Joint Committee on Communications, Climate Action and Environment debate -
Thursday, 6 Dec 2018

Review of Procurement Process for National Broadband Plan: Discussion

Chairman

We will now consider the review of the procurement process for the national broadband plan with Mr. Peter Smyth who is here to discuss his report.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. However, if they are directed by the Chairman to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

I also advise witnesses that any submission or opening statement made to the committee will be published on the committee's website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not 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. I remind members and witnesses to turn off their mobile phones or put them in flight mode as they interfere with the sound system. I ask Mr. Smyth to make his opening statement.

Mr. Peter Smyth

I am happy to accept the committee's invitation to discuss my review of the procurement process for the State-led intervention under the national broadband plan. I can discuss my review and findings with respect to the implications for the procurement process of the meetings between the former Minister for Communications, Climate Action and Environment and representatives of the Granahan McCourt consortium. However, I cannot discuss the ongoing procurement process in any detail beyond what is already in the public domain because the process remains live, nor can I discuss any substantive issues relating to the bid submitted, which is the subject of ongoing evaluation by the Department of Communications, Climate Action and Environment.

Chairman

We accept all of those points. On foot of his work and investigations, is Mr. Smyth satisfied that nothing said at any of the meetings or set out in correspondence sent or received has had an impact on the tender process? Can he expand on how he arrived at his decision?

Mr. Peter Smyth

I am satisfied that the process is safe. I have followed a number of different lines. I looked at all of the meetings involving the former Minister and different parties to the tender process and went through them in some detail, considering available minutes or any testimony to which I had access. I had access to the testimony of different people as to what was discussed at those meetings. I confirm that for 37 of those meetings where there is third-party verification present, the national broadband plan was not discussed. I am reliant on the former Minister and Mr. McCourt for the view that there was no discussion of the national broadband plan at the other three meetings. While I have no reason to believe that the national broadband plan was discussed based on what was presented, I proceeded to look at what has been the impact on the process itself. In that case, I have much more robust evidence to support the view that nothing has happened with the process. I have looked at four different things in that regard. The first thing I looked at was information available to the Minister which could have been passed on to a bidder which would have been of benefit to the bidder. Purely in view of the nature of the competitive dialogue process where there is ongoing dialogue between the Department and the bidder, information is communicated in real time between the parties in terms of positions on closing contracts, the submission on technical capacity, financing, operation and running and what is being proposed. There is no basis to assume the Minister has information that the bidder does not already have through the process. The one thing the bidder does not seem to be taking account of is the Department's affordability envelope. The Minister is privy to that and it is evident from the discussion on 26 June that the bidder was being pressed to bring the cost down. In my experience, if someone has evidence or a view of what the affordability is, tenders tend to come in very close to that number. For me, that is the evidence that the information was not communicated.

I have gone further and looked at how the documents evolved and who was involved in making changes to them and whether the Minister had any involvement in that. All of that is happening at the bottom level of the teams. When I look at the evaluation process, the evaluation teams are acting completely independently. Even when one comes up to the next level of management, those managers cannot change the outcome of the evaluation. They can comment on the way things are phrased and presented but they cannot actually go back to evaluation teams and require them to change a finding with which management does not agree. That is totally within the gift of the evaluation team. Having followed those chains of evidence through the process, I am satisfied that the process is safe.

Chairman

I will move on to our members. I ask Senator Joe O'Reilly-----

Deputy Bríd Smith

On a point of order, will the Chairman be observing a pecking order after Senator O'Reilly?

Chairman

I am taking people as they indicated; Senator Joe O'Reilly, Deputy Dooley, Deputy Bríd Smith, Deputy Eamon Ryan, Senator McDowell and Deputy Stanley.

Senator Joe O'Reilly

I thank the Chairman and I thank colleagues for the indulgence. I have another engagement to attend but I might get back before the end of this meeting. We all appreciate that this may go on. I may not hear Mr. Smyth's direct answer but I will read the transcript. I have four simple questions that people have asked me on the streets or in conversation. People who elect us ask about this on a regular basis. They are basic but kernel questions from the man on the street. First, did the then Minister, Deputy Naughten, interfere in the process? Second, did he attempt to interfere? Third, did he have any information available to him which could have been of benefit to the bidder? Fourth, is Mr. Smyth convinced the process is untainted and that we are good to go? Those questions are simply put and there is no point in elaborating on them.

Mr. Peter Smyth

I do not believe the Minister either interfered or attempted to interfere in the process. I am pretty unequivocal about that. It is reasonable to state that he had information which would have been of benefit to the bidder. However, the nature of the dialogue process meant the time lag between the Minister having that information and the bidder having it was minimal if not almost non-existent. The information was being passed almost in real time because of the way the dialogue process was being carried out.

Senator Joe O'Reilly

In practical terms, it could not have happened.

Mr. Peter Smyth

In practical terms, not really. As to whether I believe that the process has been tainted, I have been clear that I am of the view that the process is untainted by the meetings between the former Minister and Mr. McCourt.

Deputy Timmy Dooley

I welcome Mr. Smyth and thank him for his report. I want to pull back from the process a little to try to understand the rules of engagement. Mr. Smyth will be familiar with the document National Broadband Plan: State Led Intervention: Communication Protocol between DCCAE and External Stakeholders, a third updated version of which was published on 1 September 2016. Said document sets out the rules of engagement on communications between the Department and bidders. On section 9 of the document which is headed "Canvassing", the approach Mr. Smyth took was to consider whether there had been interference and whether the process had been tainted. The Minister outlined for us yesterday that Mr. Smyth set out four key questions against which he tested everything in his consideration as to whether the procurement process was compromised in any way. We accept that was the basis for his report and leave it aside. I want to understand why Mr. Smyth did not look at two other aspects of the matter. First, were the rules broken in the communication between the parties? If so, did the breach have the capacity to taint or in any way disrupt the process? It seems to me that Mr. Smyth did part B without looking at part A. At least, that is my reading of his report.

In light of the document setting out the rules on communication, does Mr. Smyth believe the prohibition on canvassing applies? It refers clearly to "Direct or indirect canvassing by any Bidder, Consortium Member, Bidder Member or their suppliers or advisers in relation to the Project or the Procurement" and states, "Any breach of this section will entitle the Department to immediately disqualify the Bidder concerned from the Procurement."

