Monday 25 March 2019

Taoiseach 'caused problem' with comments on 'low-balling' by State contractors - minister

Children's hospital cost: Government moves to shift blame to 'highly paid' advisors

Construction of the new National Children's Hospital taking place in Dublin (Niall Carson/PA Wire)
Construction of the new National Children's Hospital taking place in Dublin (Niall Carson/PA Wire)
Philip Ryan

Philip Ryan

The Government is moving to shift blame for the National Children's Hospital debacle on to "highly paid" consultancy firms which provided advice before construction on the controversial project started.

The move comes after Taoiseach Leo Varadkar caused a major headache for his own Government by sparking a war of words with the construction firm heading up the major State project.

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Senior government figures were yesterday defending construction company BAM after it said it was willing to pull out of the project in the wake of the Taoiseach's comments about "low-balling" bids for State contracts.

One Cabinet minister said: "The Taoiseach has caused a problem with his comments and it doesn't look like BAM is the real issue.

"BAM is only claiming €60m of the €450m overrun and BAM's claims were validate by an independent arbitrator," the minister added.

Another senior government source said consultancy firms which provided key advice before the project began had "dropped the ball" before the construction phase.

"There hasn't been enough focus on consultancy and advisory firms through this whole fiasco. That's what's at the heart of the overrun problem," the source added.

The controversy surrounding the hospital is now entering its fourth week, with questions still remaining over how costs skyrocketed from an estimated €800m in 2014 to the current projected cost of €1.7bn.

Writing in today's Sunday Independent, Finance Minister Paschal Donohoe says the Government will examine how to "improve the performance of advisory firms" in light of the Children's Hospital controversy.

"We need to understand how projects deliver against the promises initially set out, feed this back and improve our performance over time," Mr Donohoe says.

The minister says a number of new initiatives will be introduced to ensure the Government can evaluate major public projects before they begin.

Future payments to consultancy firms will be performance related, under the new plans.

Meanwhile, Health Minister Simon Harris was yesterday forced to publicly back BAM's continued development of the National Children's Hospital after the firm offered to pull out of the project.

Speaking to Brendan O'Connor on RTE Radio One, Mr Harris said there was "no going back" on the project and he hoped everyone will continue to do what they had signed up to do "which is to build the hospital that children so desperately need".

The minister also had to defend the Taoiseach's Dail comments about 'low-balling', which is the practice of making low price tender bids before coming back with inflated costs once a contract is won.

"There are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State," Mr Varadkar told the Dail last week.

Speaking on RTE, Mr Harris said: "The Taoiseach made very clear in his statement that he wasn't talking about any particular company and the record of the Dail shows that.

"No one is blaming anyone here, what people are saying, including the Taoiseach, is there is an inquiry, can we let it look into the issues and see where it brings us."

He said he did not believe the Taoiseach needed to provide any further clarification on his comments, adding the Government would follow the evidence in relation to the PWC report.

"You don't ask a group of auditors to go in and look at a thing and then start putting out caveats and apologises in advance of it." He dismissed suggestions that the relationship between the Government and the contractor was toxic.

On Friday, BAM CEO Theo Cullinane issued a statement insisting his company "did not benefit inappropriately from the tender process and much of the commentary is based on incomplete and inaccurate information".

Mr Cullinane called on the Taoiseach to clarify that he was not referring to BAM in his Dail comments and note that the company "continues to make a significant contribution to Ireland".

He said the "confidence of all parties involved" in the Children's Hospital is a "vital requirement" for the company.

"BAM wishes to advise the hospital board that if it would prefer to opt out of this contract and procure the work in some other way, then BAM will cooperate with them to facilitate this option," he added.

A spokesperson for Mr Varadkar said: "The Taoiseach did not reference any specific company in the Dail.

"The Government is not satisfied with several aspects of how the new National Children's Hospital project has been delivered. There is understandable public concern about the matter. For this reason, PwC has been commissioned to carry out an independent examination. He hopes and trusts that all parties and contractors will co-operate fully with it."

A BAM spokesperson said they would not be commenting beyond the company's first statement.

Bam originally made claims for additional costs totalling €200m, but an independent arbitrator awarded them costs of €60m.

A recently published Department of Health memo revealed how design and consultancy costs increased as part of the review of the hospital project.

Last week, Minister Harris apologised to the Dail over a response to questions about the hospital development from Fianna Fail TD Barry Cowen.

Sunday Independent

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