Could a civil servant have alerted Simon Harris of cost overruns?

Department of Expenditure and Reform’s Code of Practice seems to be at odds with Department of Finance policy, writes Catherine Shanahan

A question that has generated much debate recently relating to the colossal cost overruns plaguing the new National Children’s Hospital is whether a civil servant on the hospital’s development board should have alerted the Government.

The fact that the civil servant in question is the Department of Expenditure and Reform’s (DPER) chief procurement officer makes it even more relevant, given DPER styles itself as delivering “well-managed and well-targeted public spending”.

Why would a civil servant, in this case Paul Quinn, not have alerted at least his own minister, Paschal Donohoe, if not Health Minister Simon Harris, to the fact that the cost of the new hospital had ballooned by €450m over a four-month period last year?

Maybe the more accurate question is could he have alerted ministers rather than should he have done so. A 2010 Department of Finance circular (12/2010), obtained by Labour’s health spokesperson Alan Kelly, suggests he could have.

It outlines a procedure for civil servants who are ministerial nominees (in this case Mr Quinn) to the boards of non-commercial State bodies (the National Paediatric Hospital Development Board (NPHDB), in this case) to report to the relevant minister (in this case Mr Harris) “where a matter of serious concern arises regarding the State body”.

It says where a civil servant has concerns that a serious issue is not being addressed to his or her satisfaction by the chair of the board, he can ultimately advise the chair that he plans to brief the secretary general of the parent department (in this case Health) “with a view to informing the minister”.

The protocol also outlines occasions when information “must be conveyed directly to the relevant minister without delay”. 

This includes if there are serious weaknesses in controls that have not been addressed, even though the chair has been made aware, and if there is a “significant strategic or reputational risk to the body that is not being addressed”.

Tom Costello with Leo Varadkar in 2014.

There is no evidence to suggest that the chair, now ex-chair, Tom Costello, was not addressing serious concerns. 

We await the completion of a PwC review before we can judge weaknesses in controls. In terms of reputational risk to the body — that horse has bolted.

When the Irish Examiner asked DPER how circular 12/2010 squared with Mr Donohoe and Mr Harris saying respectively that Mr Quinn was on the board “in a personal capacity” and had “a duty to the board”, the spokesperson said: “The members of the NPHDB, in line with Code of Practice for the Governance of State Bodies and the NPHDB’s own Code of Governance, have a responsibility to act collectively for the NPHDB in decision making and communication, and an obligation to observe its confidentiality arrangements.”

The NPHDB’s code of governance manual seems to back up this claim.

It states that a person “shall not, without the consent of the board, disclose, save in accordance with law, any information obtained by him or her while performing his or her duties”, including as a member of the board.

It says board members shall “respect the confidentiality of sensitive information held by the board” including commercially sensitive information.

Under the heading of confidentially, it says that reports, documents, and briefings issued to members in relation to board matters “must be treated as confidential until such time as the board has had an opportunity to discuss and make decisions on their contents”.

Things get a little less clear under the heading of “Loyalty” where it states that board members must acknowledge the responsibility to be loyal to the board and to be fully committed in all its business activities “while mindful that the organisation itself must at all times take into account the interests of its stakeholders”. 

As the hospital is being funded from the public purse, we are all stakeholders.

This newspaper asked DPER which took precedent, circular 12/2010 or the Code of Governance for the NPHDB. 

No answer was forthcoming.

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