I would like to discuss that matter with Mr. Smyth. Why did he not give consideration to what seems to be an obvious breach of that rule?

Mr. Peter Smyth

If I am right, the Deputy is asking whether I consider that the meetings involving the former Minister and Mr. McCourt amounted to canvassing.

Chairman

Is that the question?

Deputy Timmy Dooley

I want to understand if Mr. Smyth thinks these interventions broke the rule to which I refer. There were several meetings. The meeting in New York clearly should not have happened in light of the guidelines. All sorts of flags should be raised when a discussion happens without a member of the national broadband plan team present. It is the only meeting from which we have minutes which prove that a discussion took place that should not have taken place. What does Mr. Smyth think they were doing? What was Mr. McCourt doing?

Chairman

The Deputy should allow Mr. Smyth to answer the question.

Mr. Peter Smyth

I formed the view that the meetings did not amount to canvassing.

Deputy Timmy Dooley

That is helpful. Can Mr. Smyth take us through what he thinks was happening?

Mr. Peter Smyth

Would the Deputy like to me to proceed meeting by meeting or does he want me to deal with the meeting of 16 September?

Deputy Timmy Dooley

There were a lot of meetings. Let us start with the meeting in 2017, which is critical. That meeting involved the discussion which took place at Mr. McCourt's home in the company of a Minister of State, the then Minister for Communications, Climate Action and Environment and a third person whose name has been redacted. Can Mr. Smyth provide an indication of what he thinks happened at that meeting? Is he basing his view on the statements of those present? Were those written statements or were they given in response to a questionnaire that Mr. Smyth provided? Did Mr. Smyth have oral communication with all those who attended that meeting?

Mr. Peter Smyth

I had an oral communication with all concerned. I exchanged phone calls with everybody concerned with respect to all of the meetings, and I exchanged-----

Deputy Timmy Dooley

They were phone calls. Mr. Smyth did not meet these people face to face.

Mr. Peter Smyth

No.

Deputy Timmy Dooley

This is important. This goes to the core of what it is all about. Were those statements taken under oath?

Mr. Peter Smyth

No. I am not a lawyer and my process does not require people to swear statements under oath.

Deputy Timmy Dooley

Mr. Smyth's report goes on to state that he has accepted the word of those concerned. He has done so in the absence of sworn statements. I am surprised by that. Regardless of his process or its validity, Mr. Smyth has tried to get at the truth but has accepted evidence in absolute good faith without people making statements under oath.

Mr. Peter Smyth

My review does not require sworn testimony. The process is not set up in that way. There was never going to be sworn testimony. Part of the reason I said that I cannot state anything unequivocally is that I have not taken sworn testimony.

Deputy Timmy Dooley

Mr. Smyth is a process auditor so he has obviously done a lot of this work before.

Mr. Peter Smyth

Yes, I have.

Deputy Timmy Dooley

Has he ever had a finding that went against the process?

Mr. Peter Smyth

In the processes that I have audited so far, no.

Deputy Timmy Dooley

Let us return to the meetings. The meeting in Clare that happened on 16 or 17 September 2017 took place when there were two other bidders in the race. It took place in the context of SIRO making it clear that it would possibly not remain in the race. Let us return to what Deputy Smith said earlier. The average punter thinks Mr. Smyth and everybody else involved believes in fairy tales if they think there was no discussion of the national broadband plan at any time during that encounter. The then Minister for Communications, Climate Action and Environment and one of the bidders were in a convivial environment. They had a dinner at the home of one of the bidders. Mr. Smyth does not believe there was any chance whatsoever of such discussion taking place and he is basing his assumption on telephone calls he has had with the participants. These statements taken by Mr. Smyth, which were not sworn statements, followed all of the other participants saying they did not discuss the national broadband plan when they were confronted with the matter in public prior to Mr. Smyth's investigation. Mr. Smyth has not made any sort of finding. He has not raised any concern. Does Mr. Smyth accept that if the national broadband plan was discussed at that particular point in September 2017, when there were two other bidders in the race, that would have given rise to considerable concern?

Mr. Peter Smyth

I would accept that, yes.

Deputy Timmy Dooley

That would be a very serious situation, which would most likely be litigated by one or other of the parties.

Mr. Peter Smyth

I cannot comment on litigation-----

Deputy Timmy Dooley

Mr. Smyth cannot comment on what they might do. However, if the response from one of the participants said that the national broadband plan had been discussed at that event in Clare, the findings of his report would be very different.

Mr. Peter Smyth

They would be, yes.

Deputy Timmy Dooley

We will move on from that event to the dinner in New York on 17 July. We now know that a discussion took place there without the national broadband plan team.

Mr. Peter Smyth

Yes.

Deputy Timmy Dooley

Does Mr. Smyth consider that to be a breach of the guidelines and rules for communication between the parties concerned?

Mr. Peter Smyth

Yes, I consider that to be a breach of the rules in the strict sense.

Deputy Timmy Dooley

Very well.

Mr. Peter Smyth

I do not consider it to be canvassing. That is based on the content of what was communicated. It was an update on a number of points that had arisen at the sponsor meeting on 26 June.

Deputy Timmy Dooley

How does Mr. Smyth define what constitutes canvassing?

Mr. Peter Smyth

I do not have a specific definition of "canvassing". I look for a situation where somebody proposes something, looks for support for those ideas and looks for-----

Deputy Timmy Dooley

I will put this to Mr. Smyth. There were three bidders in a race. Two were very well known and one was less well known. One faced certain questions regarding capacity, experience and so on. Suppose that one of the bidders then decided, in an effort to address that apparent imbalance, to begin a process of dialogue, engagement or advertising. Suppose that bidder promoted itself as capable, confident and having the necessary wherewithal. Suppose this was all done in the presence of the Minister. To me, that is canvassing. We are politicians. We canvass in different ways. We knock on doors and talk to people. We like to get our pictures in the paper so that people see us. Canvassing can happen very overtly or in a subtle way. One could not term what happened here as anything other than canvassing. One bidder had multiple opportunities to ingratiate themselves in the eyes of the Minister. One might say there is a remove between the Minister and the departmental officials and the team. There are certain walls there that prevent that. However there is no benign way to see this as anything other than canvassing. Whether or not the canvassing had a material outcome is not the relevant point when it comes to these rules being breached. If one accepts the principle that this is canvassing, the impact is a separate issue. That is the gap in Mr. Smyth's report, if I might respectfully say so. He has not looked at all the activities that happened or what the clear intent was. He could have done that. He could have made certain findings and still come up with the same conclusions, that is, that the process was not tainted as such. Mr. Smyth covered that pretty well when he recognised that the Minister's resignation insulated the process from further contamination.

