asked the Minister for Defence the person who advised a company, Sikorsky, subsequent to the closing date for receipt of tenders for the purchase of helicopters by the Defence Forces that its bid was not the most competitive received; the date when he first received a further bid from the company of 27% below its original tender price; the communications which took place between the Minister and the United States ambassador regarding the tendering process, the proposed helicopters' contract and the bids received; the reason he failed to inform Dáil Éireann of his receipt of the second tender from the company and of the communications referred to; and his views on whether by his actions, he undermined the validity of the tendering process.
Private Notice Questions. - Helicopter Contract.
asked the Minister for Defence if he intends to resubmit to public tender the contract to supply new helicopters to the Defence Forces due to irregularities in the manner in which he dealt with the original tendering process; the cost to the State of the tendering process to date; the delay that will result in the delivery of the helicopters required; and if he will make a statement on the matter.
asked the Minister for Defence if he will make a statement on his contacts with the US ambassador on 11 October 2001 regarding the proposed purchase of new helicopters for the Defence Forces; the nature of the documents provided to him by the ambassador; the action, if any, he took arising from the meeting and the documents supplied; the action he intends to take to expedite the supply of these badly needed aircraft; and if he will make a statement on the matter.
asked the Minister for Defence if he will address the serious issues raised in the recent awarding of a defence contract to the US firm, Sikorsky, in particular to clarify the questions surrounding the tendering process and apparent breaches in the confidentiality of that process, and the nature of the representations made to him by the US ambassador, Mr. Richard Egan, and if he will make a statement on the matter.
I think it is worthwhile to outline briefly the various steps in the contract process. The objective of the ten der competition was to acquire two medium lift helicopters, with an option of a third, for search and rescue purposes as well as an option for two medium lift helicopters for general purpose military transport.
The tender competition was carried out in two stages, a request for proposals stage and a request for tenders stage. Responses to the request for proposals were received in the Department on 21 September 2000. Six responses were received. The six responses were evaluated and a short list of four companies for participation in the RFT stage was drawn up. The documentation for the request for tender stage issued on 5 March 2001 and tenders were due back in the Department on 19 April 2001. On that date tenders were received from four companies. Following receipt of tenders a comprehensive evaluation process began on the proposed helicopters. The evaluation, of necessity, took some time to complete.
On 3 August 2001, a reduced price proposal was received from EH Industries. On 16 August 2001, Sikorsky submitted a revised price. On 24 September 2001, a further reduced price proposal was received from Sikorsky and this revised bid was the subject of a number of newspaper articles on 7 October 2001. On 11 October 2001, Ambassador Egan made a courtesy call to me. Our discussions centred mainly on the 11 September atrocities and during the course of the meeting, the ambassador asked me to give consideration to Sikorsky's revised proposal of 24 September 2001. He followed this up in his letter of 24 October 2001. The House will be aware of the statement of 24 March by the US Embassy on this matter.
As the validity of all tenders had expired by 30 September 2001 and taking account of the changed international situation, I decided to seek best and final prices from each of the four tenderers which were to be submitted by 13 December 2001.
It is clear from what I have said about the sequence of events that the ambassador did not present me with a new bid on behalf of Sikorsky. The US ambassador is no more an agent of any American company than are the ambassadors of Italy and the United Kingdom of EH Industries or the ambassador of France of Eurocopter. All four quite properly extolled the merits of their national industries. It is no more or no less than I would expect of them or of an Irish ambassador representing the interests of this country.
Let me be very clear. The ambassador of the United States had no authority and did not seek to make a revised bid on behalf of Sikorsky. I had no authority and did not seek to accept any such bid. In fact, the letter the ambassador sent to me on 24 October 2001 was not even acknowledged as was the case with the voluminous oral and written representations I received from many quarters, including all sides of this House.
