Mr. Fiach MacConghail: Yes, we did. Deputy Jim O’Keeffe:   Who was the architect? Mr. Fiach MacConghail: The architect for the front and back of house decorating was McCullough Mulvin, an award-winning company. They designed the original portico of the Abbey Theatre. The architect for the auditorium seating was John Keoghegan who has huge experience in the specialised area of seating, and how to configure it to have a relationship with the stage. We worked with a separate adviser from France, Jean-Guy Lecat who also has that experience. Deputy Jim O’Keeffe: While we are probing the issue, there is one other point that arose from the Comptroller’s report. He mentioned that regarding the auditorium seating, three quotations were received, the highest one was accepted. Was there a particular reason for that? Mr. Fiach MacConghail: Obviously, in terms of procurement, the lowest is not necessarily the best. We did a field trip to all the companies involved and we felt this one was the best. We had to do this in 12 days. We had a responsibility to our citizens to continue to keep the Abbey Theatre open, produce plays and minimise disruption to our other income from box office and ticket sales. One of the key conditions we wanted was to complete this in 12 days, to shut down over Easter and make a radical change. It has since been proven that the contractor who won that award was in the best position to achieve that over 12 working days. Deputy Jim O’Keeffe: I understand the pressures of trying to operate within a tight time frame. Our job is to ensure the best value for money for the taxpayer is obtained. Have the theatre and the Arts Council learned anything from this? New procurement rules have been issued by the Arts Council. Have the Abbey Theatre put in place processes and procedures that, as far as possible, enable them to fully comply with regulations in the future? Mr. Fiach MacConghail: We have. It is difficult for us to reject any offers of financing. We have implemented a set of guidelines on how to publicly procure contracts over a particular price and we circulated that to all our employees more than a year ago. That decision was also passed by our own board and the audit committee. We have learned and become stricter in our procurement policy. We are a specialised industry with specialised needs. Where it is possible we have gone for five quotes, which is the stipulation. We hope to continue with that. Deputy Jim O’Keeffe: The last point is that there is a lesson for us all to examine the kind of difficulties that arise where capital grants are sanctioned late in the calendar year, with a tight time frame and a possibility that the grant may be lost if it is not spent before the end of the year. That has broader implications as an issue for the committee and others to look at. Mr. Fiach MacConghail: The ultimate winner is the audience. Every kind of work the Arts Council and the Abbey Theatre do benefits the end users, which are our citizens. Chairman: Arising from Deputy Jim O’Keeffe’s questions, under the codes of practice for governance of State bodies, the Chairman of the Abbey Theatre should have reported to the Department of Arts, Sport and Tourism. Was there a report submitted for 2006, and were the breaches of procedures identified in that report to the Department? We are discussing the pressure to spend before the end of the year. Is this cropping up more and more in Departments? Mr. Dara Mullaly: The Abbey Theatre does not, as a commercial company, report to us on its corporate governance. In our dealings with it, we expect it to comply with corporate governance requirements. Chairman: The Abbey reports to the Arts Council. The Arts Council reports to the Department. Mr. Dara Mullaly: Yes. Chairman: Were the breaches identified to the Department through the Arts Council? Ms Mary Cloake: At the end of the year, the Abbey reports fully on its activities. I invite Mr. John O’Kane, the liaison person with the Abbey Theatre, to speak about it. Mr. John O’Kane: Communication with the Abbey is conducted via regular monitoring meetings so that we are fully appraised of what is going on with the Abbey. There is no formal annual reporting from the chair. Chairman: There should be, under the code of practice for the governance of State bodies. Ms Mary Cloake: There is a formal meeting with the Arts Council at which the chair reports verbally to the Arts Council. My understanding was that the Abbey, in its new format, was not covered by the code of practice for State bodies. The chair was in two months ago and gave a full report on 2007 but we do not have a formal written report from the Abbey. Chairman: That is the interpretation of the Arts Council. Is it the interpretation of the Department of Finance? Mr. John Thompson: The Chairman asked in particular about the end of year pressure. This has been around for a long time. Two developments in recent years have made that less of a problem than it was. First, we now have an arrangement of capital carryover, whereby 10% of a Department’s capital Vote