€9m priced sewer cost €83m after contract 'cock-up'

The Department of the Environment has rejected allegations of a "monumental cock-up" after a short drainage sewer under the Shannon ended up costing almost nine times more than forecast by Limerick city council.

Members of the Dáil Public Accounts Committee yesterday described a cost over-run on the construction of the sewer as abominable and exorbitant. The €9.57 million contract ultimately cost almost €83 million after the contractor was dismissed and won a subsequent legal action.

Department secretary general Geraldine Tallon said she was very disappointed that the exchequer ended up paying out so much more than envisaged but insisted the actions of the council and the department were thorough and robust.

The contract was awarded in May 2000 but terminated in September 2001, after 80 per cent of the time allotted had passed but only 34 per cent of the work had been done.

The matter was referred to a conciliator, who found in favour of the contractor, and then an arbitrator, who also ruled in the contractor's favour. The council appealed to the High Court, which declined to intervene. In 2006 the arbitrator awarded more than €32 million to the contractor; the overall cost to the exchequer of the dispute, and of having the job finished by a new contractor, is almost €83 million.

Fine Gael's Jim O'Keeffe described it as a cock-up of monumental proportions and said a further report was needed to establish "why no one shouted stop".

Ms Tallon said four separate risk assessments had been carried out and the department agreed with the course of action taken by the council at all stages. The advice was that the contractor's case was not well founded.

Fianna Fáil's Brendan Keneally accused the department of a "whitewash" for pretending that no blame attached to it or the council. "This is gross mismanagement and incompetence. If this happened in the private sector, heads would roll."

Committee chairman Bernard Allen pointed out that when the contractor was dismissed, some €6 million worth of work remained to be carried out. Yet this ended up costing €27 million under the new contractor.

Ms Tallon blamed "significant" construction inflation at the time and said the tender for completing the job had been put out on a restricted basis.

Fianna Fáil TD Niall Collins asked whether anyone would be held responsible for the cock-up. Had anyone been sacked, moved, demoted or retired, he asked, and were the council's legal advisers still engaged?

Ms Tallon said a review had established there was no basis for taking a claim against the advisers, McCann Fitzgerald. While "heads haven't rolled", significant changes had been made.