Any suggestion that I acted outside the strict conditions of the tender process is outrageous and I will forcefully communicate this to the editor of the Sunday Independent.The only bids considered were those of April 2001 and the best and final offers received on 13 December 2001. All contenders were given the exact same opportunity to review their prices in the light of the changed circumstances. All were treated equally. Three of the four submitted revised lower quotations.
I made my decision in the interests of the taxpayer and strictly in accordance with the competition criteria. I stand foursquare behind that decision. There was no underhand dealing. There was no back room collusion. This is the right decision for the country and the Air Corps.
In relation to Deputy Shatter's implication that Sikorsky was aware from some source that its tender was not the most competitive, I have no information on this except that I am aware that the company has denied any such knowledge.
While I cannot predict the outcome of court proceedings, it is my intention to proceed with the contract at the earliest possible date to ensure that the Air Corps has the best available recourses to carry out its maritime search and rescue role which is so important to the seafaring community which uses Irish waters.
If the proposed purchase of Sikorsky helicopters is in the best interests of this country, will the Minister explain why we are purchasing helicopters that have been rejected by Sweden, Denmark, Finland, Norway, Canada and Portugal? What criteria has the Minister used to determine that this country should, effectively, be the guinea pig for these helicopters which have been rejected by a number of our European partners? Does the Minister agree it is essential that confidentiality is preserved in the tendering process?
I refer to the circumstance in which the American ambassador could have known that the new Sikorsky bid in September 2001 appeared quite advantageous in cost terms to other bids – as if the American ambassador and the Sikorsky company were aware of the other bids. Does the Minister agree that no such comment could have been contained in the American ambassador's letter to him had the ambassador not have been aware of the other bids? Does he agree that no one outside the Department of Defence and the review group assessing the bids should have had any knowledge of the bids received by the Minister?
Does the Minister agree it was quite irregular for him to engage in discussions with the American ambassador specifically about the different tenders received? Does he agree that is the only conclusion that can be drawn from the letter of 24 October 2001 received by him from the American ambassador in which he states his appreciation for the Minister's personal attention in this complex matter?
Fine Gael is taking a different approach to this matter to that taken by it on 21 November 2001. Deputies will recall the debate in the Dáil that morning in which its Leader pressed the Taoiseach to intervene—
Answer the questions.
—in the tendering process so that Sikorsky would win the contract to secure jobs in north Dublin. It is important we realise that people want to change their minds. I fundamentally reject—
We are concerned about the integrity of the tendering process.
The Minister without interruption. Deputy Shatter, you will have an opportunity to respond.
The Minister should not distort what has been raised.
I fundamentally reject the outrageous allegation Deputy Shatter has made about interference by me in regard to the confidentially of tenders or that I discussed with the ambassador any issue relating to those tenders. It is that kind of innuendo that has kept Fine Gael where it is.
Answer the questions.
Deputies will appreciate the size and nature of the complexities involved in a project of this size. The value of the contract was the largest ever in the Department and every aspect of the competition had to be evaluated. The Deputy asked the way we did that. The functional characteristics, the technical merit—
I am asking about the manner in which confidentiality was breached.
—all maintenance and on line technical support, after sales service and warranty terms on offer, cost, ready availability of spare parts, tender prices, life cycle costs over a nominal 20 year period—
The Minister is avoiding the questions.
Deputy Shatter, I ask that you afford the Minister the same courtesy you received.
The Deputy asked me how we evaluated it. Marks were awarded under eight headings related directly to the award criteria – operational capability, operational suitability, technical merit, ease of maintenance, product support and warranties, training, life cycle costs over 20 years and tender prices. EH Industries was the top scorer under heading number one, Sikorsky was top scorer under headings numbers two, three and four, Eurocopter was top scorer under number five, EH Industries was top scorer under number six and Sikorsky was top scorer under number seven and eight. It is up to Sikorsky to speak for itself but the Deputy's understanding of the capacity of Sikorsky and its record in this industry seems to be beneath contempt and lacks understanding. The Deputy does not know anything about the business and has not gone to the trouble to find out the range and capacity it has.
