Dáil Éireann debate -
Thursday, 11 Dec 1986

Vol. 370 No. 11

Written Answers. - Committee on Public Expenditure.

34.

Mr. O'Kennedy

asked the Minister for Finance if the Government have adopted any of the recommendations of the published reports of the Dáil Committee on Public Expenditure; and if so, if he will specify the extent of the adoption of each report.

Minister for Finance (Mr. J. Bruton)

The answer is in the form of a tabular statement which I propose to circulate for inclusion in the Official Report.

The Dáil Committee on Public Expenditure has published 22 reports to date. Following is the position in relation to the reports which fall within my area of responsibility.

Report	Recommendation	Government position
Service of Public Debt	(i) Sinking funds be replaced by a system of depreciation of assets.	No change proposed.
	(ii) Provision be made for formalised Oireachtas discussion and analysis of domestic and foreign borrowing policy.	Existing mechanisms are adequate for this purpose.
Control of Capital Projects	(i) Present system of briefing, monitoring and controlling expenditure on capital projects must be improved.	The improvements in control and reporting systems recommended are an integral part of recommended project appraisal, monitoring and control procedures as defined in Department of Finance Circular 1/83 “Outline guide to procedure to be followed in relation to capital expenditure in the public sector”.
	(ii) Project proposals to be based on estimated total costs rather than current costs.
	(iii) Reporting systems must be improved.
	(iv) Specific responsibility accountability to be assigned to individual management teams within Departments.
	(v) Fixed price tenders to be sought for contracts of shorter duration than 2 years.	Under new procedures published recently by the Department of Finance fixed price contracts will be sought for well-defined work of less-defined work of less than 12-18 months duration.
	(vi) The system of fee payments for consultants must be amended.	New procedures introduced in June 1986 involve the “splitting” of fees to enable payment to be related to work stages completed. There is now more negotiation/competition on consultants' fees. Public contracting authorities will, in all situations, disregard institutionalised fee scales and abide by the basic principle of value for money.
	(vii) A Technical Advisory Unit to be set up in the Department of Finance.	The basic role of the Department of Finance is to define standards for project evaluation. The application of those standards must be the responsibility of management in line Departments and agencies and not that of a central agency.
	(viii) Full costs of projects should be charged to budget allocations.	Not practicable within present Vote accounting arrangements.
	(ix) Improvements should be made in the format and layout of the PCP booklet.	The PCP booklet is essentially an information document designed to provide broad information on the composition of planned investment by public sector bodies. Recent years have seen considerable improvement in the scope and quality of the data produced, without at the same time taking from the clarity and thrust of the booklet. It would be a retrograde step if the broad strategic thrust of the public capital programme were to be lost in a welter of detail on individual projects.
	(x) No project should be considered for inclusion in the PCP unless it satisfies the criteria of Circular 1/83. There should be more stringent controls and less discretion allowed to Departments in interpretation of the guidelines laid down therein.	The guidelines are by their nature flexible instruments designed to allow the bodies to which they apply to put them into operation in a way that best suits particular programmes. The circular acknowledges that the size and nature of projects must inevitably influence the extent to which the steps outlined in the circular are applied. The Committee's emphasis on a much more central role for the Department of Finance in capital project appraisal seems to be both inflexible and unwieldy and unnecessarily and excessively bureaucratic. In addition it would undermine the important principle that line management in spending Departments should be accountable for implementation of the guidelines.
Review of a proposal to introduce a Charge Card system for Civil Servants travelling on official business	A pilot scheme should be introduced in an appropriate Department for a limited time.	Recommendation accepted. In late autumn 1986 the Department of Finance introduced a pilot scheme for an initial period of six months at the end of which period savings to the Exchequer will be quantified.
Review of Exchequer costs of Travel and Subsistence	(i) Competitive prices should be sought in all cases where State travel, accommodation and related costs are involved.
	(ii) A centralised booking office for public service travel and accommodation should be set up under the aegis of one Department.	These recommendations are being considered in the context of the Estimates for 1987.
	(iii) The cost of travel and subsistence should be apportioned to each section manager.
The Prize Bond Scheme	(i) The Department of Finance should offer for tender the franchise to develop and operate the prize bond scheme for a 5-year term to all financial institutions operating in Ireland including those in public ownership.
	(ii) The Department of Finance should revise the scheme itself to determine whether an alternative form would be more acceptable.	The report, published on 12 November 1986, is still under examination.
	(iii) The prize fund should be revised downwards.
	(iv) The computerisation of the scheme should be suspended until the questions of scheme design and growth potential are addressed.
