The national children’s hospital board believes there would be “little or no” international interest and limited domestic interest if they retendered the project following dramatic cost escalations.
Bam, the construction firm, said on Friday it would step down from the construction of the hospital if the board asked it to do so.
However, confidential documents have revealed the board does not believe there will be enough interest in the market to build the hospital, the cost of which has risen to €1.7 billion from €800 million in 2014.
Project director John Pollock, who leads the hospital board, told senior officials at the Department of Health and HSE last November only two companies in Ireland had the ability to take on such a significant project.
“On considering the alternative options for project completion, John Pollock noted aspects of the Irish construction industry which would discourage the board to avail of [retendering],” minutes from the meeting stated.
Mr Pollock “stated that only two Irish construction companies had the capacity to undertake such a large project on their own, and he was of the belief that there would be little or no international interest in a retender, including because of the belief that the incumbent Bam would have an insurmountable advantage in any retendering process”.
“Other factors likely to mitigate against a successful retender include the fact that there are now a number of large commercial projects in Ireland with more favourable conditions [eg Intel] and additional costs for demobilisation, site security and high construction inflation.”
Further cost increases
Government sources said retendering for the contract was not a realistic option and would lead to further increases in the cost of the project, as well as delaying the hospital for years.
However, others in Government are more cautious about the company’s offer and say Ministers will have to assemble all the relevant information before any decision.
The head of Bam, Theo Cullinane, said on Friday: “Bam wishes to advise the hospital board that if it would prefer to opt out of this contract and procure the work in some other way, then Bam will co-operate with them to facilitate this option.”
The confidence of all parties was a “vital requirement for the company” and Bam “did not benefit inappropriately” from the tendering process. He complained of “inaccurate information” in recent commentary.
He said the company had written to Taoiseach Leo Varadkar to “request him to clarify that he was not referring to Bam in the Dáil”.
Mr Varadkar told the Dáil on Tuesday the Government would be looking into the potential “low-balling” of tenders, where a company would submit a low bid for a project with the aim of recouping costs later.
His spokesman said on Friday: “The Taoiseach did not reference any specific company in the Dáil. The Government is not satisfied with several aspects of how the new national children’s hospital project has been delivered. There is understandable public concern about the matter.
“For this reason, PwC has been commissioned to carry out an independent examination. He hopes and trusts that all parties and contractors will co-operate fully with it.”
Mr Cullinane said Bam would “fully engage with PwC to ensure all relevant facts are disclosed”.
The Government has engaged PwC to examine the cost increase.
Meanwhile, secretary general of the Department of Public Expenditure Robert Watt has written to the chairman of the Dáil Public Accounts Committee (PAC) to say he is willing to attend to brief members on the department’s oversight of capital projects. Mr Watt was recently criticised for not appearing at the health committee, but pointed out to PAC chairman Seán Fleming he had been requested to appear before four Oireachtas committees on the same issue.
