OPINION:Oversight, transparency and accountability have gone AWOL in the murky world of State procurement, writes ELAINE BYRNE
MICHAELMAS DAY fell last Monday, the same day the banks requested an urgent meeting with the Government, prompting the largest financial guarantee in the State's history. This old Irish quarter-day festival celebrates the end of the harvest where traditionally rents were due and bills were paid. If tenants could not pay, they brought a goose to the landlord to help seek his indulgence. Coincidence that.
At 2.08am yesterday morning, the Dáil applauded when the Credit Institutions (Finance Support) Bill was passed and sent to the Seanad. The six financial institutions have now been given a €400 billion get-out-of-jail-free card having recklessly encouraged property speculation like a game of Monopoly.
We have no option but to trust the Government who trusts the banks. Double jeopardy! Public trust has been borrowed rather than earned. A State that borrows public trust must answer the following:
Where was the regulation? What of corporate governance? Why do we have a Financial Regulator and a Central Bank?
Ireland Inc has misplaced concepts known as oversight, transparency and accountability (OTA). If found please return to Banking Sector Ireland, Reasonability Crossroads, Dame Street, Dublin 2.
The OTA has been AWOL for some time.
Take the Public Accounts Committee meeting yesterday which probed the director general of Fás, Rody Molloy, on Fás's financial management and control systems. The Comptroller and Auditor General's Special Report, published in May, criticised the underlying "failures relating to the procurement process, governance and financial management" within Fás, the Abbey Theatre, the National Library of Ireland, the Irish Blood Transfusion Service, Science Foundation Ireland and Beaumont Hospital.
Poor public procurement practices and negligent banking procedures share the same gene pool of non-regulatory compliance.
The CAG highlighted two instances where €83,000 in Fás contracts breached procurement rules. In another case, a Fás employee involved in procurement "may have intervened on occasions to recommend certain individuals for employment by a supplier". Two Garda investigations and several internal reports prompted the Tánaiste last week to commission the CAG to investigate if the "appropriate public procurement procedures exist to prevent or detect irregularities or wrongdoing" in Fás.
The CAG found that the Abbey Theatre did not advertise €916,441 in contracts. The Department of Arts, Sport and Tourism and the Arts Council were determined to have failed to notify the Abbey Theatre of its requirements to follow procurement rules.
The CAG's 2007 annual report, published last week, drew attention to the "deficient" procurement procedures within the Irish Prison Service (IPS). Under Department of Finance procedures, departments and offices "permit departures from the normal process of competitive tendering" in "exceptional circumstances". In 2006 the IPS recorded three such exceptional circumstances, valued at €260,000. In 2007, this became the norm, with 60 contracts signed without recourse to competitive processes, worth €18.6 million.
A competitive, transparent and accountable procurement process is the best means of securing value for money for the taxpayer. The Forum on Public Procurement in Ireland estimates that the procurement market for the island of Ireland is €19 billion annually.
The integrity of the procurement market, and indeed banking, is dependent on the implementation of good governance principles and regulatory discipline.
Although unsuccessful bidders have recourse to what's termed a "debriefing" by the contracting authority, Ireland has no appeals system on procurement decisions. Any perception of breaches in tendering can only be onerously petitioned to the courts and the European Commission.
The Minister of State at the Office of Public Works (OPW), Martin Mansergh, is engaged in a review of procurement practices. This review was declared in July as part of the Government's two-year €1.44 billion "public spending measures". In reality, this was already under way as a consequence of the Minister for Finance's "efficiency review" announced in last year's budget.
Each Government department or agency is responsible for its own procurement. The National Public Procurement Policy Unit within the Department of Finance is charged with formulating policy and publishing procurement best practice. The Government Contracts Committee, a committee of civil servants from across the departments, is responsible for procurement policy, national procurement guidelines and EU directives. The OPW and the Government Supplies Agency procure certain works, supplies and services for the central government sector.
Confused? Optics aside, real and substantive reform in procurement practices would restore confidence in the €19 billion annual procurement market. Notwithstanding this impressive array of bodies, the recent OECD review of the public sector noted that "there appears to be little direct guidance from the Department of Finance regarding the outsourcing of services".
How have we allowed things to get this far? Where are the good governance practices in banking and procurement? The borrowing of public trust now warrants an extensive examination and reform of public procurement practices . . . before another goose is cooked.