The secretary general of the Department of Public Expenditure has faced sustained questioning about why his department only became involved in dealing with the costs overrun at the national children’s hospital three months after the issue emerged.
Robert Watt defended the department's response to the cost overruns, which were flagged to the Minister for Health last August, at a meeting of the Public Accounts Committee marked by tense exchanges with committee members.
The €450 million overrun in the hospital project, now expected to cost €1.7 billion, has led to a major political controversy, including a motion of no confidence in Minister for Health Simon Harris, which was defeated in the Dáil.
On Thursday, there was strong criticism of the absence from the PAC meeting of senior department official, Paul Quinn, who is the Government's chief procurement officer and also a member of the hospital development board.
Fianna Fáil’s Marc MacSharry claimed the department had given a “Harvey Smith” to the committee (a reference to show-jumping champion who showed two fingers to rivals) by not including Mr Quinn in its delegation.
But Mr Watt said Mr Quinn attendance was not necessary to discuss the subject matter of the meeting, as the more relevant officer was the chair of the Government’s procurement committee, David O’Brien, who was in attendance.
Jonathan O’Brien of Sinn Féin put it to him: “You did not want Mr Quinn to appear before the committee because there are awkward questions asked of him,”
He continued: “I find it bizarre that he is not here.”
Mr Watt denied this was the case and pointed out Mr Quinn would appear before the PAC along with other members of the national children’s hospital board in a few weeks time.
Later, he remarked that given the adverse publicity surrounding Mr Quinn, “I do not believe we will ever get a civil servant to sit on a board again. For the record, we won’t.”
Some members also took strong exception to reports that Mr Watts told department colleagues just before the meeting commenced that PAC chairman Seán Fleming was trying to “control the mob”. He told the committee that he did not remember using that phrase but if he had he apologised. Alan Farrell of Fine Gael told him it was unbecoming, while Independent TD Catherine Connolly asked him to withdraw it.
‘Career ending’
Fianna Fáil TD Bobby Aylward asked about prospective overruns in the national broadband plan and asked Mr Watt if he had views on the issue: "I have views, but any comment I would make would be career ending," he said.
Several members of the committee pressed Mr Watt on what they described as inaction, or as a “passive” approach by his department in relation to the children’s hospital.
Mr Watt said the department was “not passive at all. Between 2012 and 2017, there was voluminous contact between our department on governance and procurement (on the national children’s hospital)”.
There were also some testy exchanges on when Mr Watt and his officials learned of the spiralling costs of the children’s hospital and what it had done.
Mr Watt told Mr O’Brien that he first learned of the overrun on November 19th, that his department met the Department of Health on November 23rd and that the Minister for Public Expenditure Paschal Donohoe was formally informed of the €450 million overrun on November 26th.
“We were told about a significant cost issue at that stage,” he said.
However, under questioning from Labour TD Alan Kelly, Mr Watt accepted he had learned informally about the cost overrun earlier than that.
Mr Kelly referred to Mr Donohoe disclosing a meeting on November 9th where he had learned of the costs issues.
“Did it take 10 days for the minister to tell you?” he asked.
Mr Watt contended what he had said earlier at the meeting was that the report to him from the Department of Health was submitted on November 19th.
Mr Kelly challenged that this was what he had said to Mr O’Brien.
Mr Watt, asked by Mr Kelly, accepted he would have learned informally about the matter in or around the same time Mr Donohoe was told on November 9th.
He said there was no point in saying there was a problem unless it could be quantified on paper.
In a series of exchanges, Mr Kelly accused him of showing disdain.
Opening statement
The secretary general in an 18-page opening statement referred to lessons that had been learned from the children’s hospital saga. He said that there would be no longer any pre-commitments to projects unless there was “100 per cent clarity on design” and that Government would not commit to projects until the price and design were clear. There would also be provisions for a higher risk premium to allow contracts become more realistic.
Mr Kelly said it was not credible that there was not awareness within the department of the overspend. He read out a series of emails from the Department of Health to officials in Mr Watt’s department from September to early November seeking meetings to discuss the emerging costs issues in the hospital project. He listed five requests to the Department of Public Expenditure for meetings, none of which had occurred.
“I have gone through all the email between the departments. Why did it take so long for the two departments to meet?
He read out one email where an official from health told a public expenditure official in early November 2018 that “we have been trying to meet your division since the end of September”.
Mr Watt replied there were many meetings on many matters between the department and there would have been 30 meetings plus around the budget.
He said his department would have required a “detailed note” to engage with his colleagues in health on the costs issues.
Ms Connolly said that back in 2015, the new hospital board had come before the PAC and had given assurances that governance was in place and they had learned lessons from the experience when the hospital was planned for the Mater hospital site.
Ms Connolly then turned to the hospital development board’s minutes from last summer when it was alerted to high risk, and the fact that guaranteed maximum price procedure had not been completed.
She also made reference to two further references in the minutes, one that stated the “performance of [contractor] BAM fell far short of what expected in a Tier One contract”.
Another reference in the minutes stated, Ms Connolly said, that BAM had “not delivered” and questioned whether “various design and contract teams [were] fit for purpose to deliver a project of this complexity”.
She again referred to emails sent by the Department of Health seeking meetings with the Department of Public Expenditure over costs issues between July and October of 2018.
“This shows the Department of Health desperately trying to contact your office,” she said.
Mr Watt said there were officers dealing with the Department of Health on many issues.
When Ms Connolly asked did the alarm bells not ring, Mr Watt said that when issues regarding guaranteed maximum price were detailed and that assessment came in officials from his department sat down to discuss them.
