Thursday, 22 February 2018

Questions (12)

Mick Wallace


12. Deputy Mick Wallace asked the Minister for Children and Youth Affairs the contract her Department has in place with Pobal; the services Pobal provides on behalf of her Department; if the contract was awarded following a tendering process; and if she will make a statement on the matter. [8999/18]

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Oral answers (8 contributions) (Question to Children)

This question relates to the State agency and registered charity, Pobal, which administers funds on behalf of the State. The Department of Children and Youth Affairs has the majority of contracts with Pobal. Can the Minister outline the services Pobal provides on behalf of her Department, the fees charged by Pobal and, most important, if the contract with Pobal was awarded following a tendering process?

My Department has engaged Pobal to manage programmes and administer programme funding over the past two decades across a number of different programme areas including early years care and education, or child care, youth services and the ABC scheme co-funded by Atlantic Philanthropies. The largest of these relates to the administration of child care schemes and associated activity with that sector. Pobal provides services in the areas of programme specification and design, business system specification and design, customer service, case management, funding decommital and recovery, contract management and compliance. Pobal has been identified as the scheme administrator for the forthcoming affordable childcare scheme, which will replace a number of existing child care schemes administered by it. The Bill for this scheme passed Second Stage in recent weeks.

Pobal is not under the remit of my Department. As the Deputy is aware, its parent Department is the Department of Rural and Community Development. The services it provides to my Department are managed under a multi-level governance framework, specifically service level agreements, programmes of work and individual programme agreements. The high-level terms of the relationship between Pobal and my Department are set out within these agreements. These outline Pobal’s legislative obligations and the oversight arrangements in place. Pobal is also subject to the revised code of practice for the governance of State bodies, relevant circulars and the terms of the corporate framework under its parent Department.

The services Pobal delivers to my Department are formalised within programmes of work on an annual basis and are not subject to public procurement requirements. Finally, the cost of Pobal’s delivery of services to my Department is also agreed on an annual basis by individual programme areas and is subject to review and ongoing scrutiny to ensure value for money for the Exchequer funding.

I thank the Minister. An internal audit of the Department of Children and Youth Affairs completed in March 2014 examined the role played by Pobal and found some serious problems. I acknowledge the Minister was not in office at the time but I have to hand a copy of the audit report and it is pretty worrying. It states those involved understood that the Department employed Pobal without a tender process and that this approach had not been formally justified. The audit authors went on to state they did not know whether, if legally challenged, this contract with Pobal would be in line with EU directives. From a business point of view it seems unlikely that best value is achieved by dealing with one supplier without the benefit of a competitive tendering process. The Minister stated that Pobal is exempt from the requirements of the EU procurement directives and is not subject to a tendering process. Can she tell me whether legal advice was sought ? When was it obtained? Will she be willing to publish it?

I did not hear the last part of the question.

Did the Department of Children and Youth Affairs get legal advice on Pobal being outside of the rules of the EU procurement directives? If so, when was the legal advice given? Will she publish it?

Legal advice sought by the parent Department of Pobal has indicated there is no obligation on Departments to tender the contracts or arrangements made with Pobal for the management of funds, and that reflects the Teckal principle of EU procurement law, which states that open advertising and tendering rules for public contracts do not apply where a public body obtains services from in-house sources.

I want to say two things in regard to Pobal and my Department. It has provided an important, flexible and responsible service to our Department. We also plan to commission an independent review of the operating system for child care, because that is where we invest most money in terms of Pobal, and to determine whether reform is required. From a governance perspective, as the child care budget increases it would be preferable to have a closer statutory relationship with the administrator of the child care funding. That is looking to the future.

The Minister said it is independent. We have not seen the legal advice on that. Does the Minister not think that not seeking tenders and dealing with one contractor is bad business? In 2016, €204 million was disbursed via Pobal on behalf of the Minister's Department. Even though Pobal is a State agency, it does not do this work for free and charges fees. It was paid €13.5 million in 2016 for this work. It is supposed to be a not-for-profit charity.

The EU directive states that contracts greater than €135,000 must be advertised and a competitive tendering process carried out. This has not happened. We wrote to the Charities Regulator, which said it will examine all of these bodies, including charities which are statutory bodies. Pobal obviously falls under that category.

We have examined public procurement by Departments and State agencies and the number of breaches of EU directives and guidelines is scary. Last week I raised the issue of An Garda Síochána and Accenture. Accenture was paid €26.5 million in 2016 alone and there has been no tender since 2009. The Government must be losing money by not insisting on tendering processes.

The issues the Deputy has raised are important and it is an opportune time for him to raise them. This issue needs to be examined. It is important to state that my Department's work, engagement and moneys which are determined in respect of Pobal are legal and regularly scrutinised at executive level between my Department and Pobal.

I have indicated that we will conduct a review in general as our budget increases and as we continue to work with Pobal. As I understand it, a review will be conducted on the structure of the charitable status of Pobal, which is another question the Deputy raised.

We are following legal processes which are in consonance with the law. The Deputy is suggesting that we ought to consider policy changes or procure another body. Should we ask Tusla or establish another entity? These are the issues we will examine in the future.

Written Answers are published on the Oireachtas website.