can be carried over into the next year, so that the “use it or lose it” situation is abated. Second, we have moved more to long-term planning, in view of capital, through the successive national development plans which have expanded in scope over time. There is less of the end-of-year pressure to spend than there would have been some years ago. Chairman: On the other question, are we all happy that the Abbey is not subject to the codes of practice? Mr. Fiach MacConghail: The Abbey Theatre is subject to the code of practice for governance of State bodies. The chairman of the Abbey Theatre reports to the Minister for Arts, Sports and Tourism. He submitted a report in 2006 but did not include the breach of the public procurement guidelines. Chairman: So there was a report to the Department? Mr. Dara Mullaly: The annual report was submitted. Mr. Fiach MacConghail: It is a formal communication between the chairman of the Arts Council and the Minister of the day. A report was submitted in 2006. Deputy Niall Collins: I wish to ask one question relating to the partnership of arts officers with local authorities. It is fair to say they do very good work. Will Ms Cloake expand on the nature of the partnership? Are the contracts of arts officers open ended or fixed term? Is there co-funding of the arts budget from the Arts Council in conjunction with the local authorities? The budgets under which they operate are minuscule in comparison with the overall budget of a local authority. For example, the local authority budget in Limerick is €130 million. Does the Arts Council liaise with the managers of local authorities to increase the funding available to the local arts officers? Ms Mary Cloake: The local arts officer network has been one of the real success stories of the last ten years. For the first time we have a complete complement in that every local authority area has an arts officer. It is indicative of how popular the arts have become at local level. We have a long-standing partnership arrangement where we contribute to elements of the cost. In some cases, where a county is badly provided for in terms of a rate base, we provide funding for the salary but, increasingly, the local authorities are paying all of the salary themselves, which is very good. We look at the programme offered at local level and we contribute to certain elements of it. Limerick city and county are among the best for supporting individual artists and communities in the arts. Some sterling and exemplary work is going on in the city and county. That is evidence that when there is a long established programme the standard of work can be very high. On the question of spending from local authorities, it is not what we would want but it has increased three-fold during the past ten years, from approximately €5 million to €15 million. In regard to our original policy on venues, Deputy O’Keeffe mentioned west Cork arts centre. We started off being the organisation that would fund the arts centres around the country and would provide 80% to 90% of their funding, with the local authority providing 10% or 20%. In the 1980s and 1990s we had a policy of matching local authorities 50-50 on contributing to the running costs of arts centres. What has happened now is that the local authorities are way ahead of the Arts Council in their contributions to the arts centre networks. We consider that to be a real success. Yet, one of the frustrating aspects is that the potential for the work of arts officers is so vast that they could usefully spend twice what they are getting. I suspect that is a matter of time. Deputy Niall Collins: What is the position with the security of tenure of their contracts given that there is only one arts officer in each local authority who does sterling work? There are other disciplines in local authorities where there are probably excesses and there will probably be cutbacks across the board, in terms of resources. I would not like to see the arts officers come in under the umbrella of these cuts. Are the contracts open ended or fixed term? Ms Mary Cloake: It is different from county to county. We recommend strongly that the arts officer is a permanent member of the local authority staff and, in many instances, that is now the case. Deputy Thomas P. Broughan: I heard Mr. MacConghail recently on an arts programme with directors from the other three national theatres who made a very good case for the performance of the Abbey in recent years, particularly in bringing theatre to the whole nation and also in involving all the other theatre groups. I commend him on that. What happened to the special account, the escrow account? Why was the special money put into that account for the refurbishment? Ms Mary Cloake: I will invite our finance director, Ms Ellen Pugh, to explain what happened and to outline the status of the account. Ms Ellen Pugh: We put it into the escrow account because the conditions of the grant were not fully met. In order to draw down payments for capital grants, organisations have to submit the original invoices plus