Adjournment Matters. - Public Contracts.

Thursday, 14 October 1999

Seanad Éireann Debate
Vol. 160 No. 8

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[861]Mrs. A. Doyle: Information on Avril Doyle  Zoom on Avril Doyle  While I welcome the Minister of State, Deputy Jacob, to the House, I had hoped that either the Minister for Public Enterprise, Deputy O'Rourke, or the Minister for Social, Community and Family Affairs, Deputy Ahern, could have come in to address a very important issue that has arisen in relation to a matter which has rumbled away for some time.

Last Thursday this Government was asked by the European Commission to explain why the £35 million social welfare payment distribution contract was awarded to An Post for an extra three years without a competitive tender. Apparently the European Commission was reacting to a letter from a Dublin-based firm of solicitors acting on behalf of a marketing and technology company based in Dublin. This firm sent this letter last August claiming that under EU directives the contract should have been put out to tender. The Commission contends that the awarding of the contract in this manner contravenes Article 86 of the Treaty of Rome by protecting An Post, a public entity, from competition and also that it contravenes EC Council Directive 92/050, the public procurement directive. It even contradicts the advice given previously to the Government by its own contracts committee.

There are two relevant points. The first relates to the threat to the 1,900 or more rural post offices which provide such an essential service. The second relates to the point that during the canvass for the European and local elections of this year, the retention of the social welfare payments contract by An Post was a major issue which threatened to cause serious political damage to the Government in many constituencies. In the Euro-constituency of Leinster I met this issue from Louth to Wexford. The decision to extend, without competition, the An Post contract to deliver social welfare payments defused the controversy prior to polling day. As late as February last, however, the Attorney General's advice to the Government was that the contract had to go out to public tender. By May the Attorney General's advice to the Government had apparently changed – the contract did not have to go out to tender. After a special Cabinet meeting, Ministers O'Rourke and Ahern had apparently resolved their differences and it appears that the former won. What was considered heretofore a financial service was now a social service.

It is well understood that many of the smaller rural post offices depend on the delivery of social welfare payments for survival. Many need to be updated to allow for electronic transfer of funds to provide a cost effective service, but even in a competitive tender situation, given the political will, An Post should be able to compete, with its huge range of outlets throughout rural areas, if it and the Government were willing to invest in the infrastructure of small towns and villages. If the political will had existed An Post would have had [862] nothing to fear from open competition for this most important contract.

I ask the Minister to come clean and let us know what is going on. What political expedient was resorted to last May to get the political heat, which the Fianna Fáil canvassers experienced as they went from door to door, out of this issue? I want to know how the Attorney General could have changed his mind and done a U-turn in five or six months and how the Government Contracts Committee could be ignored on this matter. Where do the rural post offices stand in relation to the Commission's questioning of why the Government did not go to open competitive tender?

Is the Government committed to the survival of our rural post offices, which is so essential if rural development means anything? Was it being expedient in May when it extended the contract for three years without open competitive tender knowing that it was likely to be challenged by other would-be providers of the service, knowing EU legislation and the advice of its contracts committee? What were the Ministers, Deputy Dermot Ahern and Deputy O'Rourke, playing at in the heat of the battle of the local and Euro elections last May? Why did they use the rural post offices, and the excellent service they provide to so many people in small town and villages, and their particular problem, which is so intrinsic to their future, to try to gain votes expediently?

Has the Government any commitment to rural Ireland? Has it any commitment to the over 1,900 rural post offices? Is it prepared to invest in updating the infrastructure in these post offices particularly in relation to computers and electronic hardware generally? In its election manifesto, Fianna Fáil undertook to “make the computerised local post office a one-stop shop for most State services”. I fully support this. Fine Gael fully supports this. Commitment to rural development means nothing if the heart of rural community life continues to be threatened by political opportunism and expediency, such as we have apparently experienced on this issue from the Government, in the heat of the elections in June. Given its handling of the issue I am extremely concerned for the future of rural Ireland. If the essential focal point of rural towns and villages cannot be protected and handled honestly in terms of their needs, all the words expounded by various Ministers, all the pre-election promises, White Papers, studies and task forces are worth nothing.

I hope the Minister of State can give me a direct and straight answer on the position in relation to the social welfare payments contract and our rural post offices. Will it need to go to open public tender? Was the Minister within his right to extend the contract last May without going to open competitive tender on this matter? Is the Government prepared to commit itself to the future of our rural post offices and ensure that if it is a matter of open competitive tender An Post will be up there with the best of them in [863] respect of any tenders it may need to submit for this essential service?

Mr. Jacob: Information on Joe Jacob  Zoom on Joe Jacob  I thank Senator Avril Doyle for raising this issue. I take this opportunity to formally congratulate her on her elevation to another important forum and wish her well in her term of office there.

Mrs. A. Doyle: Information on Avril Doyle  Zoom on Avril Doyle  I thank the Minister of State.

Mr. Jacob: Information on Joe Jacob  Zoom on Joe Jacob  The contract between the Department of Social, Community and Family Affairs and An Post under which social welfare payments are delivered at post offices was first signed in 1992 and covered the five years 1992-96. The term of this contract was extended, with the approval of the Government Contracts Committee, for a further period of three years, 1997-99. This second term will end on 31 December next.

In May 1999, the Government approved a proposal to further extend the term of this contract for an additional period of three years, 2000-02, inclusive. This decision was taken in the context of advice from the Attorney General regarding the application of EU law to this procurement. In giving his advice, the Attorney General had regard, inter alia, to the views of the Government Contracts Committee on this matter. The Department of Social, Community and Family Affairs is currently in negotiations with An Post regarding the detailed terms and conditions which will apply to this business arrangement during the coming three years. My colleague, the Minister for Social, Community and Family Affairs expects that this process will be completed shortly.

Following the Government decision, a Dublin-based firm which had indicated an interest in bidding for this business, made two separate complaints to the European Commission. One of these complaints alleges that the decision to further extend the contract with An Post infringed a number of competition-related Articles of the EU Treaty. The other complaint alleges that the decision infringes Council Direc[864] tive 92/50, which lays down the rules governing procurement by Government Departments.

The Commission has in the past week referred the first of these complaints, alleging infringements of the EU Treaty, to the Department of Social, Community and Family Affairs for its observations. The Department's response to this complaint, which is based on complex issues of law, will be issued to the Commission in due course. It would be inappropriate for me to comment on the various issues which have been raised by the complainant until they have been fully considered and a reply issued to the European Commission. Suffice it to say that my colleague, the Minister for Social, Community and Family Affairs, is confident that the Government's approach is legally sound and will stand up to scrutiny.

The second complaint, alleging the decision is in breach of the requirements laid down in EU Directive 92/50/EU, has not as yet been referred to the Department of Social, Community and Family Affairs by the European Commission.

I reiterate the Government's commitment to maintain a viable post office network. The decision to further extend the contract under which An Post provides payment delivery services to the Department is evidence of that commitment. In addition, the Government has decided to further develop the post office network so that it can, in the future, provide a range of new services to citizens.

In this latter context, it is intended that facilities will be provided in post offices in some areas to enable the payment of electricity bills and purchase of airline tickets. It is also intended to install public access points to the Internet and other technology related facilities. My colleague, the Minister for Public Enterprise, has established an interdepartmental committee to further these initiatives. Senators will agree that these developments are a clear indication of the Government's continuing commitment to ensuring a commercially viable future for the post office network.

The Seanad adjourned at 4.30 p.m. until 2.30 p.m. on Tuesday, 19 October 1999.

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