To cast such a direct reflection on the civil and technical group which sat and examined these tenders in the way it did over four months—
The Minister is avoiding answering the question about how the confidentiality was breached.
Deputy Shatter, please.
—is just outrageous. Confidentiality was not breached.
Why did it know its bid was 27%—
I do not even know whether it knew nor does the Deputy. I have the word of the company.
The American ambassador said that—
He did not.
Minister, I ask you to address your remarks through the Chair.
It is important the Minister realises that Fine Gael's motivation here is to ensure the Air Corps gets the best helicopters in the quickest time possible. It is not helpful to anyone to cast slurs across the floor. In the report, the Minister seems to indicate that following the 11 September atrocities, he went about trying to save the taxpayer money and entered into re-negotiations or sought revised tenders. Is it fair to say that his decision was made for him by EH Industries and Sikorsky which both submitted reduced offers on 3 and 16 August, respectively, that that was the reason he went back to seek revised tenders to save the taxpayer money and not because of 11 September and that it was not initiated by him? Did the Italian, British or French ambassadors make representations to him? If they did, what form did those representations take? He briefly referred to them extolling the virtues of their national industries. Did they make any direct request to him to consider companies from their countries? When does the Minister expect the delivery of these helicopters? If Sikorsky gets the contract when does it expect to deliver them? Has the Minister an indication of when the industry expects they will be delivered?
Reports have appeared about readvertising for tenders. I do not necessarily believe those reports but can the Minister put the issue to bed? The Minister mentioned that he did not acknowledge the letter from the ambassador of the United States of America sent on 24 October. Does he agree that as a common courtesy he should acknowledge all letters he receives from ambassadors?
Nor did I acknowledge the representations made by Deputy Noonan when he asked me, through the Taoiseach, to take a different route. I did not acknowledge representations from anybody. There were more representations on this contract than anybody could possibly envisage. Representations came from all sides of this House. I ignored all representations. The decision I took was in strict accordance with EU regulations. Every aspect of it was covered. It was a fair, free and open process.
I have outlined why the second tender was sought. Tender prices expire on a certain date, on 30 September in this instance. I sought final tenders on 13 December. Arising from my judgment on that and the successful tender process, I saved the taxpayer about €5 million on the total contract. My judgment and justification in doing what I did was vindicated. Fine Gael asked me to consider having another tendering process.
The expectation is that we will secure the helicopters around the end of 2003. I intend to continue negotiations with Sikorsky to complete the contract as soon as I can. Obviously it is subject to a judicial review and I must await the outcome of that process. I received representations from ambassadors on behalf of every company.
I am pleased this is being discussed in the House and that the Minister is here to clear up the matter. Like everyone else I want to see this matter resolved so that we can receive the helicopters. The Minister stated that he received representations from other ambassadors. Did he meet other ambassadors?
Yes.
Did he meet military attachés from the United States and other countries? When the Minister received the representation from the American ambassador, did he tell him that he passed the issues raised to the appropriate expert group? There are contradictory statements in the newspapers from the PR people from the different groups. Is the Minister concerned that there were leaks in the tender process? It put into the public arena information showing one company's bid was higher than another. Did the Minister seek to clear up that matter?
The Minister rightly said that representations were made by all parties in this House on this issue. I am well aware that members of my party made representations. They wanted the issue to be resolved and have the process moved on to contract stage. Now is the time to clear this up once and for all. If one was to read the newspapers one would believe that there was only one side to the story and that the American ambassador was the only ambassador involved. Were other ambassadors or military attachés involved? Did the Minister examine the leaks that led to successive tenders from different parties?