a certification from their accountants to say that the invoice was paid. In this case, while we knew that the work was ongoing, that the Abbey was doing the work, we did not have the certification from the accountants so we did not accrue it in the account but put it in our accounts, an escrow account, because we thought this was the most prudent place to put it and the money could be drawn down subsequently. In January we received invoices from the Abbey. We put €286,000 into the escrow account. In January we received invoices for €225,000 and we subsequently accrued that amount in the accounts in conjunction with the Comptroller and Auditor General. The balance was over €60,000. In June 2005 we received invoices from the Abbey for €51,000 and we released money from the account to that amount. There was a balance of just over €8,000 and the Arts Council got a refund of the balance later in 2007. Deputy Thomas P. Broughan: So this account is closed. Ms Ellen Pugh: Yes. In the 2007 report, the Comptroller and Auditor General was concerned about the possibility of any double spending. Did double spending occur? Ms Mary Cloake: No. There was extensive liaison on an informal basis between the Arts Council and the Departments of Art, Sport and Tourism. The Arts Council would not be a major capital funder. We did as I said earlier. We were very concerned about the public interface of the Abbey and also health and safety so we did what we could but the major work such as seats would be a matter for the Department. That was under constant discussion and negotiation throughout the period in question. Deputy Thomas P. Broughan: Is the Comptroller and Auditor General convinced, therefore, that there was not any form of double spending in this instance? Mr. John Buckley: Yes, we were fairly satisfied. One of the points we would make is that there would be much more coherence to the system if all capital funding was coming from the same source, either the Department or the Arts Council. In that way a single agency would be monitoring it. One of the lessons that might be learned from it is that there would be value in consolidating the funding for capital that is going to an agency like the Abbey so that people on both sides of the transactions would be aware fully of the entire picture. Deputy Thomas P. Broughan: I will put a final question to the director. Regarding the big move, everybody is delighted that there are plans for the new theatre. I am not sure what type of international competition was run 30 or 40 years ago but it appeared to be something like an office building in the middle of the city or a fortress of “luvvies” against the surrounding world. I am delighted to hear there will be an international competition. What is the position now in terms of the big move? Will that be a PPP project? It is something this committee will have a major interest in tracking up to the days when hopefully the people involved will be doing their work in an appropriate building on the banks of the Liffey. Mr. Fiach MacConghail: I thank the Deputy for his kind words earlier. While the building we have is very austere, I would contend it is not a fortress of “luvvies” but a fortress of citizens. What is happening on our stages and continually since we were founded is a major debate about what is going on in our society, both nationally and internationally, and long may that continue. We welcome the Government decision to relocate the Abbey Theatre to the docklands. It was agreed also that this would be procured through a PPP. I will let my colleagues in the Department of Arts, Sport and Tourism answer the PPP element of it but in terms of what is happening at the moment, we are finalising the accommodation brief, in other words, what the building will entail in terms of our theatres, the rehearsal space and so on. At the same time as finalising that accommodation brief we are also working as a project team where the Abbey Theatre is a part of that team along with the Department of Arts, Sport and Tourism, the Office of Public Works, the National Development Finance Agency and all our various technical advisers. We are now trying to secure and complete the competition regulations which will be run by the Royal Institute of Architects of Ireland. When those two processes are complete, the international design competition will be announced. In terms of how long that will take, the end result and when we will move into our new building, I will defer to the Department on that. Chairman: In case the representatives think some members have lost interest in the proceedings, there is a vote in an adjoining committee. That is where some of the members have disappeared to. I have a question for the Department of Finance representative. Is there international experience in regard to the provision of theatres through PPPs? Has the Department studied any case histories? Mr. John Thompson: Quite honestly, I do not know. The technical aspects of a PPP are handled by the National Development Finance Agency which has built up specialised