Consultants paid lavishly for wrong advice on broadband
Government spends more than €25m on consultancy fees for National Broadband Plan
KPMG: was hired to provide “financial, commercial and procurement advisory services” for the NBP. Photograph: Niall Carson/PA Wire
Whether or not we think the Government’s €2.9 billion National Broadband Plan (NBP) represents value for money – and it seems most outside the corridors of power don’t – there is one thing we can agree on. The €25 million dished out in fees to firms such as KPMG has been an unmitigated disaster.
In a letter from Minister for Finance Paschal Donohoe to the Oireachtas Budgetary Oversight Committee, the Minister revealed that from June 2013 to June 2019, the total spent on consultancy firms amounted to €25,853,684, with an estimated €11 million going to KPMG.
Spending €25 million might, in theory, be forgiven in the context of a very difficult project but that’s different from spending it on advice that has delivered an extremely negative outcome for the State.
Advice which led to a process that alienated the telecoms industry here – most of the major players shunned the process. It also left the taxpayer with a €2.9 billion bill, six times the original estimate and a model which also hands over State infrastructure to a private company putting up a fraction of the State’s contribution. In 2015, following a public procurement process, KPMG was hired to provide “financial, commercial and procurement advisory services” for the NBP. According to the departmental secretary general, KPMG people “either drafted or provided input/review of key procurement documentation”.
Boiled down, it advised the Government to choose a gap-funding model with the winning bidder retaining ownership of the new network. Such a model, KPMG said, would lead bidders to place a high “strategic value” on securing the contract, which would trigger a more competitive process, potentially driving down the size of the State subsidy required. The opposite happened. The advice was wrong.
The Government wins praise for its unified and forceful role in the Brexit negotiations; for the clarity and consistency of its message; for getting other EU member states to row in behind the Republic’s position.
Domestically, however, it seems to lack this type of leadership in many policy areas – housing and health being obvious examples – and is content to farm out major decisions to consultants often with negative consequences. The financial crash was littered with examples of this. Is the NBP another?