Some contractors should never get public contract again - Taoiseach

‘We have a real concern that some companies have been low-balling, coming in with very low tender prices to get the contract’

The Taoiseach Leo Varadkar insisted in the Dáil that  taxpayers’ money had not been wasted on the children’s hospital project. Photograph: Brian Lawless/PA

The Taoiseach Leo Varadkar insisted in the Dáil that taxpayers’ money had not been wasted on the children’s hospital project. Photograph: Brian Lawless/PA

 

Taoiseach Leo Varadkar has said there are a small number of contractors who he would never like to see getting a public contract again in the State.

As the Dáil continued to debate the cost overruns on the new National Children’s Hospital project Mr Varadkar said the government would look at contractors who were “low-balling” by putting in low priced contracts initially at tender stage and then putting in higher claims after they got contracts.

Mr Varadkar was speaking as he came under pressure from opposition leaders in the Dáil about the handling by Minister for Health Simon Harris of the escalating costs of the planned new national children’s hospital and when he became aware of and informed his Cabinet colleagues about a €450 million increase in the cost of the project.

Independent TD Michael Lowry had raised concerns about a possible conflict of interest for consultants PwC who have been commissioned to investigate the spiralling costs of the project and have been asked to report by the end of March.

Mr Lowry said the consultants had received €30 million in auditing fees over the past five years from BAM, the main contractor for the new children’s hospital project.

Mr Varadkar told him that there was “no conflict of interest” because PwC had not audited the company since 2015.

But he said the Government had to learn lessons from the hospital costs controversy.

The cost of the project has risen from an estimated €800 million in 2014, to €983 million in 2017, and €1.43 billion now. Equipping the building and providing IT pushes this bill up to €1.73 billion; this does not include the cost of family accommodation, a research centre, excess construction inflation and any other changes to clinical standards.

Mr Varadkar said the Cabinet decided at its Tuesday meeting to examine whether two-phase tenders should be avoided in the future. While there were advantages they “don’t know the full cost of a project until the second tender comes in”.

‘Baying mob’

They were also considering whether to “factor in optimism bias and promoter bias, whereby projects that people want to see delivered tend to give rise to optimism about the real cost”.

He said they would also “examine the issue of low-price tenders and whether we should look more at median price because we have a real concern that some companies have been low-balling, coming in with very low tender prices to get the contract and then coming back with claims thereafter.

“We also particularly want to look at contractors’ past form and public service references.”

He added: “there are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State.”

The Taoiseach also insisted that taxpayers’ money had not been wasted on the children’s hospital.

He said accountability was not about “giving in to the baying mob” or to “witch-hunts” looking for a head on a plate as he rejected Sinn Féin leader Mary Lou McDonald’s call for him to remove Mr Harris from his job.

Mr Varadkar said that the Minister and he and the Government accepted responsibility for the fact that they had “underestimated the true cost of this project”.

Ms McDonald described Mr Harris’s record as “frankly shambolic” and she criticised Fianna Fáil leader Micheál Martin for describing the escalating costs as “extraordinary” but still backing the Government on the issue.

Mr Martin said the Government “can’t actually say that the taxpayer hasn’t been ripped off”. The Minister had effectively misled the Dáil and there had not been a proper explanation of why the hospital and its costs had not been put on an early warning system.

Mr Varadkar said he fully understood that the public are “very annoyed at the way costs have escalated”. He pointed out that Mr Harris and the Secretary General of the Department of Health had spent hours before the health committee answering thorough questioning from opposition TDs.

And he said Sinn Féin was no friend of the taxpayer because every year before the budget they ask for billions in extra taxes to be imposed on taxpayers and business.

Statement at 6pm

Meanwhile Mr Harris will answer questions for an hour in the Dáil on the escalating costs of the national’s children hospital on Wednesday evening, Government Chief Whip Seán Kyne said.

Mr Kyne made the announcement after opposition TDs criticised the decision not to permit questions when Mr Harris made his statement to the House on Tuesday afternoon apologising for not giving more information about costs of the new children’s hospital project when he responded to a parliamentary question.

Mr Kyne said Mr Harris will make a statement at 6pm on Wednesday followed by an hour of questions from the Opposition.