Abortive contract cost Forbairt £2.3m

AN abortive research contract undertaken on behalf of an Irish company cost the State agency Forbairt and its predecessor, Eolas, £2.376 million, according to a report from the Comptroller and Auditor General.

The client company has been paid an £850,000 settlement, which the semi state agency's insurance company has refused to pay. The salary and expenses costs for Forbairt and, Eolas of dealing with the project have been substantial.

Eolas, the agency which was responsible for science and technology before it was subsumed into Forbairt, entered into a contract in 1988 with an unnamed Irish based company to develop a range of miniature circuit breakers. The initial fee was to, be £175,000. The project ran into difficulties, however, and Forbairt later tried unsuccessfully to find a sub contractor to complete it.

Legal advice to Forbairt was that the organisation was bound by the original Eolas contract "and that it had potentially very significant financial liabilities by reason of the continuing delay in completing the contract." In June of last year Forbairt paid £850,000 to the company as a settlement.

However the agency's insurance company refused to pay out on the professional indemnity claim, saying Eolas had not disclosed relevant information.

In response to a query from the comptroller, the chief executive of Forbairt, Mr Dan Flinter, estimated the total cost of the project at £2.376 million. Mr Flinter told the comptroller that Forbairt had legal advice and was considering taking legal proceedings against the insurance company.

The original period of less than " years assigned to the project was, in hindsight, unrealistically short, Mr Flinter said, while patent restrictions proved a major problem.

The comptroller also investigated the cost of unoccupied office space held by another State industrial agency, Forfas. The costs associated with this space between 1993 and 1995 were some £1.4 million. The surplus space arose from the IDA vacating various offices when staff were centralised in the newly completed Wilton House.

The offices vacated in 1985 were sublet by 1986, but the tenants exercised break options in these contracts between 1992 and 1994, leaving the offices unlet.