There is one issue. The former Minister spoke to it in recent days when he stated that his only desire was to keep Mr. McCourt at the table. SIRO and Eir might have liked to have the same level of desire on the part of the Department and the Minister to keep them at the table. They had all raised issues of concern. Consequently, they did not see business in it for them and pulled out.

I must push the point that Mr. Smyth's report is somewhat less than complete on the canvassing. I will give Mr. Smyth another opportunity to explain how he did not see it as canvassing.

Mr. Peter Smyth

I sat down, I talked to people, I looked at minutes and I looked at what was discussed at various meetings. Deputy Dooley is asking me to speculate on what might or might not have been discussed at a meeting.

Deputy Timmy Dooley

I suppose what I am asking-----

Chairman

The Deputy should let Mr. Smyth finish.

Mr. Peter Smyth

That is not what I have been doing. I have tried as far as possible to work with the facts as I can establish them. I have avoided speculating and trying to form opinions, and have tried to work to facts. On that basis, I do not have any facts or information which would lead me to a conclusion that there was canvassing.

What I have said is that the series of meetings, in particular, meetings that did not appear to be necessary in terms of the process, gave cause for concern and they are the reason I was recruited to do the report. They create what I described as an apparent bias and the Minister stepping down effectively negates that apparent bias.

I accept, if one takes the average man-in-the-street's view, the Deputy is asking the question on the basis that something must have happened but I have no evidence stating that something happened. I have no evidence of the Minister trying to engage in the process in favour of Granahan McCourt. That leads me to the conclusion that there was not canvassing.

Deputy Timmy Dooley

Would Mr. Smyth say that the actions of the two parties concerned, by leaving themselves in a position where there are no minutes and they were the only two who participated in certain meetings and phone calls, have left the situation open to the view that there was potential for canvassing to take place which, of itself, would be a serious finding that would be damaging to the overall process? By Mr. Smyth not being able to say that canvassing took place, neither can he say that it did not. I would have thought - I am not a lawyer and there are members here more qualified than am I to comment on this - at a minimum it left the situation open to a perception that canvassing took place. As for bias, Mr. Smyth found the same, "apparent bias", and he used that term. We can say "apparent canvassing" or the potential for canvassing, or the perception of canvassing, which, in itself, would be a breach of the rules.

Mr. Peter Smyth

I cannot come to a conclusion about canvassing. I can come to a conclusion about an apparent bias.

Chairman

Has Deputy Dooley any other questions?

Deputy Timmy Dooley

I will leave it at that for the time being.

Chairman

I will move on to Deputy Bríd Smith.

Deputy Bríd Smith

I want to ask Mr. Smyth about the business of the process itself. I note "process auditor" is Mr. Smyth's title. One of the most extraordinary statements I heard throughout the whole controversy was when the Taoiseach stated that the problem with the arrangement or meetings, whatever they were, the 18 meetings between the then Minister, Deputy Naughten, and Granahan McCourt, the dinners he had and all the rest of it, was not that they met and had dinner but that he did not have dinner with all the others as well. In other words, it is okay to have dinner with those who are bidding for the contract but one needs to have dinner with everybody. The other two bidders were SIRO and Eir. Did Mr. Smyth question them and did he find out if there were any dinners, lobbying or whatever?

Mr. Peter Smyth

I did not interview anybody from SIRO and Eir. If one reads the report, there are a number of meetings and one-on-ones with the CEO of Eir but the focus of those meetings was all on Eir's roll-out of fibre to the home to 300,000 homes. It seems to have focused exclusively on that subject because that was where Eir saw the key advantage to it.

The former Minister also had four meetings with the CEO of Vodafone. The focus there was Vodafone's broadband expansion outside the process and its mobile broadband.

The former Minister did meet the other bidders. He had engagements and one-on-ones. One of the meetings with the CEO of Eir was a breakfast meeting. It was followed by a coffee meeting with the CEO of Vodafone, followed by the launch of the Vodafone Internet of things. There are different dates on which there were meetings overlapping.

Deputy Bríd Smith

Why then did the Taoiseach think there was a problem that the former Minister did not have dinner with the other two, and that he only had dinner with one of the bidders?

Mr. Peter Smyth

I am not aware that the Taoiseach had said that.

Deputy Bríd Smith

The Taoiseach did.

Mr. Peter Smyth

I would consider that to be-----

Deputy Bríd Smith

The Taoiseach is quoted in the media as saying it. I think he was in Cavan at some event when he said it. The Taoiseach stated that the main problem is that the then Minister had dinner with one bidder and not all three of them. Is Mr. Smyth concerned that that has tainted the process?

Mr. Peter Smyth

No. I am also telling the Deputy that the then Minister met all of the bidders at different stages at different parts of the process.

Deputy Bríd Smith

But he did not have dinner with them.

Mr. Peter Smyth

He did have dinner or different meals with them.

Deputy Bríd Smith

The Taoiseach was wrong then.

Mr. Peter Smyth

I think he is being quoted incorrectly. I cannot say the Taoiseach is wrong because I did not hear what he said.

Deputy Bríd Smith

Okay. I will find the quote for Mr. Smyth and send it to him.

Mr. Smyth states he believes the process is not tainted by the meetings between Mr. McCourt and the former Minister. Is the process at all tainted, although maybe not by the meetings? Most people who vote and put us in this House would look at this and ask, "In the name of God, what sort of tangled web of corruption and deceit is going on here? What is our public money being spent on?"