expertise in this area. I assume that will include looking at examples from around the world where other people have done this sort of project from which they would learn. Chairman: Could somebody provide us with the information? Mr. John Thompson: We can certainly check that out for the Chairman. Deputy Thomas P. Broughan: On a related point, will we end up having to pay a levy for seats in the various theatres when they come on stream? In other words, will it turn out to be another M50 fiasco? Mr. John Thompson: I do not think I can comment on that. Chairman: Having listened to the proceedings, does Mr. Buckley have any comments to make? Mr. John Buckley: It is acknowledged that there were rules that were not observed in this case and that has implications for value for money as well as probity in the sense that people have an entitlement to expect that they will get a chance to bid for contracts such as this. Equally, the non-compliance with rules, especially when they breach the EU procurement thresholds, could expose organisations to claims from potential tenderers. The Department of Finance mentioned there has been a general improvement with the advent of capital envelopes and so on. That has eliminated the pressures at year end, the splurge and so on, but there is still considerable residual pressure, as this particular report indicates. What we may have to reflect on long term is the effect of procurement funding rules and accounting rules and whether they should be aligned better or more goal congruent. The obvious point is that procurement takes time. To comply with procurement rules time is needed whereas pressure to spend within a defined window creates a countervailing pressure that cannot be readily resolved. In business, holding money to leverage the delivery of a product to somebody’s satisfaction would be the norm whereas the pressure here, under the Government accounting and funding rules, tends to be to force the person who should have the leverage to forfeit it and spend the money. On the other side, I would make the point that accounting rules should be neutral. They should not influence what people are doing. We may have to reflect on that too when we consider this and a number of other reports on procurement which the committee is looking at. One way of resolving it is for the funding agency like the Arts Council to accrue the funds in its accounts and hold them until the following year rather than resorting to escrow accounts and so on. An alternative way is to create a mini-capital envelope situation, when we have semi-State bodies and companies like the Abbey, and allow the money to move to the capital accounts of the recipient companies on condition that it is spent within six months. It allows an appropriate window for them to carry out all the administrative responsibilities they have to do to comply with the procurement rules. The general point is that when we have these countervailing rules, something has to give. It has been resolved up to now by people giving precedence to the accounting rules on the simple basis that they need to get control of the resources and hold the money, and they would feel foolish if they gave up the money. On the other hand, there are many legal responsibilities attached to procurement and if it is to be resolved it is necessary to resolve it in favour of compliance with the procurement rules, which are somewhat driven by Europe and exposure to suit and claims from other people if they are not honoured. Some reflection is needed on the way these matters would be balanced, and it may be opportune to do it in the context of a review of public financial procedures which is going on currently in the Department of Finance. It may give an opportunity to reflect on these matters and to consider whether certain archaic rules can be reworked and reformulated so as to serve us better in the future. Chairman: Mr. Buckley mentioned accrual accounting. Are there any proposals to implement accrual accounting for departmental Votes? I believe that was flagged some years ago but why has it not happened? Mr. John Thompson: My understanding is there is no plan as such. The issue is under consideration from time to time. Some aspects of accrual accounting have been brought into accounts in that there are statements of accruals in prepayments, asset registers and so on but a full move to accrual accounting does not seem to be in prospect. I am aware it has been under consideration from time to time but there does not seem to be any move to go down that route at the moment. Chairman: Why not? Mr. John Thompson: There are advantages and disadvantages in any system of accounting. In the commercial world there are accrual accounts but one also keeps a close eye on cash accounts. I do not know if the Comptroller and Auditor General will agree that, in the context of a control function, having the focus on cash is probably more appropriate, given that, in terms of accrual accounting, questions of opinion and value judgments come into play which may not be entirely appropriate