Health

Children’s hospital costs: Failure to inform official appearing at PAC about extra €107m ‘undermines public confidence’

Labour Party TD Alan Kelly said the move was ‘completely undermining’ of the Public Accounts Committee

A conciliator operating under the disputes procedure set out in the contract for the hospital had recommended that building firm BAM should receive an additional payment if €107 million for delays in the project attributable to the client.

Martin Wall
Sat Jun 1 2024 - 12:34

Labour Party TD Alan Kelly has strongly criticised Minister for Health Stephen Donnelly and his top civil servants for failing to inform an official appearing before the Dáil Public Accounts Committee that a conciliator had recommended that the firm building the new children’s hospital receive an additional €107 million.

In a statement on Saturday Mr Kelly maintained this move was “completely undermining” of the Public Accounts Committee which held a hearing with senior figures in the organisation overseeing the construction of the hospital last Thursday.

The Irish Times reported earlier this week that last Wednesday a conciliator operating under the disputes procedure set out in the contract for the hospital had recommended that building firm BAM should receive an additional payment if €107 million for delays in the project attributable to the client.

This information was not provided to the Public Accounts Committee on Thursday as senior figures believe the disputes process was still under way as the recommendation could be appealed.

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On Friday the Department of Health said senior civil servants had been updated about the conciliation process on Wednesday evening and that, in turn, the Minister was briefed.

The €107 million sum is the most significant additional payment to be recommended under the conciliation/dispute management provisions in the hospital building contract.

The conciliator’s recommendation came hours before senior figures in the National Paediatric Hospital Development Board (NPHDB) and a Department of Health official were scheduled to appear before the Dáil Public Accounts Committee.

The Department of Health said on Friday that while it knew the conciliation process was under way, the official before the committee ”was not aware of the recommendation of the conciliator until after the meeting”.

“Senior officials in the Department did receive an informal update on the ongoing conciliation process on Wednesday evening. The Minister was, in turn, updated on this ongoing process.”

In a statement on Saturday Mr Kelly said; “It is quite astonishing that the Minister and his top civil servants were aware of this recommendation of a payment of €107 million and didn’t brief their official who attended the Public Accounts Committee.”

[ The Irish Times view on the National Children’s Hospital: another chapter in the never-ending saga ]

Mr Kelly argued that it was “obviously deliberate” that information about the conciliator’s recommendation had not been passed on to the official appearing before the committee on Thursday.

He also asked whether the Minister had informed Tánaiste Micheál Martin before he went into the Dáil on Thursday where he was asked questions about the new children’s hospital.

Mr Kelly said he would be raising the issue with members of the Public Accounts Committee.

“This is completely unacceptable and undermines public confidence further in the shambolic way this project has been managed.”

Details of the €107 million recommendation were not given to the Dáil Public Accounts Committee when it heard from the NPHDB on Thursday.

It said about 1,600 claims for additional payment made by BAM in relation to the project were subject to the dispute management process.

However, it said, so far the net change to the overall contract value including conciliations and adjudications had been approximately €27 million – less than three per cent of the original contract value.

It is understood the board believed the recent conciliator’s recommendation remained confidential as it could still be appealed to the High Court under the disputes procedures.

The Department of Health said in its statement on Friday: “The NPHDB undertook a series of scenario and risk exercises to robustly determine its additional budget needs. The enhanced capital budget of €1.88 billion approved by Government in February 2024, as outlined in the 2019 PwC report, includes the potential for contractor claims among other things.”

“NPHDB has noted that the emerging recommendation by the standing conciliator is still within the conciliation process. ”

“Even if the conciliation recommendation is accepted by the NPHDB, it will not breach the revised budget. The Department does not intend to make any further comment while the confidential and commercially sensitive process under the contract is still ongoing. Litigating a contract in the public realm damages the state’s ability to protect the taxpayer’s interest. ”

Martin Wall

Martin Wall

Martin Wall is the former Washington Correspondent of The Irish Times. He was previously industry correspondent

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