Something Mr. Smyth, as somebody who conducts auditing of processes, might explain is whether at any stage he considered that there should be an investigation into the fact that one of the bidders who came late into the process himself was under investigation for the sale of Siteserv and whether that has ramifications for the process of the tendering. He came in late. It would be like me coming to compete in the tendering process, as Bríd Smith Limited, telling Mr. Smyth I have Bank of Ireland and Sisk builders on board and we three will do this together but then, a year later after I got the tender, stating that I have not Bank of Ireland but Bank of America, and I have not Sisk but Murphy. Is that sort of process okay? That is what happened here in SSE being replaced by the Irish Infrastructure Fund and then John Laing being replaced by Denis O'Brien at the table. Is all that acceptable in the process of tendering?

Mr. Peter Smyth

Deputy Bríd Smith is asking me to step outside the remit of my report into the ongoing process.

Deputy Bríd Smith

Mr. Smyth is a process auditor and I am asking him about the process.

Mr. Peter Smyth

That is true. However, the Deputy is actually asking me to comment on an ongoing process and I am afraid I cannot do that.

Deputy Bríd Smith

This has happened. It may be ongoing but it has happened.

Mr. Peter Smyth

It is still ongoing.

Deputy Bríd Smith

Lastly, at any stage was the Minister of State, Deputy Breen, questioned by Mr. Smyth as to his role in this because the Minister of State set up the meeting between McCourt and Naughten in Clare where they had dinner?

Mr. Peter Smyth

I spoke to the Minister of State, Deputy Breen, because he is my third party in terms of what was discussed at the dinner with the former Minister, Deputy Naughten, and Mr. McCourt.

Deputy Bríd Smith

Does Mr. Smyth think Deputy Breen had a role in any of this, other than setting up the dinner?

Mr. Peter Smyth

I do not think Deputy Breen had a role in this, other than setting up the dinner.

Deputy Bríd Smith

I thank Mr. Smyth.

Chairman

I thank Deputy Bríd Smith. I will move to Deputy Eamon Ryan.

Deputy Eamon Ryan

I suppose I should state at the outset that I am a former Minister in the Department and ran - or was involved in, oversaw or whatever is the word for what the Minister does - a procurement process. That ended up with a single bidder, Three, which ended up winning the process. I am glad to say we delivered the project on time and to budget. I met the bidders at various stages throughout that process.

Even in this role, as an Opposition spokesperson for this area on this committee, I have met Mr. McCourt, recently and just once. I meet ESB every now and then. I meet Eir, meet Vodafone and meet SIRO. I meet everyone because one needs to talk to people to have an understanding of what is a complex technological area.

Mr. Smyth detailed all the various meetings that the former Minister, Deputy Naughten, had and I asked myself, "What is different? Why did the then Minister, Deputy Naughten, resign?" Maybe I got the answer in a line of Mr. Smyth's report. Where he speaks of the number of meetings the then Minister had and the dinners he had, Mr. Smyth's report states:

The remaining meetings as and of themselves gave rise to a concern as they suggest an ongoing engagement between the former Minister and Mr McCourt outside of any formal need for them to engage with each other in the normal course of the Department's business including the State-led intervention under the NBP.

Given that characterisation, as I read it in the report, does Mr. Smyth agree that what happened in this instance was that some of the meetings were not part of what would ordinarily be regarded as a formal need for engagement between a Minister and industry representatives, including those in a tender process?

Mr. Peter Smyth

The answer is probably "Yes". It comes back to Deputy Dooley's question about what was wholly necessary. Most of the meetings can be ascribed to specific activity in the Department in specific areas, and there is a reason for the Minister to be meeting. There are a number of meetings regarding which there is not a specific tie to the activity of the Department. Again-----

Deputy Eamon Ryan

How many meetings? It is hard to follow the trail because there were so many meetings and telephone conversations.

Mr. Peter Smyth

The meetings that fall into that category are the dinner in Clare, the dinner in February and the dinner in March.

Deputy Eamon Ryan

Was the dinner in February the one in the Merrion Hotel, or was that the one in March?

Mr. Peter Smyth

That was in March, I believe.

Deputy Eamon Ryan

Where was the dinner in February?

Mr. Peter Smyth

I think it was also in the Merrion Hotel. It was originally supposed to be in an alternative location but the Deputy will remember that there was a threat of snowstorms so it ended up getting moved.

Deputy Eamon Ryan

At the dinner in New York, there was an official, but not one tied to the national broadband plan process. At the meetings in Clare and in the Merrion Hotel, there was no official with the Minister.

Mr. Peter Smyth

At the meetings in March and in Clare, there was no official with the Minister. At the meeting of February, there was. The press secretary and the secretary were both at those meetings.

Deputy Eamon Ryan

The private secretary or the-----

Mr. Peter Smyth

The private secretary.

Deputy Eamon Ryan

It is slightly different. That is an issue considering the hypersensitivity of the Department on this issue because the Moriarty tribunal concerned another procurement process related to it. I do not believe the Department would have allowed me to go to a dinner with a bidder on my own. That would have set so many alarm bells off that there would have been a red alert. Does Mr. Smyth get a sense from the Department that it recognises that its Minister is not being protected if there are informal meetings of the kind in question, and that it would be very uncomfortable about it happening?

Mr. Peter Smyth

I have not interviewed the officials in the Department and asked them whether they were concerned about the meetings with the Minister.

Deputy Eamon Ryan

I would say they would be.

From my experience of a similar situation, I believe it is hard for the public to believe the position on the dinner in March, in the Merrion Hotel, where we are told there was no discussion of the matter in question. It was mainly a discussion on the use of The Box in Trinity College Dublin and ALTV to train Syrian refugees. While there is a memo for the meeting in New York, there is only a brief mention of what was the biggest political issue for rural areas and the whole focus of the then Minister. The thought that there was not really any conversation on that issue is not really credible. That is why, when the Dáil debated this matter and found out about the series of meetings, there was not really a single dissenting voice in a Chamber of 158 Members, many of whom are friends of former Minister Naughten, for whom I have the highest regard. There was not really a single dissenting voice on his having to resign. Is the assessment of the 158 Deputies fair?

