Priority Questions. - Ministerial Transport.

Joe Sherlock

Question:

63 Mr. Sherlock asked the Minister for Defence the position regarding proposals to replace the Government Gulfstream IV jet and the Beechcraft aircraft; the number of tenders received by the closing date of 30 May 2003; if a decision has yet been made on the awarding of the contracts; if new or second hand aircraft will be acquired; the total estimated cost; when it is expected that the aircraft will be in service; and if he will make a statement on the matter. [18892/03]

Bernard J. Durkan

Question:

65 Mr. Durkan asked the Minister for Defence the total number of tenders received for the purchase of Government jets; if the tenders are for new or second-hand jets, or for leasing; when those tenders are expected; when they will be evaluated; and if he will make a statement on the matter. [18897/03]

I propose to take Priority Questions Nos. 63 and 65 together.

The Government has decided to replace the Gulfstream IV and the Beechcraft King Air in the ministerial air transport role. The decision was necessary to meet the ever-increasing demands of Government business, not least in the context of a significantly enlarged European Union.

The two tender competitions for the acquisition of the aircraft, a long-range aircraft and a smaller seven to nine-seater aircraft, are now in train. The closing date for receipt of tenders for both competitions was 30 May 2003.

The tender competitions allowed for the submission of both new and previously owned aircraft and all options, such as outright purchase, lease, lease-purchase or other alternatives were open for consideration. In tandem with proposals for the supply of the aircraft, tenderers were also asked to outline offers for the Gulfstream IV aircraft as at the proposed date of hand-over of the tendered aircraft or in mid-July 2004, following the EU Presidency. Offers for the Beechcraft King Air were also requested in tandem with proposals for its replacement. Tenders were received from nine companies in respect of the long range aircraft and from six companies for the seven to nine seat aircraft. Some tenders contained a number of proposals. In addition, a number included new and pre-owned aircraft.

The tenders are the subject of evaluation and, accordingly, the Deputies will appreciate I cannot comment on the process, which is ongoing. I expect the evaluation process to be completed in or around the end of this month. The acquisition of the aircraft will be the subject of a detailed cost benefit analysis, including value for money, with comparison costs associated with alternative arrangements. Responses to the tender process will determine the most advantageous system of payment.

The cost of the acquisition of the aircraft can only be defined following the evaluation process, particularly given that pre-owned aircraft are a consideration. It is expected the new aircraft should be available for operational service by 1 October 2003.

How many tenders were received by the closing date for the Government Gulfstream IV jet? Has a decision been made on whether new or second-hand aircraft will be purchased? Has a decision been made on whether they will be purchased or leased? Will the Minister give an indication of the high expenditure of public money involved?

As I indicated in my reply, there were nine tenders for larger aircraft and six for the smaller aircraft. A number of tenders include both new and pre-owned aircraft. It will not be possible to indicate the expenditure involved until decisions are taken following the evaluation process, which is under way and should be completed by the end of the month. There will be a tough evaluation of the tenders, bearing in mind value for money and the method of payment, should that arise.

Given that the stated purpose of the acquisition of lavish new aircraft is that Ireland will assume the EU Presidency next January, is the Minister satisfied the aircraft will be in place? Will Air Corps personnel require training to fly and maintain the aircraft? When will this take place? Will a Supplementary Estimate be introduced to provide for their acquisition?

No Supplementary Estimate will be introduced by any Department and that has been made absolutely clear since the beginning of the year. It is expected, if a decision is taken following the evaluation to accept tenders, that a number of the aircraft will be available before the end of the year. With regard to the smaller aircraft, a short time, if any, would be required to train Air Corps personnel whereas if the larger aircraft were acquired, a longer training period would be necessary. I am assured by the Air Corps that is well within its ambit.

If no Supplementary Estimate is provided, does that mean the finance is in place for acquisition or lease of the aircraft?

No, there is no provision in my Estimate this year for this purpose. This could mean a number of things. Little money may be required this year or it could depend on whether the Government leases the aircraft or purchases them outright or on the time frame agreed to make payments for pre-owned aircraft. A small amount could be involved this year.

Ireland assumes the EU Presidency on 1 January.

These matters cannot be debated today because I want the evaluation to proceed as independently as possible without reference to the money available.

It has been established that tenders were invited for short haul and long haul aircraft. Has the Minister undertaken a cost benefit analysis of leasing or purchasing the aircraft? Has such an analysis been applied to both new and pre-owned aircraft? How necessary will both aircraft be following our Presidency of the EU? Has that been taken into account in an economic analysis of the proposal?

We currently have two aircraft, which have been utilised to the full over several years. These aircraft offered great flexibility to a number of Governments as people had an opportunity to conduct business in transit, prepare for meetings and return to Ireland much more quickly than they would have using commercial airlines. The aircraft have been instrumental in assisting Governments to do a much more efficient and effective job.

Ireland is a €40 billion industry and Government representatives engage in significant travel through the 15 EU member states. Travel will increase considerably in May next year when the number of member states increases to 25.

Ireland is a society, not an industry.

As Ireland is primarily an exporter, considerable business is also conducted outside Europe.

Very often politicians and the public suggest that certain moneys could be put to better use. For example, this was said when we invested in Croke Park, yet when people attended the opening ceremony for the Special Olympics, they said it was great vision on the part of the Government to get involved with the GAA in this regard.

That is why aircraft were flying overhead.

I attended the National Aquatic Centre and was reminded of the row in the House during which Members criticised the investment of money in the centre but when I saw the Special Olympians swimming, I said it was great that the Taoiseach had the vision to do that.

Interestingly, the Minister did not reply to my question about the cost benefit analysis and weighing up the benefits of purchasing or leasing. What was the result of the analysis? We are in the second half of the financial year and next year's Estimates are about to be prepared. Has the financial requirement for the purchase or lease of the aircraft been identified in the Estimates?

I made it clear in reply to Deputy Sherlock that it would not be judicious of me to outline the funding that will be available during the evaluation process. This process will be undertaken strictly on the basis of the best value for money and I intend to conduct the process in the interest of the taxpayer to the best of my ability.

I am sorry I did not reply to the Deputy's earlier question. He knows the answer but he is notorious for asking questions to which he knows the answers. It is not unusual for any of us to do so when in Opposition. The Deputy can take it that no cost benefit analysis of leasing versus purchase is needed. If one has the money, nine times out of ten or 99 times out of 100, paying for something when purchased tends to be the best way to do business. There are always costs associated with putting off payment. Having said that, current interest rates are at an historically low level, therefore, purchase by leasing and on the longer term is a more attractive proposition than it used to be.

Is the Minister aware that a number of companies which tendered have done an evaluation of the benefits both to them and to the purchaser of lease versus purchase? Will he clarify if his Department will be doing an independent analysis? Will his Department recognise and take account of the analysis and information made available by those who are in the industry and who are conversant with leasing and purchase to large corporations?

We will make an independent decision based on the best advice available. Needless to say, we take account of advice from different areas. In the final analysis, however, it will be an independent decision which will not be based on outside influence.