or may be difficult to get right. Accrual accounting is not a panacea; it has its advantages but it also has its disadvantages. Chairman: We were wrapping up the discussion, but Deputy O’Brien indicated he would like to contribute. Deputy Darragh O’Brien: I had to briefly leave the meeting, as a vote had been called at another committee. I apologise if the points I wish to raise have been covered. On the issue of procurement, there is a trend among most State agencies which have appeared before the committee, as I am sure the Comptroller and Auditor General will testify, of regular breaches of procurement rules, from which we cannot hide. We must examine some financial system to address this. I wish to put a question to the officials from the Department of Finance. It has been mentioned that the Department permits a 10% capital carry-over to the following year. Is that correct? Mr. John Thompson: Yes, a carry-over of up to 10% is permitted. This assumes there is an underspend in year one and the money is carried over into year two. Deputy Darragh O’Brien: Is that deemed sufficient? From Mr. Thompson’s experience, in the context of agencies spending purely in order to draw down funds in the accounts for one year, is this an issue the Department will wish to address? Mr. John Thompson: The carryover provision was intended to make sure there would be much less pressure for this to happen. Deputy Darragh O’Brien: I have two brief questions for Mr. MacConghail. He said he was satisfied he had received value for money for the work done. How does he know this, given that procurement rules were not followed? He sought advice from his architect. A substantial amount to the tune of €900,000 was spent. How can he say he was satisfied that the taxpayer had received value for money? Mr. Fiach MacConghail: If we break down the costs involved and consider the seating scenario, a significant cost, we invited three companies to tender for the work which is specialised. We are talking about theatre seating, a bespoke requirement. The procurement guidelines indicate we should have obtained five tenders. We obtained three and proceeded with one, which we considered was appropriate. Value for money was obtained in that respect. As regards the other three aspects, I made a valid judgment on the basis that we had a long-standing and good relationship with the architect who knew our building well and had interfaced regularly with the construction industry at the time. The architect contacted three contractors by telephone and one response was obtained and accepted. I consider fair value was obtained, but we did not adhere to the procurement guidelines. Deputy Darragh O’Brien: Mr. MacConghail would admit that was far from ideal. Mr. Fiach MacConghail: Yes, I would. Deputy Darragh O’Brien: The Arts Council would share much of the blame in that it did not make it clear in respect of the grants it would give that procurement guidelines would have to be followed. Will the witnesses from the Arts Council confirm that there were no breaches of public procurement guidelines in 2007 in respect of any grants allocated by it? Mr. Fiach MacConghail: As regards the Abbey Theatre, since 2006 we have implemented the procurement guidelines which we circulate to all our employees and subcontractors. I can verify—— Deputy Darragh O’Brien: Is Mr. MacConghail satisfied they are being followed? Mr. Fiach MacConghail: Yes. Deputy Darragh O’Brien: Is the Arts Council satisfied such guidelines are being followed? Ms Mary Cloake: Yes, we did not have any capital grants in 2007. Any capital grants from 2008 onwards will be subject to the new conditions. Chairman: The committee will note the Arts Council’s accounts for 2006 and dispose of chapter 3 of special report No. 10 of the Comptroller and Auditor General on the Abbey Theatre. Is that agreed? Agreed. I thank the witnesses for attending. The witnesses withdrew. Sitting suspended at 11.55 a.m. and resumed at noon.  Special Report No. 10: National Library of Ireland.
Mr. A. Ó hAonghusa (Director, National Library of Ireland) called and examined. Chairman: Witnesses should be aware that they do not enjoy absolute privilege. As and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act 1997 grants certain rights to persons identified in the course of the committee’s proceedings. These rights include the right to give evidence; the right to produce or send documents to the committee; the right to appear before the committee, either in person or through a representative; the right to make a written and oral submission; the right to request a committee to direct the attendance of witnesses and the production of documents and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee. Persons invited before the committee are made aware of these rights and any persons identified in the course of proceedings who are not present may have to be made aware of them and provided with a transcript of the relevant part of the committee’s proceedings, if the committee consider it appropriate in the interests of justice. |