Mr. Peter Smyth

Again, the Deputy is asking me to speculate. He is asking me to speculate on what was discussed or not discussed at meetings. In this whole process, I have tried not to speculate. I have tried to work on establishing facts, insofar as I can, and then following other trains of evidence in support-----

Deputy Eamon Ryan

What I am saying is that the 158 Deputies did speculate. The result of the speculation was that it is more than likely, unfortunately, that there was a discussion on the national broadband plan.

Mr. Peter Smyth

And that is why I have the statement about there being an apparent cause for concern and apparent bias.

Deputy Eamon Ryan

Mr. Smyth is referring to the line I read out at the very start on there being no formal need for these meetings.

Mr. Peter Smyth

Yes.

Senator Michael McDowell

I thank Mr. Smyth for coming in this afternoon. Can I ask him about his own process? He said he reviewed contemporaneous business and formal records of the various engagements and meetings. Did he ask the chief actors involved for a written statement?

Mr. Peter Smyth

No.

Senator Michael McDowell

Does he believe he should have done that?

Mr. Peter Smyth

No.

Senator Michael McDowell

Why did he not ask them for a written statement?

Mr. Peter Smyth

Where there were formal minutes and notes of a meeting, I did not feel it was appropriate to start interrogating people as to what else was discussed at the meetings.

Senator Michael McDowell

I see. I want to be clear about this. Mr. Smyth did not ask anybody involved at any of the meetings for which there are records or notes whether there was anything else discussed.

Mr. Peter Smyth

Not directly, no.

Senator Michael McDowell

With regard to the unminuted meetings, did he ask the participants to give him a written statement as to what they were doing on those occasions?

Mr. Peter Smyth

I did not ask them to give me a written statement. I spoke to them over the telephone on multiple occasions to get records of the various meetings.

Senator Michael McDowell

I want to understand this again. Mr. Smyth did not ask Mr. McCourt and the former Minister to put in writing, for his consideration, their account of the meetings that took place.

Mr. Peter Smyth

I did not. Mr. McCourt provided a written statement without being requested to do so. He sent a memo to the Department, to be copied to me, with his view on the various meetings and discussions that had taken place.

Senator Michael McDowell

Did he supply that to the former Minister, Deputy Naughten?

Mr. Peter Smyth

I do not believe so. It was addressed to the assistant secretary in the Department.

Senator Michael McDowell

Did Mr. Smyth say he spoke to them on the telephone?

Mr. Peter Smyth

Correct.

Senator Michael McDowell

How often did he speak to each of them on the telephone regarding these matters?

Mr. Peter Smyth

With Deputy Naughten, I had eight calls and 14 text message exchanges, plus two emails. With Mr. David McCourt, I had eight calls, 15 text messages and two emails.

Senator Michael McDowell

Mr. Smyth also had the benefit of a written statement from Mr. McCourt.

Mr. Peter Smyth

I also had the benefit of a written statement from Mr. McCourt.

Senator Michael McDowell

Who arranged these telephone calls? Was it Mr. Smyth?

Mr. Peter Smyth

In the first instance, I contacted the former Minister's office in Roscommon and was given his mobile number. I sent him a message asking him to give me a call to discuss the process. All the exchanges were between me and him. There were a number of cases where I rang him and got through to his office, after which he rang me back.

Senator Michael McDowell

I see. Was Mr. Smyth aware of who was with him when he was speaking to him on the telephone?

Mr. Peter Smyth

No.

Senator Michael McDowell

Does Mr. Smyth not agree that the advantage of asking for a separate written statement from each of these gentlemen is that they would commit themselves to a version before he started asking one of them on the telephone for information in a situation where the call could be discussed with the other?

Mr. Peter Smyth

I do not think there is any advantage because, if they wanted to fabricate evidence, they could fabricate evidence.

Senator Michael McDowell

If Mr. Smyth asked both of them to come before him, it would be very simple for him to ask whether they had been speaking to each other since he last spoke to them.

Mr. Peter Smyth

The process I was running was to be completed in three weeks. It was completed in four.

Senator Michael McDowell

I cannot see how a written statement from both of them would not have helped. Mr. Smyth would have known their versions of the dinner in New York and of what was discussed. He would have known the versions of the one, two or three dinners in the Merrion Hotel.

Mr. Peter Smyth

I had Mr. McCourt's statement containing his version of the dinner before I started the work.

Senator Michael McDowell

Mr. Smyth proceeded on the basis that the former Minister-----

Chairman

The Senator should allow Mr. Smyth to finish his reply.

Mr. Peter Smyth

The Department supplied the Minister's diary and other information and notes on various meetings. I called Deputy Naughten and went through the meetings with him, put together their chronology and validated-----

Senator Michael McDowell

Did Mr. Smyth meet Deputy Naughten in person or speak to him by phone?

Mr. Peter Smyth

I spoke to Deputy Naughten by phone.

Senator Michael McDowell

Mr. Smyth assumed that the written statement Mr. McCourt provided through the Secretary General of the Department had not been given to Deputy Naughten.

Mr. Peter Smyth

Correct.

Senator Michael McDowell

Was there any basis for that assumption?

Mr. Peter Smyth

There was no particular basis for it. However, the former Minister had made various statements about the meetings, dinners, etc.

Senator Michael McDowell

Those statements were incomplete.

Mr. Peter Smyth

They were incomplete to a certain degree, yes.

Senator Michael McDowell

Who set up the New York dinner?

Mr. Peter Smyth

Mr. McCourt.

Senator Michael McDowell

Mr. McCourt knew the then Minister was going to be in New York and issued an invitation.

Mr. Peter Smyth

Mr. McCourt asked the then Minister to join him for dinner.

Senator Michael McDowell

Who set up the dinner in County Clare attended by the Minister of State, Deputy Breen?

Mr. Peter Smyth

It is my understanding that the Minister of State, Deputy Breen, set up that dinner.

Senator Michael McDowell

Who set up the dinners in Dublin?

Mr. Peter Smyth

The then Minister made contact with Mr. McCourt to set up the coffee meeting in Dublin at the end of January.

Senator Michael McDowell

What about the dinners in the Merrion Hotel?

Mr. Peter Smyth

The other dinners were initiated by Mr. David McCourt.

