The Government has announced a full review into the operations of the Arts Council after hearing €6.7 million was spent on a proposed new IT system that has since been abandoned.
Minister for Arts and Culture Patrick O’Donovan said an initial report initiated by his department last year found the Arts Council was not prepared for the scale of the IT project and did not assign adequate resources to deliver it.
“The examination also found that the oversight, monitoring and reporting arrangements by the department over the lifespan of the project were inadequate,” he said in a statement on Wednesday.
An external review of governance and culture at the body has now been commissioned, he said.
The Arts Council said €6.675 million was spent on the endeavour, of which €1.2 million was spent on work that can be “reused”. The project was paused in late 2023 and discontinued from June 2024, it said.
It is understood a Cabinet discussion on the controversy went on at length on Wednesday morning, as Ministers digested the news of another controversy to hit the department just two years after the RTÉ scandal exploded.
In his statement after the Cabinet meeting, the Minister said his department made queries last August regarding the Arts Council annual report and received clarifications in late October.
He said he met last week with the Chairperson and Director of the Arts Council to convey his “deep concern” about the project.
Governance failures must be addressed to safeguard public funding and to prevent issues reoccurring, he said. He said the examination “points to a broader range of more fundamental questions about governance and culture within the Arts Council”.
Mr O’Donovan said he has instructed his department to begin an external review into governance, culture and expenditure at the organisation.
Tánaiste Simon Harris has said he was “furious” upon learning the Arts Council had spent millions on an abandoned information technology project.
The Fine Gael leader told his party’s parliamentary party meeting on Wednesday the matter raised very serious questions about the governance and controls within the agency.
“This is the sort of issue that rightly infuriated the Irish people. I welcome the swift action of the new Minister today on this,” he said.
The Arts Council acknowledged “significant” sums were spent on an undelivered project.
“We take our role as custodian of public money very seriously and for that reason we are engaging with our contractors with a view to seeking legal redress,” it said in a statement on Wednesday.
The council relied heavily on external advice and “took it in good faith”, it said.
The product delivered was “not fit for purpose” and, after being advised the work could be remedied, it continued with the programme “to protect initial investment”.
“The development work that followed and ongoing reviews revealed that the deficiencies and bugs were so fundamental, it was not cost effective to continue,” the Arts Council said.
Arts Council Director Maureen Kennelly said the organisation “greatly regret[s] that this ambitious and complex project was not completed”.
“The need for a new system remains and I am determined to provide an improved grants management system for the arts sector,” she said.
Here are the main findings of the initial review published on Wednesday:
Governance and oversight
- The Arts Council’s business case “did not meet” the requirements of the Public Spending Code. Among the deficiencies here was the lack of effort to estimate the costs of all alternative options. A business case is the first stage of a project’s life cycle and should consider in detail potential options and risks to decide how or whether to proceed.
- There is “no record” of the proposal being brought to the Arts Council board for approval.
- The department did no formal review that could have queried the level of analysis in the business case or flagged that the business case did not include estimate costs for every key component of the project.
- Senior members of the firm developing the project were frequently changed, contributing to disruption and delays.
- Internal audit statements and the Arts Council chair’s report to the Minister did not reference the use of non-competitive procurement procedures and noncompliance with procurement requirements.
- While minutes show concerns were raised at the Business and Finance Committee of the Arts Council’s board, apart from a request for a “lessons learned” analysis, as costs spiralled and delays abounded, minutes do not record the extent to which the committee questioned progress or “sought to hold the project team to account”.
- The Audit and Risk Committee (ARC) of the board did not review the project as it was under the remit of the Business and Finance committee. However, the project was on the corporate risk register for a prolonged period, consistently attracting high scores, and should have been examined by the ARC.
- The Department was not informed in June 2022 that the new system did not pass testing and was not launched as planned.
Delays and overruns
- Despite changes during the process, there was “no analysis” of additional estimated cost.
- The project was delayed, with a “soft launch” cancelled in June 2022 due to “active defects” that “posed too much risk to the business”.
- In April 2023, the Arts Council approved €3.8 million spending to deliver the project by the end of 2024. This was on top of €4.17 million already spent.
Contracts and changes
- Delivery was slower than planned ”at each milestone". The technology partner blamed the Arts Council for greater “business processes” than expected, while 17 “change requests” added at least 1,000 man hoursand €707,770 in expenditure.
- A January 2023 third-party review of technical changes made found a “commercial off-the-shelf solution” would have been better. It found it was “almost impossible to determine” the purpose of some of the code used on the project.
- Changes were made to the test strategy and plans that significantly contributed to problems and defects in the system being only identified at a late stage in the process.
- Despite changes in the scope of the system and reductions in changes, a In late 2023 the Arts Council was told the 2024-end target could not be met and 2028 would be the date to go live. The project also needed additional capital expenditure of €6.6 million and operational expenditure of €2.5 million. The Arts Council had already spent €6 million and decided at this point to pause the project.
- Another third-party review in February 2024 found the project’s architecture was “inadequate and over simplistic”. The project plan was “not feasible” as it might overrun and business users might not adopt the system.
- At this point the Arts Council began to look for commercial off-the-shelf solutions In June 2024, a steering committee recommended this route and the Arts Council agreed.
- Of 20 contracts, 12 incurred expenditure above the original contract value, while some documents governing contract extensions could not be found. Business cases for extensions were not procured competitively as no “reasonable alternative” existed, according to documents reviewed by the report.
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
