State to examine if unrealistically low bids submitted to win contracts

The Government is to examine if companies have been submitting low tenders to win construction contracts and then seeking to increase the budget, as the controversy over the rising costs of the national children’s hospital continues to dog the Coalition.

“We have a real concern that some companies have been low-balling, coming in with very low tender prices to get the contract and then coming back with claims thereafter,” Taoiseach Leo Varadkar told the Dáil in answer to Opposition questions about the children’s hospital costs.

“There are one or two contractors who, quite frankly, I would not like to see get a public contract again in this State,” Mr Varadkar added.

Later, Minister for Finance Paschal Donohoe declined to say if the Government believed this had happened with the hospital contract.

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“It wouldn’t be appropriate for me to comment on that because a decision has now been made on the tender and who is doing the work,” he said.

Lowest tender

The contract for the children’s hospital was awarded to the lowest tender (€637 million) but the costs have rocketed since to an expected €1.7 billion.

Mr Donohoe indicated yesterday that there was a concern that the cost may escalate further, saying that the incoming chairman of the board would review the existing estimates.

“I believe that is the best cost estimate that we have available to us at the moment, and Fred Barry when he takes over his role as chairperson of the board will be able to give us an assessment as to whether there’s any future change possible,” he said.

The Government defended its record of delivering many capital projects on time and on budget but Ministers and the Taoiseach said they accepted responsibility for the dramatic inflation in the costs of the national children’s hospital.

Yesterday, the Cabinet agreed on a series of measures to pay for this year’s overspend on the children’s hospital.

However, Mr Donohoe was unable to supply any details for the €24 million in savings from the health budget – which is just half of the €50 million figure that was identified for savings from the Department of Health previously.

Later, a spokeswoman for Minister for Health Simon Harris said that the saving of €24 million would be achieved by “delivering some smaller capital works such as repairs and replacements over a longer period of time”.

Mr Harris delivered a personal apology to the Dáil yesterday for his failure to reveal the overspending concerns in a reply to Fianna Fáil TD Barry Cowen last year.

Meanwhile, a new report has examined the reasons behind the massive cost escalation at the hospital. The report by Mazars, the final version of which was issued on December 17th, 2018, was commissioned by the National Paediatric Hospital Development Board.

The report, which has been seen by The Irish Times, finds that the project's "fundamental systems and checks and balances failed to protect the board from a large sudden increase in the cost of construction".

It found that the capital cost budgeting process “failed to determine and therefore secure the necessary capital budget” from the beginning of the process.

It also found that the budgeting process “failed to properly estimate the likely future costs of the project within the stated contingency limits”.