Tuesday, 11 March 2014

Ceisteanna (4)

Michael Colreavy


4. Deputy Michael Colreavy asked the Minister for Communications, Energy and Natural Resources if he will provide details of the awarding of the contract to oversee the introduction and maintenance of postcodes here; the number of companies that applied for the contract; the way a decision was reached to award the contract; and if he will make a statement on the matter. [11909/14]

Amharc ar fhreagra

Freagraí ó Béal (6 píosaí cainte) (Ceist ar Communications)

I wish to take a couple of seconds to vent my frustration. Because of the rules, protocols and regulations in this place, I was not able to change my priority questions after 11 a.m. on Thursday. The Minister announced in the press a major change with regard to a renewable energy project which has been effectively mothballed. Neither Deputy Moynihan nor I could change our questions and it makes no sense. I hope we will have an opportunity during this week to hear the Minister make a statement and to ask questions on it.

A postcode system entails converting map coordinates into machine-readable format and it is not a complicated process. Yet, it is reported that this cost €25.6 million for a contract over ten years and in addition there will be a tender for a contract for technical advice and support. This is extraordinary because I would have thought this cost would have been included in €25.6 million. It is reported that it will cost an additional €5 million to integrate the postcode system with other government software systems. There was also a €40 million turnover requirement for companies tendering for the contract which excluded most, if not all, Irish IT small and medium enterprises from applying. How is this reconciled with the Government's stated aim to support SMEs?

My Department commenced the procurement process for a national postcode system in 2011. An open and competitive procurement process was conducted in accordance with Department of Finance and EU procurement frameworks.

A pre- qualification questionnaire was issued on www.etenders.gov.ie on 17 January 2011. This invited interested parties to tender for the contract as a postcode management licence-holder for a period of ten years, to design, provide, disseminate and maintain a national postcode system. This procurement process followed the negotiated procedure under the relevant EU regulations. I must inform the Deputy that the process is a great deal more complex than he has presented. Given the technical complexity of the project, the Department ran the procurement following a competitive dialogue procedure provided for in the public supply and works Directive. The procurement was managed by my Department assisted by its advisors, PA Consulting.

The procurement comprised three specific stages. Stage 1 was a pre-qualification process involving the short-listing of candidates for the next stage on their technical capacity and financial and economic standing and this took place in early 2011. Stage 2 was an invitation to submit initial proposals together with a competitive dialogue and this took place in 2011. Stage 3 was the final tender and took place in June 2013. Three parties qualified following stage 1 of the procurement process.

Landmark, a UK company, withdrew from the process at the final tender stage. The Department subsequently received two final bids from consortia led by Capita and An Post, respectively. The two bids were evaluated by an evaluation team comprising senior personnel from my Department and its advisers. That evaluation process was conducted in August 2013 and the bids were analysed and evaluated under a number of award criteria.

The evaluation team concluded that Capita's proposal best met the criteria set out in the tender documentation and recommended it as the preferred bidder. I brought that recommendation to Government for approval in October 2013 and signed the contract with Capita on 20 December last year.

There is nobody better than management consultants at making a simple matter complex. The more complex it becomes, the more they and their friends can cash in. A postcode system converts map coordinates into machine-readable format. The complexity in this case apparently arose because the system had to be tailored in a certain way to support the administration and organisation of public services. That has never been fully explained.

In addition, I still do not understand why there was a requirement for tendering companies to have a turnover of €40 million or more, a requirement which excluded most Irish IT companies from the competition. It was also reported that a person, persons or company involved in analysis, design and advice in regard to the system was also part of the consortium which eventually won the tender. Will the Minister comment on that?

We have a leading-edge project here. In a context where every OECD country has already introduced this type of system - most of them 30 years ago - we are able to benefit from the subsequent advances in technology. Moreover, the expenditure on the project will go back to the State on a scale in excess of 50% because it involves preparing the databases within Departments and so on. The company that won the competition already employs 1,000 people in Ireland.

I did not know there was a turnover threshold below which companies could not apply, and I am sceptical as to whether that was, in fact, the case. In any event, as we can see from the period of time it has taken to reach where we are, a great deal of care went into ensuring the company chosen has the proven capacity to deliver on this significant challenge. The establishment of a system of unique identifiers puts us at the leading edge in terms of this type of technology. The new system has been universally welcomed - particularly by business, and not just businesses in the logistics areas. In the context of an era of digital enterprise, this is the way we have to go. In addition, it will add to the bottom line of An Post.

I have it on the good authority that the €40 million turnover threshold was indeed a requirement for tendering companies. Perhaps the Minister will look into the matter and draw up a note as to how that figure was arrived at. The Minister referred to complexity. In fact, all we have had is a statement to the effect that the complexity arises because the system will be used by Departments and will support the planning and evaluation of services. However, that aspect was never outlined so that the likes of me can understand where the complexity actually lies.

The Minister made no reference to the fact that a person, persons or company involved in analysis, design and advice in regard to the system is now benefiting from the ten-year contract that was awarded.

I do not know what the Deputy means by his last point. I will, of course, furnish him with a note on the point he makes about the threshold, but I do not know to whom he is referring in his last point.

I do not know who he considers to be "benefiting". The officials in my Department who brought forward the project are not benefiting. The company that was eventually selected has an extensive involvement in Ireland and a proven track record elsewhere. The value of the system is that it will improve the efficiency and accuracy of internal business processes and deliver improved efficiencies with regard to logistics. Deputy Colreavy has previously raised with me issues regarding the emergency services, each of which has welcomed this development. The system will facilitate better planning and analysis capabilities across the public and private sectors. It will provide a stimulus to mail volumes through improved direct marketing capabilities. It will enable organisations to improve existing services or develop new service offerings. It will facilitate improved efficiencies and quality improvement in the mail sector.