister for Finance which are designed specifically to prevent such over-expenditures in the future. As to disciplinary procedures in this case, I have indicated I intend to discuss this matter with the institute. However, I would not wish to make a general statement about disciplinary procedures because the appropriate discipline would tend to vary with the seriousness of the offence. With regard to the architects' fees, I am not able to give the Deputy precise information as to the extent of the fees paid to the architects——
The fees asked for——
I ask the Deputy to allow me to answer the question. Neither am I able to give the Deputy the precise figure as to the extent to which fees have been reduced as a result of the negotiations that took place following my recommendation. However, I am quite prepared to seek out that information for the Deputy and furnish it to him, either in the House or privately, whichever is the more convenient to him.
I thank the Minister.
Will the Minister clarify if the £1.42 million for the completion of Stage 2 includes the cost of conversion to laboratory accommodation?
The exact method whereby the accommodation planned as an office can be converted to laboratory accommodation has not yet been finalised. Perhaps some additional money may be necessary for this purpose but I am not in a position to say at this stage. In view of the difficulties that may arise in converting it to laboratory accommodation, it may be that all the work may not be completed this year.