Senator Michael McDowell

To summarise the situation, where minutes existed, Mr. Smyth did not ask anybody to elaborate on the meeting or what happened at it but, rather, took the minutes at face value.

Mr. Peter Smyth

Correct.

Senator Michael McDowell

In regard to the meetings which were not minuted, Mr. Smyth had one or more telephone conversations with the participants.

Mr. Peter Smyth

Correct.

Senator Michael McDowell

Did Mr. Smyth note the subject matter of conversations at the meetings for which there were no minutes?

Mr. Peter Smyth

Yes, I did.

Senator Michael McDowell

What were the topics of conversation? What was discussed at those meetings?

Mr. Peter Smyth

To which meeting does the Senator refer?

Senator Michael McDowell

We will begin with the dinner in New York.

Mr. Peter Smyth

The note that was formally provided refers to discussion of the national broadband plan and various matters.

Senator Michael McDowell

Did Mr. Smyth ask what the remainder of the conversation regarded?

Mr. Peter Smyth

No, because I was provided with a minute regarding what related to the national broadband plan.

Senator Michael McDowell

Did the Minister of State, Deputy Breen, provide an account of what was discussed in his house between-----

Mr. Peter Smyth

It was not the house of the Minister of State; it was the house of Mr. David McCourt.

Senator Michael McDowell

Sorry, I was confused on that point. Did the Minister of State provide an account of what was discussed at that meeting?

Mr. Peter Smyth

He did.

Senator Michael McDowell

What was discussed at that meeting?

Mr. Peter Smyth

The development of rural Ireland.

Senator Michael McDowell

Did broadband form part of that discussion on the development of rural Ireland?

Mr. Peter Smyth

It did. They discussed the 115,000 homes to which Granahan McCourt and Enet-SSE were proposing to deliver broadband. That plan was publicly launched two weeks before the meeting.

Senator Michael McDowell

Does it follow that Mr. Smyth was told what was discussed at the two dinners in Dublin by Mr. McCourt and Deputy Naughten and the discussion had nothing to do with the broadband plan?

Mr. Peter Smyth

Correct. The meeting on 27 March took place just after Mr. McCourt had been given an award by Science Foundation Ireland. That award was discussed, as was the development of ALTV.com, which is a vehicle being used for training of Syrian refugees, and the decision of Dugout, which provides media content development for the football industry, to move to Ireland.

Senator Michael McDowell

I acknowledge that Mr. Smyth had no power to administer an oath or similar, but did he regard it as his function to test and evaluate the truthfulness of what he was told in regard to the meetings which were not minuted?

Mr. Peter Smyth

I did, yes. I sought third-party corroboration of the meetings which were not minuted when such was available.

Senator Michael McDowell

Did Mr. Smyth take any steps to test the truth of what he was told in regard to the meetings for which there were neither minutes nor third-party attendees?

Mr. Peter Smyth

I ask the Senator to give me an example of what he thinks I ought to have tested.

Senator Michael McDowell

For example, Mr. Smyth could have required Deputy Naughten and Mr. McCourt to separately provide him with an account of the meeting and not afford them the opportunity to confer.

Mr. Peter Smyth

In terms of the timing of my phone calls to the parties to discuss the matter, they would not have had time to confer on what they had spoken about.

Senator Michael McDowell

I thank Mr. Smyth.

Deputy Brian Stanley

I welcome that Mr. Smyth is present to address these issues. The context of this situation is that if the tender process was completed successfully, the Minister with responsibility for signing off on it, having completed due diligence and examined what was involved in detail along with departmental officials, would go to Cabinet and recommend that the contract be approved. Other Ministers may question the process at Cabinet but the word of the responsible Minister would carry significant weight. That is how government works. As a procurement officer, is that Mr. Smyth's understanding of the process?

Mr. Peter Smyth

That is normal practice. However, in procurement of this scale, the issue of affordability is of particular relevance and the Department of Public Expenditure and Reform would have a significant role in the approval of the expenditure, independent of the sponsoring Department.

Deputy Brian Stanley

There is one bidder left in the process.

Mr. Peter Smyth

Correct.

Deputy Brian Stanley

Does Mr. Smyth agree that the bidder in question has significantly more power and clout than would be the case if there were still two or three bidders involved in the process? Is that his opinion as a procurement officer?

Mr. Peter Smyth

The Deputy is asking me to discuss the specific ongoing process.

Deputy Brian Stanley

If one bidder rather than two, three or four is tendering for a public contract to provide a particular service or infrastructure, does that bidder have significantly more clout in terms of the power play in the tendering process than would otherwise be the case? As a skilled procurement officer and auditor, does Mr. Smyth agree with that statement? What are the repercussions in terms of the public good and so on?

Mr. Peter Smyth

In general, it is an advantage to have multiple bidders. There are various things a procurement specialist can do to negate the power of a single bidder. One would ensure that one has as much information as possible on the cost to the bidder of providing the goods or services one is seeking. In large-scale public infrastructure projects, there is a process known as a public sector benchmark which is, effectively, a model of what the project should cost. That allows the public sector to determine whether it is getting value for money from the private sector by comparing the bid to what it should cost the public sector to carry out the project itself. In the context of the broadband plan, there is no formal public sector benchmark for the broadband plan but there is a very robust should-cost model to which one can compare the bidder's proposals.

Deputy Brian Stanley

I accept that.

Mr. Peter Smyth

That is done regardless of the bidder which is involved. In the context of a project of this scale, one must look to the should-cost model in terms of driving value for money.

Deputy Brian Stanley

I accept that. I agree with Mr. Smyth's statement that only having one bidder confers some advantage in a tender process.

The report states:

Following the formal notification of eir's withdrawal from the procurement process the former Minister held a brief meeting with David McCourt the chairman of enet and Granahan McCourt on the 31st of January to confirm Granahan McCourt's commitment to the procurement process notwithstanding the withdrawal of eir. The former Minister advised that he briefed the Secretary General of this meeting. However, there is no formal minute of the meeting with David McCourt on 31st of January.

