Claims hospital price tag may hit €2bn

The cost scandal enveloping the €1.7bn National Children’s Hospital shows no sign of abating with the Department of Health unable to guarantee that the final price will not exceed €2bn.

Who will be held responsible for the financial fiasco that saw costs increase by €450m over a four-month period last year is unclear, but the blame game began at yesterday’s Public Accounts Committee.

Comptroller and Auditor General Séamus McCarthy said “it seems to me to be a project belonging to the Department of Health”, when asked who he believes was responsible.

However, department secretary general Jim Breslin shifted the blame to the National Paediatric Hospital Development Board (NPHDB) saying there was “a statutory responsibility on the board we created to construct the hospital”. And while it is correct to say he was the accounting officer, he “did not absolve the statutory body that we put in place either”.

Under questioning from Labour health spokesman, Alan Kelly, as to whether the cost of €1.7bn represents “the totality of the spend on the project”, Mr Breslin was unable to say, pending the outcome of a “scenario analysis”. This analysis is tasked with identifying the potential costs of any residual risks to the project.

Mr Breslin said he expects the analysis to be done in tandem with a PwC review of escalating costs, due for completion in March.

Mr Kelly asked him: “Can you guarantee us that this project will come in under €2bn?”

Mr Breslin answered: “So the only variation on the guaranteed maximum price are the exclusions from the contract and we’ve been asked by the Government to do a scenario of sensitivity analysis on the impact of those. That’s not complete, but that does include inflation above 4% from July of 2019, so I don’t think it takes it into that type of space.”

Officials also came under pressure to explain how Health Minister Simon Harris had not become aware of the €450m escalation until August 2018 when the board knew about it since June. Sinn Féin TD Jonathan O’Brien asked how it was possible that Paul Quinn, one the health minister’s three public interest nominees to the board, had not made the minister aware earlier.

Mr Quinn is chief procurement officer at the Department of Public Expenditure and Reform and also chair of the NPHDB finance sub-committee.

“We had the head of procurement in DPER sitting on a board aware of these escalating costs, and he’s sitting there to protect the public interest, yet there is a two-month delay between the board being aware and the Department of Health being told?” Mr O’Brien asked.

Mr Breslin confirmed this was the case, saying there were “formal reporting lines”. The committee was also told that Mr Quinn was on the board in “an individual capacity” and not as an official from the department.

Mr O’Brien said the “conspiracy theorist in me would ask if the delay in telling the minister had anything to do with reappointment of the board in July”.

“You became aware of escalating cost in June, you were reappointed in July, and you tell the department [of health] in August.”

Fine Gael TD Kate O’Connell said she finds it hard to accept that there was no communication between the head of procurement at Department of Public Expenditure and the Department of Health when costs had escalated so wildly.

Let’s call a spade a spade. We know how it works. People talk to each other. I am seriously concerned if the head of procurement knew about this and the minister and the person writing the cheques, Jim Breslin, didn’t know. It’s really, really concerning.

The committee also heard that accounting firm Mazars conducted a review after costs escalated “to see who knew what in terms of reporting”. Mr O’Brien asked why PwC are now being tasked with another review, at a cost of up to €450,000.

The C&AG was asked if it is “unusual for a project this size to be on track one month [as the board claims it was up to June 2018] and then €450m over four months later”.

“That would be very concerning,” Mr McCarthy said.

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