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(Speaker Continuing)
[Deputy Sean Fleming:   ] The note the Department of Education and Skills gave to the Minister, Deputy Howlin, this morning on this issue stated it was retendered and according to that note it did not go to the next in line. Which is correct?
Mr. Kevin McCarthy: My understanding is that it was-----
Deputy Sean Fleming: It may have been the under-bidder, but the document we were given at the meeting with the Minister, Deputy Howlin, at 10 o'clock this morning states it was retendered.
Mr. Kevin McCarthy: My understanding is that there was not a full retendering process and that the under-bidder was effectively awarded.
Deputy Sean Fleming: He may have got that job, but is this morning's document from the Minister, Deputy Howlin, inaccurate?
Mr. Kevin McCarthy: We will clarify that.
Deputy Sean Fleming: Okay. What was the scale of the cost of the project, if the witnesses do not have exact details? Was it €10 million, €20 million, €30 million, €40 million or €80 million?
Mr. Kevin McCarthy: It is much more significant than that. That is quite a significant development. It is certainly over the €30 million.
Chairman: Can Mr. McCarthy come back to us on that?
Mr. Kevin McCarthy: I will.
Deputy Sean Fleming: I will help Mr. McCarthy, because it is in his own notes on the appropriation accounts. The account the Department gave us for today states that the expenditure on the St. Patrick's, Drumcondra, campus development in 2010 was €5.5 million, in 2011 it was €1.8 million and the legally enforceable commitments to be met in subsequent years, according to the Department's appropriation accounts signed off by the Comptroller and Auditor General last March, was €32.4 million, giving a total cost of expenditure incurred up to the end of 2011 plus legally enforceable commitments of €39.736 million. Is that the cost of the project?
Mr. Kevin McCarthy: We will just confirm that.
Chairman: He is asking a question and he does not know the answer to it.
Deputy Sean Fleming: I understand that, Chairman, but it is helpful sometimes. Perhaps the Comptroller and Auditor General will have a comment to make on this. In what year did that contractor go bust? Was it 2012?
Mr. Sean Ó Foghlú: We had an initial contractor, who went bust - I think that was 2011 - November 2011. Then there was a retender. Then there were difficulties with the contractor getting a bond on the retender. That is my understanding of it, but we will come back to the Deputy with the detail.
Deputy Sean Fleming: I ask Mr. McCarthy to explain the appropriation account, which used the phrase "legally enforceable commitments to be met in subsequent years in relation to the St. Patrick's Drumcondra development of €32.405 million". Who had the legally enforceable commitment if the contractor had gone bust? How could he legally enforce a commitment if he had ceased trading?
Mr. Kevin McCarthy: I think the reference there may be in terms of overall capital commitments and the commitments we have entered into. The commitments at this stage in terms of spend commitments on third level capital relate to projects that had reached a point of contractual commitment in November 2011.
Deputy Sean Fleming: This contract was null and void if the contractor had ceased trading. There was no enforceable contract against the Department because the contractor did not complete the job. Why does the Department refer to a "legally enforceable commitment" if nobody can legally enforce it against the Department? Who was the contracting authority for this, St. Patrick's or the Department?
Mr. Kevin McCarthy: St. Patrick's.
Deputy Sean Fleming: There have been other schools projects that have attracted much publicity where contractors have gone bust. How many of them have occurred under the Department's Vote since 2010? Can we get a list of all the schools and campuses where the contractor has ceased trading during the course of the project and another contractor had to come in? After it had happened once or twice, it must have set alarm bells ringing. Does the Department have mechanisms in place because unfortunately this is not unusual now? I hope the Department is on top of the potential problems that can arise. Does it have such a thing as a completion bond? In other words, when a contractor is given a €10 million or €20 million job to do, does he not need to produce a bond guaranteeing that he will complete the job before the Department gives him the job? Surely the Department would not enter an agreement for, for example, €40 million without the contractor having a bond to guarantee that the job will be completed? Would there not be some insurance bond from which it could claim?
Chairman: It would be helpful for us to get a list of those schools that have not been completed where a contractor has gone out of business, including details of the bonds that were in place and whether they were subsequently retendered or what happened. The witnesses will be aware that Loreto school in Kilkenny is in the same circumstances and I would like to know about it. It is difficult to get up-to-date information on it. If Deputy Fleming is agreeable, we will ask the witnesses to submit that to us.
Deputy John Deasy: Mr. Ó Foghlú will be glad to hear that I wish to raise just one issue. I believe Deputy Dowds touched upon the costs and benefits of prefabs as opposed to permanent builds in schools. In his opening statement Mr. Ó Foghlú explained the capital resource challenges that exist within the Department. I will use the specific example of Kilmacthomas national school in Waterford and will get into the national policy after that. The school needs an extension and the Department insisted that it get quotes for the cost of buying two replacement prefabs. Based on the preferred tender just received, buying the two prefabs and connecting them to the school's heating system would cost €160,000, which is approximately 80% of the cost of a new build - the capital cost estimate for two permanent build classrooms is €200,000.
As Mr. Ó Foghlú will be aware the prefabs have a book life of approximately ten years even though many of us have been in prefabs that are 20 or 25 years old and still in use. I thought the Department had changed its policy direction on the issue. It might be preferable to give the school the €160,000 and let it raise additional money locally. In the case of Kilmacthomas, the architect involved has said that the provision of two prefabs does not represent value for money in the medium or long term and recommends that the school seek to have the proposed prefabs funding reallocated towards a two-year permanent classroom extension and then try to raise the money locally.
I will ask about the national policy and how it has evolved in recent years. Kilmacthomas is a clear example of the cost-benefit question. I want Mr. Ó Foghlú to respond specifically to the example I have raised and consider the option of building permanent classrooms in Kilmacthomas as opposed to providing new prefabs and all the financial issues that surround that school specifically.
On the national issue, my information is that at the height of the boom the previous Government had a policy of renting prefabs in schools as we all know. I believe 715 new rental contracts were agreed in 2007 alone. The average rental cost of a standard 80 sq. m prefab classroom in 2008-09 was €15,000 to €16,000 per annum. That was reduced by April 2012 to €15,000. The expenditure on rental accommodation, including prefabs, has gone from €39 million in 2009 to €29 million in 2012, a reduction of approximately €10 million. As of April 2012, some 580 schools were renting temporary accommodation. The programme for Government contains a commitment to reduce the reliance on rented prefabs in schools. Only 35 new primary school contracts were entered into in 2011 so we have seen the progression, but the example of Kilmacthomas begs the question of how much progression there has been in the case of a school that does not want to face the prospect of having prefabs for another 15 or 20 years.
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