An overrun in cable-laying costs of between £9 million and £26 million at Iarnrod Eireann raises uncomfortable questions for the company and demands a decisive response from the Minister for Public Enterprise, Ms O'Rourke.
That there were misjudgments, shortcomings and failures within Iarnrod Eireann in agreeing the terms and in awarding and monitoring the cable-laying contracts with Sasib/MNL in 1997/98 is beyond dispute. And the fact that three of the key people involved in negotiating the contracts for Iarnrod Eireann later joined MNL raises questions.
Iarnrod Eireann insists there was nothing untoward in the handling of the contracts, but the episode will serve to emphasise the need for modern and efficient practices within semi-State companies. It will also reopen the question of instituting "cooling-off periods" for senior officials who leave the public sector for the private.
Questions of accountability are also raised by the failure of Iarnrod Eireann executives to inform the CIE board of the overruns in a timely fashion. The findings of MHA, a company appointed as outside project managers for cable-laying in 1998, blew the whistle on the major cost overruns and failures by Sasib/MNL in 1999. The response was to commission another report by PricewaterhouseCoopers.
Yesterday, the Minister blamed the nature of the contracts entered into by the company for the current situation and she described the PricewaterhouseCoopers report as "damning". Then, in a move clearly designed to keep public attention focused on Iarnrod Eireann and the contracting companies, she invited the chairman of the Joint Oireachtas Committee on Public Enterprise and Transport, Mr Sean Doherty, to investigate the matter.
There are many aspects of these developments that require careful evaluation. PricewaterhouseCoopers reported that the contract for a rail signalling system for Iarnrod Eireann was "unrealistically low" when it was signed with Sasib in 1997. In the following year, MNL won a contract to simultaneously lay cable for ESAT along railway lines and MNL and Sasib merged.
But then priority was given to cable-laying for ESAT, rather than to addressing the signalling needs of Iarnrod Eireann. Publication of a damning rail safety report in July 1998 caused Ms O'Rourke to commit £450 million to a five-year modernisation programme and, as a consequence, outside project managers were appointed. It was only then, in late 1998, that the shambles of the cable-laying exercise was exposed and the likely cost overruns by Sasib/MNL identified.
There are good reasons why costs escalated. The demand for higher safety standards and the need to hand-dig trenches contributed greatly and exacerbated the mistake in the original "unrealistically low" evaluation. But the gap between £40.339 million, which Sasib/MNL estimates as the final cost, and Iarnrod Eireann's estimate of £24 million to £25.8 million shows the size of the potential black hole.
The taxpayer must be protected in this instance through an aggressive commercial response.
There must be some accountability from CIE for its handling of the situation. And the electorate deserves more than hand-wringing from Ms O'Rourke.