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Saturday 30 August 2014

Irish Water consultancy payments: IBM to get €44m as part of €80m spend

Published 14/01/2014 | 12:06

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John Tierney, managing director of Irish Water, with one of the water meters being installed around the country.
John Tierney, managing director of Irish Water, with one of the water meters being installed around the country.
Graphic showing Irish Water contracts

IRISH Water will spend at least another €30m on consultants – on top of the €50m already controversially paid out.

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Among the biggest earners will be computer giant IBM, which will be paid €44m up to the middle of next year, with a further €17m going to Accenture and almost €5m to Ernst & Young

The news comes as Irish Water today defended awarding four contracts without opening them to public competition.

Responding to revelations in today’s Irish Independent that the company used exemptions in EU procurement rules to award contracts for computer services to firms working for parent Bord Gais (BGE), it said it was “scrupulous” in hiring companies to carry out services.

The statement came as management appear before the Dail Environment committee to answer questions about a €50m spend on consultants tasked with helping establish the semi-state utility company.

Irish Water told the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht that Bord Gais expertise has shaved close to €100 million from the set up bill for Irish Water.

Executives told the Committee that the set-up costs for a brand new national utility reaching into and serving every home on the public water system were necessarily large, and so it was a priority to manage those costs.

“Between now and 2021, Irish Water will save the Exchequer over €2billion – which is a fraction of the set up costs,” said John Tierney, MD of Irish Water. “The set up costs could have hit €250million. Instead, the bill is €150million, thanks to the Government decision to set up Irish Water within Bord Gáis and give us access to Bord Gáis’ expertise.”

Managing director John Tierney has previously said that all contracts were awarded following “open competition”, but it emerged that contracts for computer services for payroll, scheduling maintenance works and recording assets were offered to existing suppliers including IBM.

This morning, a detailed breakdown on spending was sent to TDs. It emerged that €44.8m will be paid to computer giant IBM; a further €17.2m to Accenture and another €4.6m to Ernst & Young.

In addition, solicitors McCann Fitzgerald will receive €970,000 while A&L Goodbody will receive another €2.9m.

The briefing document says that KPMG will get €2.2m, while another €13.3m has been spent on 18 contractors “who were procured”.

The company’s statement said that Bord Gais and Irish Water “have been scrupulous in the awarding of contracts” and had saved “at least” €58m by using incumbents to provide additional services.

“To ensure value for money and transparency, all contracts have been awarded in line with the guidelines set out at EU level for public sector procurement,” it said.

“Irish Water was established within Bord Gáis so that the new utility could benefit from the expertise and experience of being part of a world class utility. In practice this means using Bord Gais’ capability running billing, asset management and utility financial systems.

“In order to do this, Irish Water has been set up using the same proven IT systems and processes as Bord Gáis.  This has enabled Irish Water to save at least €58m in software licences and also to meet the challenging timetable for set up.”

It confirmed the Irish Independent story – which clearly stated that no procurement rules were broken - that the contracts were not opened to competition because the services would not be delivered on time due to the technical challenges involved.

The four systems were the CORE HR & Payroll System; Syclo work management and inventory system for mobile workforce; Maximo Work & Asset Management System and Click work order scheduling system, it added.

Meanwhile, Public Expenditure Minister Brendan Howlin today insisted that Irish Water would be brought fully under the Freedom of Information laws.

Mr Howlin appeared to reject reports that Irish Water will be open to FOI requests for a period of around three years.

He said there would be no "hokey, cokey in and out regime", adding: "all the documents pertaining to Irish Water should be made available for public scrutiny".

When asked if the €50m spent on consultants to date was value for money he replied: "I don't know until I hear the full explanation... too many mistakes in the past were made by not having proper external consultation."

By Paul Melia

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