Eir pulled out on 31 January but no officials were present and no minutes were kept. All we have is a verbal record. Senator McDowell asked Mr. Smyth whether a formal written statement was taken but it was not. All we have is the word of the former Minister and the word of David McCourt for what transpired at the meeting. Does Mr. Smyth find that situation open to huge risk? A meeting took place on the day eir pulled out yet the people present did not discuss the tendering process for the national broadband plan. Did the Minister telephone to talk about football, the weather in Clare or whatever? I am an Opposition spokesperson for communications. I recall the day that eir pulled out of the process because I felt that the process was in jeopardy.

Mr. Peter Smyth

To be clear, the broadband process was discussed at the meeting because the Minister sought an assurance from Mr. McCourt that the entities would continue in the process. The Minister was not going to go into the Dáil and say that we still had a live process only for Granahan McCourt to pull out immediately after he made that public statement. I did not say that the broadband plan was not discussed at the meeting. It specifically discussed whether Granahan McCourt and the consortium were committed to continuing with the process.

Deputy Brian Stanley

If I was the last remaining bidder, and the Minister was going to confirm that situation, I would say to him that my answer will be "Yes" but only if the price was right and my terms were met. I find it incredible that anything else would happen in that discussion.

The report continued:

There was a phone call on the 8th of August on foot of a senior sponsors dialogue meeting held earlier on the same day. The former Minister sent a text message summarising this call to the Secretary General. However, there is no formal minute of this call.

Let me outline what happened. There was one telephone conversation between Deputy Naughten and David McCourt and then Deputy Naughten sent a text detailing what transpired and what business was discussed to the Secretary General. Does Mr. Smyth find that strange? The procurement rules are very clear that a Minister should not meet or have discussions with a bidder, and particularly one remaining bidder, without officials being present. The report states that there was a phone call but we do not know what happened. All we have is the recollection by the former Minister or his version of what happened during that telephone conversation.

I have made a number of telephone calls today but I could not give a verbatim record of what transpired during many of them. I have a fairly good memory but I could not say word for word what happened in those conversations. However, I would recall some of the significant details. Ministers and Deputies are busy people. Does Mr. Smyth believe relating the conversation verbatim to be a precarious, haphazard and unethical way of doing things?

Mr. Peter Smyth

In terms of the time lag between the start of telephone call and the sending of the text, there is less than 30 minutes. Both are timed. The record sent to the Secretary General was pretty much contemporaneous with the call.

The senior sponsors' meeting earlier in the day, which was part of the dialogue process, resulted in a request for contact with the Minister, which was why the phone call was made. From my perspective, that call was part of the dialogue process. It would have been preferable to have a third party present to record-----

Deputy Brian Stanley

The rules say there should be a third party present.

Mr. Peter Smyth

Correct.

Deputy Brian Stanley

A number of months ago Mr. David McCourt sought to meet me but I refused. I have no power or influence over a tendering process. I have met Mr. McCourt once in the past. I did not see any need to meet him. I felt that, as an elected politician, it was inappropriate for him to meet me at this point in the process. For the life of me, I cannot understand why one Minister with one remaining bidder would have discussions at such an advanced stage of the process. Does Mr. Smyth find that wrong? Does he believe that the meeting had the potential to compromise the whole process?

Mr. Peter Smyth

I do not find it wrong.

Deputy Brian Stanley

The public does.

Mr. Peter Smyth

I note that it would have been better if a third party had been present when the phone call was made. The nature of the dialogue process is that there is an ongoing exchange and dialogue with the bidders. It is very different from most of the procurement processes. The only other process that would be similar is a negotiated process. All the other processes have an arm's length approach where I send a person a document. The person answers it and I evaluate it and may ask for clarifications. A dialogue process is specifically designed to allow the parties to meet, discuss and test and push ideas.

Deputy Brian Stanley

The process is subject to certain ground rules that were not met in this case.

The Minister made a statement in the Dáil this week that his only motivation was to keep the remaining bidder and I can understand that situation. I am on the record of the Dáil as saying to him that he became a prisoner of the process. Yet we have three meetings and telephone calls where there were no minutes kept and no officials present. We must rely on the word of the former Minister and the kingpin for the one remaining bidder. We are accepting their word for it.

Mr. Smyth is a civil servant and is not a legal officer. He was not looking at this from the point of view of a legal challenge. I have the four points of reference here. He looked at from the point of view of commercial sensitivity and whether information may have been imparted and so on. I contend that the process has not been looked at in terms of whether it has been left open to being legally challenged by somebody in the future because it has been stated that many meetings took place without the presence of officials and without a record being kept. What was discussed? We have heard the explanations but neither Deputy Naughten nor David McCourt have confirmed what happened in writing for Mr. Smyth. We also do not have third-party validation of what happened. That surely leaves the State open to a legal challenge in the future. Yesterday, the Minister said that his only motivation was to keep the remaining bidder in the process yet Mr. Smyth has said that on three occasions, where no one else was present and no record was kept of the meetings, the national broadband plan was not discussed. Does Mr. Smyth find that claim to be incredible?

The national broadband plan, NBP, was not discussed. Is that not incredible?

Mr. Peter Smyth

The Deputy is asking me to give a legal opinion, which I cannot do. There are legal advisers to the process.

Deputy Brian Stanley

Would Mr. Smyth agree that could be left open to a legal challenge?

Mr. Peter Smyth

The Deputy is asking me for a legal opinion. I will not give him a legal opinion. As a process auditor I am precluded from doing that. If the Deputy reads the rules about a process auditor, it is one of the things that is specifically precluded so I will not give him a legal view or a view as to whether there is a legal challenge.

I have said all along that I have not relied on what the various parties told me was and was not discussed at the meetings. I cannot speculate on what may have been discussed but I have gone and done the tests that I can to determine whether they did or could have done anything to interfere with the process. That is the basis of my key finding that the process is safe.

Deputy Brian Stanley

With due respect to Mr. Smyth, the problem is whether anything was discussed. He has said that the NBP was not discussed during those three conversations. If these facts were presented to anyone on the street they would not say that the NBP had not been discussed. Why would it not have been discussed? One of the days this happened was the day that Eir pulled out. There were no officials present, no minutes. It was 31 January and we are being told the NBP was not discussed. I find that incredible.

Mr. Peter Smyth

No. The Deputy has been told that on 31 January the NBP was specifically discussed because Mr. McCourt was asked whether the consortium was going to continue in the process. I have not said that the NBP was not discussed. I have actually said that was the specific purpose of the meeting.

