State rejected half-price offer on convention centre in 2007
Published 16/09/2010 | 05:00
A PROPOSAL to build the newly opened national convention centre for half of its eventual cost was rejected by a government-appointed committee, a report by the Comptroller & Auditor General (C&AG) reveals.
Spencer Dock Convention Centre Dublin (SDCCD), part of businessman Johnny Ronan's ailing Treasury Holdings group, won the public private partnership contract to build and run the centre after bidding €390m in 2007.
However, it has now emerged that the rival Anna Livia consortium, which was backed by Bennett Construction, had three bids between €203m and €224m rejected by a government steering group.
Convention Centre Dublin, located in the Dublin docklands, was officially opened earlier this month.
While not criticising the steering group's decision, C&AG John Buckley said there could be merit in changing how bids are evaluated in future.
He also found it likely that because of the high price paid, the cost of the project would outweigh its economic benefit over the next quarter century.
The C&AG report said SDCCD won the contract after assessors awarded its bid higher marks than its much cheaper rival.
Despite being considerably more expensive, the bid also fell within a benchmark set by the Office of Public Works, which set acceptable expenditure levels on the project at a maximum of €414.4m.
The Government is to make staggered payments to SDCCD over the next 25 years as part of the deal for the construction and running of the centre.
The start of the payments comes as a welcome respite to Treasury and its subsidiaries, which have had loans worth more than €1bn moved to the National Asset Management Agency. The payments will be subject to indexation, and although their cost in present-day values is €390m, the actual amount that will be paid by 2035 will be €713m.
SDCCD will be paid €3.9m a month by the Government for the next five years.
A further €2m a month will be paid to the company from state coffers for the following 20 years before the building reverts to state ownership.
The amounts spent have proved controversial, as a Failte Ireland-commissioned report on the possible benefits of the centre over the next 25 years estimates a boost to the economy of between just €170m and €255m.
According to the C&AG report, the rival bids were judged on four criteria, with marks awarded out of 100.
Forty marks related to design and construction, 30 to operation and maintenance, 20 to financial considerations and 10 to legal elements.
The C&AG report said the methodology used to assess the bids had a significant effect on their overall ranking.
Out of a possible score of 100, SDCCD's winning bid scored 67.99 points, compared with the rival bid's score of 62.82.
The C&AG report said that even though the Anna Livia bid was €187m less than SDCCD's, this was not enough to sway things in their favour.
"Due to the assessment weighting used and despite the large cost differential, it only received an additional 3.6 marks in the evaluation of cost," the report said.
In contrast, the selection of SDCCD was "based on higher marks awarded in relation to design, construction, operation and maintenance, which more than compensated for lower marks awarded in relation to financial criteria"
Mr Buckley said there could be merit in changing the way such bids were evaluated in future.