I met other ambassadors and in almost all cases their military attachés. I did not pass on to the expert group any of the representations made to me. I did not take those representations into account, nor did I take into account those of the Deputy. On 18 October Deputy Wall raised the issue in the House. He said:
One company in the tendering process sought an extension of the closing date. During that period the company submitted a new bid which was 27% less than the original bid and the Department of Defence now refuses to accept this second bid. Considering the financial implications for the Department and the overall cost of this project, why will the Department of Defence not recognise the second offer from one of the participants, given that it was within the tender period?
That gives an idea of the representations that were made at the time. I could not consider that. My answer was that I was adhering to the tender process and the EU regulations.
Deputy Wall's party leader said on 21 November:
Before I was interrupted, I was asking the Taoiseach if he will intervene to prevent the loss of 150 jobs and the departure of some business that we could retain here . . . Does the Taoiseach agree with recent reports in the newspapers that counter trading is common practice in defence procurement? A recent newspaper report cited at least six European states, Italy, Austria, Portugal, Spain, Greece and Norway, in which the Governments have been engaged in this practice. While there is a precedent for it, I respect the Taoiseach's comments on transparency and tenders. We should have transparency.
This is irrelevant.
Deputy Quinn continued:
I ask him to repeat the entire process and invite offsets along the lines described to ensure we get the best deal in terms of the equipment the Air Corps needs and the best offset for securing jobs in FLS, formerly TEAM Aer Lingus. There is no problem with the proper procedure for tenders. I would be pleased to contemplate implementing again the whole process, including offsets, to make sure there will not be accusations of favouritism.
We still say so.
This is what the Labour Party asked for. It puts into some context the differences that are now being presented for obvious political gain on the events of that time.
(Interruptions.)
I appreciate the consistency with which Deputy Wall has approached this matter. I have outlined a history of the events that took place. I ignored the representations that were made in these instances. I dealt with the matter in accordance with the strict criteria laid down.
The Minister mentioned the courtesy call by Ambassador Egan on 11 October 2001. Did the Minister have any telephone conversations about this matter with Ambassador Egan subsequent to that? What discussions did the Minister have with Arcon consultants? I understand they were the consultants retained by Sikorsky in Dublin. What discussions took place between the Minister and the Taoiseach on this matter?
The answer to the first three questions is "No." The answer to the final question is that the Taoiseach and I had discussions at different times on various matters, including this. It was in the public arena and the Taoiseach was being pressed by Deputies on all sides to intervene in the tendering process, which he rejected. I was in the House on those occasions.
I assure the Deputy on all these counts, particularly on the questions about the ambassador telephoning me and in relation to any other company, that the answer is "No." I emphasise, in case he has any doubt, that the representations that were made in relation to this tendering process were probably unique. I am happy that I withstood the pressure that I was put under from a variety of quarters, the heaviest of which was in this House by the leaders of the Labour Party and Fine Gael, so as to protect the State and the taxpayer and to ensure that the Air Corps got the best possible deal. There was no other consideration for me.
Will the Minister agree that, to put it at its mildest, he was extremely unwise to engage in discussions with the American ambassador or any other ambassador about the tendering process and the tenders received? Will he acknowledge and accept that European Union regulations expect the confidentiality of the process to be protected and that an objective decision will be made on the tenders received? Will he confirm that Mr. Michael Keane, a public relations consultant and former general secretary of the Progressive Democrats, and Paddy Duffy, a former special adviser to the Taoiseach, lobbied on behalf of Sikorsky?
Just as the leader of Fine Gael made representations on behalf of Sikorsky, so too did many other people. The best reply is that given by the Taoiseach on 21 November in the Dáil that virtually every Member of the House had lobbied for one or other of the companies involved. Deputy Shatter suggests that he was, or is aware of the conversation I had with Mr. Egan, the ambassador, but he does not have the facts. He is prepared to put out in an insidious way something that he knows in his heart and soul to be untrue. I never discussed the tendering process with Mr. Egan or anyone else.