Deputy Brian Stanley

Yes but surely the bidder was the one person remaining in the process who could pull the rug from under the Government and the State on this at that time. The bidder would have realised at that stage that it had all the clout. Mr. Smyth knows how a negotiation with tenderers or any kind of negotiation works. There is always a power play and at that point the remaining bidder holds the full deck of cards. We are saying the Minister met him to make sure he was motivated to stay in the process. He has put this on the record. The Minister had the weakest hand here and any business person in that situation would be saying to the Minister, or whoever was on the other side, that they would remain in the process provided the terms and conditions were suitable to their needs, if not they would not stay in it. Does Mr. Smyth not agree?

Mr. Peter Smyth

I have no basis to assume that conversation happened. The Department and the people running the process are rational actors. They are not going to-----

Deputy Brian Stanley

So is the bidder.

Mr. Peter Smyth

-----simply take things in terms of having to get this across the line at any cost.

Deputy Brian Stanley

The Minister is the person signing off and he said that his only motivation was to keep the bidder in the process.

Chairman

We are going to wrap up this question soon unless Mr. Smyth has anything else to say on this issue.

Deputy Michael Fitzmaurice

In the procurement process, a process I am familiar with in other areas, am I correct in saying that the tenderer fills in the document and puts in their tender bid, showing their capacity to do something, staff numbers, work done and pricing? When Eir, enet and the ESB were in it, would those figures have been in before any of these contacts were made?

Mr. Peter Smyth

The information on finances and cost of bids would not have been in the process up to that point. In terms of the procurement process in general there is a selection process in that I am deciding whether the bidder has the capacity to do what I want to do. I will have questions in the process which determine whether the bidder has the capacity to do something. It then moves into an award process where I look at methodology and how the bidder will do something and I use that to decide. Selection is a pass-fail question. One bidder can pass with 100% and another might pass with 40%. The award questions consider how the bidder proposes to do this. When I sit down and test the methodology, I ask if I believe the bidder can deliver that. When I have assessed both I will consider cost information.

Deputy Michael Fitzmaurice

Had Eir or SIRO not even got to the point of the monetary cost when they pulled out of the process?

Mr. Peter Smyth

Not SIRO because it pulled out before the submission of the detailed solution. When Eir pulled out, it would have put in an initial financial solution but at that stage it would have been very high level. It would not have been a major part of the submission at that point.

Deputy Michael Fitzmaurice

Would I be correct in saying, and I am coming from the private sector in the line of a bill of quantum, that those that give out a contract generally have a figure for the cost of something six months or a year before they put it out to tender?

Mr. Peter Smyth

In a normal tender process, the answer is "Yes" while in a competitive dialogue, it is "No". In a competitive dialogue, I may have a view on what it might cost but the function of a competitive dialogue is that I do not have a particular view on how this will be done. The purpose of the dialogue is to have a discussion with the potential bidders about what it is I am going to buy and then get to the end of the dialogue and say we have discussed the art of the possible, this is what I want to buy, tell me how it will be delivered and how much it will cost. This dialogue process was slightly different because the tenderers all had different start points. Their approaches to doing something were never going to be the same. It was not trying to get to a single model that all bidders would bid against because the only way they could do that was if all bidders were identical. It was trying to get to a stage where all the bidders were putting forward their best proposals against a set of criteria, which had been set out at the very beginning, that they must meet. That set of criteria has never been changed. Everybody is then bidding against that but because of the dialogue it was not starting, knowing exactly what it was it wanted to buy and therefore a cost model could not be done. It was done on the basis of having an idea of what the outcome would look like but in terms of how this was done and delivered I do not have that view of the world. The purpose of the dialogue is to get that view of the world.

Would the endgame for anybody tendering for it not be supplying fibre broadband to the 540,000 homes identified by the Department? Is Mr. Smyth telling me that it is like a design, build and operate, DBO, scheme and that whoever will design, build and operate, in whichever way they do it, in the most effective way is a big part of the process?

Mr. Peter Smyth

It is, but to come back to fibre broadband to the home, the Deputy is assuming that will be an outcome. The outcome specified is the delivery of broadband at a particular speed. The different options to provide broadband at that speed for an individual house have been teased out in dialogue.

Deputy Michael Fitzmaurice

If a Minister needed to meet someone at the weekend, early in the morning or late at night, did Mr. Smyth check to see if departmental staff would be available at all times, if required?

Mr. Peter Smyth

I did not ask that specific question.

Deputy Michael Fitzmaurice

Does Mr. Smyth know if they were available?

Mr. Peter Smyth

My experience suggests they were.

Deputy Michael Fitzmaurice

On a Saturday, a Sunday or any day.

Mr. Peter Smyth

Yes.

Deputy Michael Fitzmaurice

The metropolitan area networks, MANs, contract had been awarded to Enet six or seven months before. I believe the Department awarded it to 2030 without a procurement process. Did Mr. Smyth look into that matter or did he believe it might have been better to engage in a procurement process?

Mr. Peter Smyth

That is not the subject of my review and I did not form any view on it. It is my understanding the Department exercised an option in the original procurement process to extend the agreements.

Deputy Michael Fitzmaurice

Was there not an option to engage in a procurement process?

Mr. Peter Smyth

No. To state it did so without engaging in a procurement process is incorrect.

Chairman

It is not part of this discussion.

Deputy Michael Fitzmaurice

I am not asking Mr. Smyth to nail it down in pounds, shillings and pence, but does he believe broadband can be delivered as part of the current process? Also, does he believe we will achieve value for money or that it will cost a good deal more?

Mr. Peter Smyth

The Deputy is asking me about an ongoing process and I cannot answer the question.

Chairman

I know that Deputy Fitzmaurice was in the Chamber, but I said at the start of the meeting that Mr. Smyth could only discuss the review he had carried out.

Deputy Michael Fitzmaurice

I thank Mr. Smyth.

Chairman

I thank Mr. Smyth for taking the time to come before the committee.

The joint committee adjourned at 4.45 p.m. until 12.40 p.m. on Tuesday, 18 December 2018.