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Dáil Éireann debate -
Wednesday, 18 Oct 1995

Vol. 457 No. 2

Ceisteanna—Questions. Oral Answers. - Consultancy Services.

Mary Harney


1 Miss Harney asked the Taoiseach the tendering procedures for the appointment of consultants in his Department. [14958/95]

Mary Harney


2 Miss Harney asked the Taoiseach the reason there has been such a substantial increase during the last three years in the cost of consultancy services in his Department. [15076/95]

I propose to take Questions Nos. 1 and 2 together.

Before awarding a consultancy contract my Department generally invites at least three firms to tender, in line with the general rules for their engagement as set out in the Department of Finance's Public Procurement booklet. However in exceptional cases, where clear justification exists for engaging a person with particular expertise, such specialists are engaged without competitive tendering. The total cost of such a contract would not usually exceed £5,000 but where it does, the sanction of the Minister for Finance is secured before payment.

The outturn, or expected outturn, on consultancy services in recent years has been: £10,500 in 1991, £6,000 in 1992, £113,500 in 1993, £362,000 in 1994 and £90,000 in 1995. In 1993 the increase was caused mainly by the engagement on contract of Nemesis and Carr Communications, to provide additional expertise within the Department to assist the then Taoiseach and the then Ministers of State. In 1994, £259,000 was spent on consultants, engaged by the Efficiency Audit Group, to carry out a review of the Defence Forces.

The total 1995 expenditure to date on consultancy services amounts to £48,000. The projected outturn for the year is £90,000. The major expenditure has been £20,000 to Andersen Consulting for a study on internal audit systems in the Department and £20,000 for consultancy work commissioned by the Constitution review group.

May I take it from the Taoiseach's response that, with the exception of the appointment of an expert — if there is only one expert there cannot be competitive tendering — the appointment of consultants is always put out to tender?

In respect of small items of business, where the administrative and other costs involved in seeking tenders would be excessive, a fee is often agreed. Such contracts would not normally exceed £5,000, but where they do the sanction of the Department of Finance is sought. The overwhelming majority of consultants are appointed on the basis of a tendering procedure.

Is the Taoiseach saying that there is not often a commercial reason for not putting projects out to tender? Is the Taoiseach saying that tendering is the normal commercial behaviour?

Tendering is the normal way to proceed in any case in which one wants to get value for money. However, there may be exceptions in respect of small business items, when a person with special expertise is sought or when one must act quickly. However, the overwhelming majority of consultancies awarded by the Department are done on a tendering basis.

There is a widely held view in semi-State companies and elsewhere that the best commercial bargain is not always got by way of tender and that there are other ways of dealing with the matter. Will the Taoiseach comment in that regard? Is he saying it is tender or nothing in all cases?

Competition is good for business in any area of life and if a number of people are allowed compete, one will obtain the best price. That is common sense and is provided for in the Department of Finance guidelines on public business. It is also important to point out that when dealing with public business, as distinct from commercial private business, one is dealing with somebody else's money. We must be seen to be more careful in such dealings than in the case of a private business deal and that applies to Government and State companies. When State companies sell assets or place business they are dealing with assets that ultimately belong to the people and, therefore, great care must be taken to be transparently competitive, effective and cost conscious in the way the business is placed.

The Taoiseach, therefore, should investigate the sale of the Aer Lingus hotels for more than £200 million.

The Deputy is raising a matter worthy of a separate question.

In view of the Taoiseach's comments about tendering I want to bring to his attention the sale of the Aer Lingus hotels and Irish Steel——

The Deputy may not proceed on a matter about which a separate question should be tabled.

——neither of which went to private tender.

Let us inject some realism into this matter. Everybody is aware that Irish Steel was on the market for years. When he was Minister for Industry and Commerce, Deputy Reynolds believed he had a deal made for the sale of Irish Steel and everybody is aware of that.

What about Aer Lingus hotels?

Equally, anybody who examined the balance sheet of Aer Lingus would realise it needed an injection of cash and that, therefore, a reasonable offer for the hotels would be entertained.

I thought the Taoiseach believed in tendering.

I understand the offer in question was worthwhile.

It was a matter, therefore, of merely taking a good offer.

There was no need to place an advertisement in a newspaper stating that anybody interested in buying Irish Steel should send a letter to PO Box 25. Everybody knew the State would be interested in disposing of part of its interest in Irish Steel.

It was a matter of taking a good offer.

However, it is a different matter when selling a site——

As opposed to hotels.

——and those interested in buying it were being fobbed off——

Many people were fobbed off in respect of Aer Lingus hotels.

——and subsequently an interested individual or company buys it without going to open tender and without it being in the public arena.

There was no tendering for the Aer Lingus hotels.

That is different from the position of Irish Steel or Aer Lingus and Deputy Brennan, who is an intelligent man, is capable of understanding that.

Some days the Taoiseach is in favour of tendering and other days he is not.

I would not advise Deputy Brennan to continue on this line because he is wrong.

The Taoiseach should answer the question on the Aer Lingus hotels.

I answered it.

He did not answer in regard to the Aer Lingus hotels.

I call question No. 3.

I did answer the question regarding Aer Lingus hotels but the difficulty is that Deputy Burke was not listening, he was obviously in dreamland, in a reverie, thinking about something else.

Why did the Taoiseach not put out to tender the sale of the Aer Lingus hotels?

I recollect I ruled out of order any reference to a specific matter, hotel or subject.

Apparently, it is all right for the Taoiseach but not for us. Why did he not put them to tender?

I answered the question. The Deputy is now admitting that he had the Act, because he is quoting from it. A moment ago, he said he did not have it.

It is à la carte——

The Chair should be obeyed when he calls the next question.