Bam gave Varadkar 2¼-hour ultimatum to clarify ‘lowballing’ remark

Hospital contractor’s letter and tight deadline understood to have irked Government

During leaders' questions in the Dail on Tuesday 12th February, the Taoiseach made comments on companies submitting low bids, only to raise prices afterwards. Video: Oireachtas TV

 

Bam Ireland, the construction firm building the national children’s hospital, gave Taoiseach Leo Varadkar a 2¼-hour ultimatum to back the company in the row over cost overruns at the project.

The company’s chief executive, Theo Cullinane, wrote to Mr Varadkar last Wednesday demanding that he clarify his Dáil remarks disparaging some building contractors or else Bam would consider “all our options”.

The letter was sent to the Taoiseach at 3.45pm and cited a 6pm deadline for the Taoiseach to clarify his remarks about companies that have been “lowballing” contracts.

Mr Varadkar has not replied to the letter, but a spokesman has said he was not directly referencing any specific company in his Dáil remarks.

Sources say the tone of the letter and the manner in which a public statement was demanded of the Taoiseach at short notice has caused annoyance in Government circles. It is not expected that Mr Varadkar will reply to Mr Cullinane’s letter.

The Government has engaged PricewaterhouseCoopers (PwC) to look into why the cost of the hospital has risen from €800 million in 2014 to €1.7 billion now.

Bam last August submitted €200 million in additional claims for its work on the hospital, but this was reduced to €60 million through the involvement of an independent expert helping to determine the final price. The total cost overrun since last year is €450 million.

Reputation ‘damage’

The Taoiseach last week said “there are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State”.

The following day, Mr Cullinane wrote saying the remarks were widely understood to refer to Bam, adding: “It has been seriously damaging to our reputation.”

The remarks came at a time when Bam said it was showing “considerable forbearance in managing a misunderstood process” at the children’s hospital “and in terms of making comment on misinformation being put in the public domain about our conduct”.

“For the Taoiseach to make an ambiguous statement of this nature under Dáil privilege is extremely inappropriate and damaging,” Mr Cullinane said.

He said the company had made a huge contribution to Ireland over 60 years and employs over 2,500 people, “for whom this issue has serious implications”.

He called on the Taoiseach to immediately clarify he was not referring to Bam in the Dáil and that it makes a “welcome and significant contribution” including in the children’s hospital where the company is “in full compliance with all its obligations”.

Step-down offer

When the Taoiseach failed to respond publicly as demanded, Bam issued a statement on Friday saying it would step down from constructing the hospital if the development board wanted it to do so.

Bam declined to elaborate further on this statement on Sunday, or to say whether the company would be prepared to appear before one of the Oireachtas committees investigating the cost overrun.

Asked whether Mr Varadkar was referring to Bam in his remarks last week, his spokesman repeated: “The Taoiseach did not reference any specific company in the Dáil.”

Minister for Health Simon Harris said at the weekend that the Government did not intend to retender the project. He also did not believe Bam’s name had been “blackened” or that the Taoiseach needed to clarify his remarks.

Retendering would add up to 1½ years to the completion of the project and at least €150 million in costs, according to the development board. Bam would likely be due a contract-break fee if asked to walk away from the project.

Mr Harris faces a Sinn Féin motion of no confidence in the Dáil on Wednesday over his handling of the hospital cost overrun, which he is expected to survive. The PwC report is due at the end of March.