CIE signals contract and cost overruns `dubious and bizarre'

A cost overrun of more than £25 million for a new CIE signalling system was described as "extremely dubious and bizarre" during Question Time yesterday.

Not only had the costs escalated, but four senior executives who signed the original contract had "defected" from CIE to one of the main contracting companies involved, said Mr Jim Higgins (Fine Gael, Mayo).

The Mini-CTC system - to be installed on lines from Dublin to Galway, Sligo and Waterford and on the Mallow to Tralee line - represented "one of the most dreadful matters that I have had to deal with", the Minister for Public Enterprise, Ms O'Rourke, replied. The original contract, signed in 1996, was for £14 million but the costs had spiralled and were now running between £25 million £40 million, she said. The new signalling system was not now scheduled to be completed until 2002.

She admitted it was "equally remarkable" that four of the key people involved in negotiating the contract had left to join MTL - "the main company" involved in the contract. There were "legal matters arising from this affair", said Ms O'Rourke. "The whole matter is entirely unsatisfactory."

Mr Higgins asked whether there was not "some bizarre stench off the entire contract", given the enormous cost overrun and the fact that the head of procurement, the signalling engineer who was the manager in charge, the company solicitor and another engineer had all "effectively defected" to the company with which they negotiated the contract. "Four of the main people who were involved in the decision-making have now gone to the company which is going to add £25 million more of taxpayers' money than was originally contracted for."

The situation was discussed at last month's meeting of the CIE board, the Minister said, after which she was handed a copy of the PricewaterhouseCooper review of the contract.

"The CIE board will discuss the matter again at its next meeting. Following that, the action to be taken in order to move forward will have to be decided." It was difficult to see what could be done, she added. She was "distinctly unhappy" that people had left CIE and gone to one of the main companies "who are part of this process".

"We should not exclude the possibility of sending a file to the Garda Siochana, if needs be," suggested Mr Higgins. "Some of the main players are no longer there," replied the Minister.

Ms O'Rourke was asked why she could not speed up the process of introducing competition to the public transport system in Dublin through the privatisation of Dublin Bus. She was "the only Minister who can prevent gridlock in Dublin in the near future", said Ms Olivia Mitchell (Fine Gael, Dublin South). The introduction of competition would take up to 10 years, Ms Mitchell predicted, because of the problems involved in the break-up of the CIE holding company's subsidiaries, including pension arrangements, etc.

The 273 new buses that the Minister had introduced on to the streets of Dublin were only "a drop in the ocean", she added, given the chronic transport problems besetting the capital. "Dublin is getting to be unviable." Dublin Bus was closing routes to prop up the capacity of the quality bus corridors. Five more were to open before Christmas "at the expense of existing routes".

Ms O'Rourke said it would not be at the expense of existing routes. A total of 400 new buses would be introduced between now and next year, she said. As regards competition, under the 1932 Road Transport Act, which gave CIE a monopoly on public transport - services could only be introduced where they were not being provided by the public companies.