Thursday, 19 October 2000
Dáil Eireann Debate
1. Mr. Higgins (Mayo) asked the Minister for Public Enterprise if her attention has been drawn to the £40 million cost overrun in the mini-CTC Iarnród Éireann signalling system; if she has discussed the matter with the Iarnród Éireann board and executives; and if she will make a statement on the matter [22433/00]
Minister for Public Enterprise (Mrs. O'Rourke): The mini-CTC contract relates to the installation of a new rail signalling system. The project, which was approved by the CIE board in March 1996, is considerably behind schedule and over budget. I have received a copy of a report which was prepared for CIE by independent consultants in relation to the execution of the mini-CTC contract. I have discussed the matter with the CIE chairman and there are ongoing discussions between my Department and CIE in relation to matters arising in the report.
Mr. Higgins: (Mayo): Is it true that a contract for £15.7 million will now cost between £25 million and £40 million, that there is an overrun of up to £25 million? Is it also true that the price was not locked into the contract? Furthermore, is it correct that the work has not been completed on any of the 28 stations designated for completion last December? What will the Minister do about this matter and how will she address it? What is her attitude to the problem?
Mrs. O'Rourke: The way in which the contract was devised in 1996 was entirely unsatisfactory. I  was made aware of this matter by outside sources. That was how it came to my attention. Many of the points the Deputy made are correct. The nature of the contract as it was drawn up was very unsatisfactory. The contract documentation was not tight enough. Having read the report which was given to me by the chairman of CIE, I would have grave doubts about certain aspects of the whole operation concerning the public procurement of this signalling system. The Deputy is correct in what he has said. When the contract was drawn up in 1996 or early 1997 it was envisaged that it would cost £14 million, yet it has now risen from £25 million to £40 million. The work is not scheduled to be concluded until 2002, which is remarkable.
Equally remarkable is that many of the people involved in initially drawing up the contract back in 1995 or 1996 have left to join one of the firms in question, MTL. Letters have been written to me concerning legal matters arising from this affair. While I know that matters raised here are not tenable in a legal situation, I am aware of the situation. The whole matter is entirely unsatisfactory.
Mr. Higgins: (Mayo): Is it not the case that the taxpayer has again been taken for a ride? A contract that was supposed to cost £15 million has an overrun of up to £25 million which John citizen will have to pay. Is there not some bizarre stench off the entire contract, given, as the Minister has rightly acknowledged, that four of the people involved, the head of procurement, the signalling engineer, who was the manager in charge, the company solicitor and another engineer, have all effectively defected to the company with which they negotiated the contract?
Mr. Higgins: (Mayo): Four of the main people who were involved in the decision-making have gone to the company which will add £25 million more of taxpayers' money than was originally contracted for. What legal advice has the Minister received on this matter? This is a very serious situation. These people would not last ten minutes in the private sector. It is quite obvious that there was something extremely dubious and bizarre about the way in which the whole thing was negotiated. How can the matter be salvaged at this stage for the taxpayer? That is essentially what we are talking about, apart altogether from productivity and the need to bring the rail safety programme on schedule at the earliest possible stage.
Mrs. O'Rourke: I am glad the Deputy has raised the matter. I wondered whether anyone on the Opposition benches would raise it at the time it happened. The Deputy is quite right to raise it, however, because to my mind it is one of the most dreadful matters I have had to deal with. The report was discussed at the last meeting of the CIE board. Following that the chairman gave me  a copy of the PricewaterhouseCoopers report between the middle and end of September. The CIE board will discuss the matter again at its next meeting. Following that, the action to be taken to move forward will have to be decided.
Frankly, it is very difficult to see what can be done. The original price was £14 million and it is now estimated at between £25 million and £40 million – that is a wide disparity. I am distinctly unhappy that people have left and gone to one of the main companies which is part of this process. I await the next board meeting and my next meeting with the chairman to see what the board intends to do about it. I await their advice on the matter.
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