I have been in this House a long time, I have been a Minister in a number of Departments and I have decided tendering on a range of products, both national and international, and I tell my colleagues in the House that I have never deviated from the truth. The Deputy can attempt innuendo as much as he wants but the truth will win out in the finish, and I am happy to be able to say that about this and all other contracts. I did not discuss the tendering process with any ambassador.
In the context of the Minister's reply, will he explain the letter of 24 October 2001 from the American ambassador which refers to his meeting on 11 October with the ambassador and two advisers from the American embassy. Will the Minister confirm that that meeting took place and that one of the issues discussed was the Sikorsky bid for the helicopter contract?
The Deputy, on Tipperary FM yesterday, accused me of incompetence. I could be inclined to return the compliment, but will be more generous. In the business of politics, people have approached me all my life to say certain things. They are free to say what they want to me. If the ambassador of America, or any other country, pays me a courtesy visit – that one was mainly concerned with the atrocities of 11 September – and mentions another matter to me such as the tender, am I supposed to lock that out of the conversation? My position is simple and it is that I do not discuss things but people are free to say or write to me what they want. It is extraordinary that someone, who pretends in this House to defend people's rights, wants to suffocate any person visiting a Minister so that he or she is not free to speak. Is that the position?
What is the current position in relation to the tendering process and is litigation taking place in regard to it? If so, at what stage is it at and what is the likely timeframe?
It would be helpful to the whole process if we had more frankness and the simple truth. Last year, strong representations were made in this House to make me yield and do something that I should not do under EU regulations, and I rejected them. I took my own course and from that secured a bid which would save the taxpayer, over the whole process, about €5 million. The technical merits and other aspects of the successful tender are not in doubt. I wish to proceed and am not the one standing in the way, although people in this House, with a different motivation, are. I would like people to accept reality and allow the process to continue.
If court proceedings have to be fought, I am confident, on the basis of the exactitude with which we approached this matter, that we will be able to proceed on the basis that I outlined as quickly as possible. We have been waiting a long time for these helicopters and the Air Corps wants them. I know that an election is coming and that opportunism is part and parcel of what we must live with, but the facts are supreme and the truth is the truth. I only want the freedom to pursue this and move on, and I ask Deputies to let that happen so that we can secure for the Air Corps what it has waited for a long time. However, I cannot put an exact time on it.
Is there litigation?
There is litigation pending but whether that will be pursued—
Has the process been finalised?
No.
Where do matters stand? Is the existing litigation preventing contracts being signed and progressed? Has the Minister a timeframe in which the litigation may conclude and, if it is not concluded, will the projected date of September 2003 be at risk?
I hope that there will not be much of a difference. I obviously have no control, as no one else has, over what might happen in the court, but I am optimistic that it will not take too long and that the work in relation to the contract will be completed. The Deputies will appreciate that winning the tender does not place obligations on anyone until the contract is signed, which I want to do as soon as possible. I cannot give a precise time.
We worked on the basis of a great deal of co-operation over the past four or five years and it would be helpful if the Deputy took into account the difference between the stance particular parties took on this issue last October and that now. If we introduced a little more sense into the situation and less nonsense, we would be able to proceed much faster.
Did the Minister take the offer of offset into consideration? Is he aware of a report entitled Ireland as a Global Centre of Aerospace Excellence, published by the IDA in May 1992, which stated that an offset could be taken into consideration? Is the Minister aware of that report and, if so, did he take it into consideration?
This is the first time—
I am not trying to catch the Minister out.
I know the Deputy is not trying to catch me out but this is the first time he has turned turtle on me. First, I explained time and again that there is no scope for considering offset arrangements under European Union regulations. Second, it would be incomprehensibly difficult to evaluate the merits or otherwise of offsets but once a contract is signed with a particular company, it is important at that stage to do the best one can on the offset. However, it cannot be done at the tender stage. The Deputy should bear in mind that EU regulations are clear on this issue, there is no scope whatsoever for offset arrangements. They may be engaged in when a contract is being signed and it would be up to Enterprise Ireland or IDA Ireland to pursue that matter.