	(v) The Bank of Ireland should be charged with responsibility for reviewing the operation of comparable prize bond schemes abroad and undertaking market research surveys in Ireland.
OPW1. Project procedures used in the Acquisition and Fit Out of Premises	(i) A feasibility document hould be prepared for all but the smallest projects.	Feasibility documents are prepared.
(ii) Costs should be included on a current cost basis.	This recommendation has been adopted.
(iii) A contingency figure should be included.	It is proposed to include this item in future estimates.
	(iv) The document should include an allocation for rent payable from lease commencement to occupation date.	All relevant items are included.
	(v) Changes in the scope of the project or delays occasioned by the client Departments must be highlighted and allocated as a responsibility to the client Department.	Changes in briefs are being actively discouraged, but where additional costs are unavoidable every effort is made to achieve a corresponding saving.
	(vi) A Management Control System must be set up particularly on larger projects.	This recommendation has been adopted.
	(vii) Project Co-ordinators should be appointed.	This recommendation has been adopted.
	(viii) A routine review system should be set up to compare performance on projects on the ongoing basis.	This recommendation has been adopted.
2. Rental and Lease Terms in the Period 1981-83	(i) Strategic Plan—A medium term plan covering the next 3 to 5 years must be prepared.	A plan for the construction of new office and other buildings in the years 1987 to 1991 has been prepared.
	(ii) Lease terms should be reviewed and should include:	Since the publication of the report in November 1984 a total of 30 properties have been leased by the Commissioners of Public Works or which 11 were in Dublin. In all of the leases provision was made for upwards or downwards rent reviews although some provided that the rent as a result of a review would not be less than the initial rent. Where fitting out was involved an appropriate rent free period was sought and generally obtained. Where the term of the lease exceeded 10 years an option in favour of the Tenant was included in the lease to terminate the lease at ten yearly intervals.
	(a) Upwards and downwards rent reviews.
	(b) Rent free periods for fit out,
	(c) Lease break clauses,
	(d) Landlord Structural Guarantees,
	(e) Landlord Guarantee on building services,
	(f) User leases,
	(g) Any other areas of specific concern to Government Departments such as security etc.
	(iii) There should be selective use of professional valuation surveyors and property consultants on negotiating rent reviews, on negotiating new leases and in the establishment of a comprehensive register of market rents and conditions. Their reappointment must be based on demonstrable evidence of performance in achieving the best rent and terms.	Since the publication of the report consultants have been engaged by the Commissioners of Public Works to negotiate the rent reviews of 20 properties. A total of 16 consultants were engaged.
	(iv) The annual estimate and annual outturn of the OPW should show the rent on Unoccupied Space as a separate figure.	Office space specifically allocated to Government Department is shown under the appropriate subhead as a charge on that Department. All vacant accommodation is chargeable to OPW.
	(v) All Public Sector Bodies should be required to confirm through the OPW that the OPW are not acting in a particular lease or purchase.	A circular issued from the Department of Finance in 1978 to all Departments requesting that the Bodies under their aegis considering leasing office space consult with OPW prior to entering into negotiations.
	(vi) The Property Services Division of OPW should prepare an Annual Report to the Commissioners reviewing performance in the previous twelve months on rents lease terms and rent reviews and comparing this to the overall market situation as objectively as possible.	An Annual Report for 1985 has been prepared and this practice will continue in future years.
Review of leasing of Public Sector Accommodation	(i) In each case involving new or additional accommodation a study should be undertaken as to the most cost-effective decision, whether to rent, purchase or hire.	Where appropriate these recommendations have been complied with, with the proviso that before OPW can dispose of property, regulations specify that all Government Departments must be circulated and asked if they need the property retained.
	(ii) No lease should be signed unless a contract has been signed to dispose of the existing accommodation.
Faults in Buildings occupied by the Public Service.	(i) A detailed survey should be commissioned before acquiring lease or freehold.	All buildings are examined by architectural, electrical and fire safety staff before a letting is entered into.
	(ii) A 10 year (minimum) structural guarantee should be obtained.	Although such guarantees, where appropriate, were sought, it was not possible to obtain them.
	(iii) The new lessee or purchaser should insist that rights and warranties which the owner/developer has with his design team and contractors are passed on.	Since the publication of the report the Commissioners of Public Works have not taken a lease of any property where it would be necessary to ensure that such rights were passed on.
	(iv) Commercial lease terms in general should be reviewed, particularly in relation to repairing covenants.	It is not possible except with the agreement of the Landlord to vary the terms of a signed lease.
		For future leases standard terms being drawn up at present will include provisions based on these recommendations.