NI Water: Why the £28 Million figure is nonsense…

There was a very tidy read in to the NI Water story from Martina Purdy on Newsline this evening and a very welcome recognition of at least some of Slugger’s role in helping to break what is shaping up to be the major political story of the year.

We understand there is a great deal more coming down the line… And in case anyone is thinking this stays inside the NICS, think again…

Where has the General Consumer Council been through all of this? And how does the ultility regulator now feel about the fact that he is known in the common parlance between the CEOs of two major utilities as “Danger Mouse”?

More seriously what value for money have the consultancy firms been throughout? According to PWC, NI Water was a paragon of virtue. The one figure borrowed from the IRT (led by senior partner from Deloitte and Touche, Jackie Henry) by the Minister is that supposedly mispent £28 million.

For those of you still buying that line, it’s worth pointing you at reader William’s deconstruction of that £28 million, which Paul Maskey keeps mentioning

The totality of contracts = £28m, allegedly. That figure refers to work done. The overwhelming amount of that sum is for legitimate work undertaken and paid for. There is NO evidence to suggest the work was not done correctly, so much of that sum is self-evidently not in dispute.

If all of this sum refers to single-tender contracts, it can be argued that other people tendering MIGHT have done the work for less.

If we assume a second tenderer offered to undertake the work at 10% LESS than that eventually paid for, the ACTUAL figure of ‘loss’ or ‘not being good VFM’ = £2.8 million (Two point eight).

So MLAs or anyone else clinging to figures like £28m simply demonstrate that they’re supping up a line, or simply aren’t smart enough to grasp the simple business maths.

In other words, it was completely legal and, crucially, has no serious recall value. It looks like the Minister was sold a pup by his Permanent Secretary to the extent that both he and his party are no longer in a position to work out what’s real and what’s not about the true story of NI Water.

An truly Independent report which sought, comprehensively and openly, to lay out all the evidence before the Minister, would not have put him in that situation.

  • medillen

    The point surely Mick is that the tendering process was not properly done which left predictable access to certain companies, as has been the norm for decades. This is the real central issue in this.

  • Mick Fealty

    No, it’s not the real problem Med.

    You’re making the mistake of buying Priestly’s line on this. Think: £1 Billion in contracts over three years. Now think: anyone taking more out of that than they are legally entitled? Not according to anything we have seen.

    Oh, but we might have cut £2.8 Million by using multiple tenders (and remember some of those ‘single tender actions’ went to some of the big accounting firms that are supposed to be keeping an eye on all of this)…

    Smell something fishy?

    Dallat, McGlone and Purvis did.

  • Chris Donnelly

    Mick
    You seem to be skirting past Medillen’s point. It doesn’t really matter how much another company could have underbid those awarded the contracts. What matters was that £28m of contracts were rewarded without a tendering process being initiated.

    There is a lot of good ground being covered by yourself and others on this evolving story, and it’s now clear to those looking at the site for the past few weeks just why you doggedly stayed on the story.

    But the absence of a tendering process can’t be overlooked, no matter (I suspect) how much those involved in helping turn over many of the rocks to expose this aspect of the story would like it to be (for self-interested reasons?)

    In reality, there are parallel issues at play here.

    The Ministerial- civil service conflict is one, and that has been coming since a period of sustained devolution began. That battle will be played out in the time ahead, and it will be necessary for politicians to assert their authority to effectively draw new lines to redefine that relationship.

    A newly defined relationship which ‘puts manners’ on civil servants, however, will present a not inconsiderable challenge to the political parties to raise the calibre of both their elected representatives and paid advisors to ensure that they have the skills and expertise required to both stay on top of their ministries and begin to formulate and implement policies of their own. I know you have some interesting thoughts on how our STV-clientelist system mitigates against that happening, but we need to get there soon regardless. Incidentally, this isn’t a dig at Conor Murphy as I rate him higher than any of the current nationalist Ministers (barring McGuinness, though for other reasons in his case.)

    Finally, the NIW story as initially told, involving the irregular procedures with regard to tendering, is also something which requires to be effectively addressed- not least because there have long been suspicions about many firms benefitting from public sector contracts.

  • Pigeon Toes

    It’s also worth remembering that Patsy Mc Glone commented on DRD reluctance to examine their own procedures

    “Mr McGlone:

    Just before I get into this wee bit here, I am concerned by what Ms Patterson said. The problems around procurement predate the establishment of NI Water as a Go-co, and you have accepted that. Indeed, many of the personnel who, as Mr MacKenzie knows, were in the Water Service, moved over to Northern Ireland Water. I am deeply concerned to hear that. The focus is, correctly, on NI Water, but some of those bad habits, it has been accepted, existed prior to NI Water, in the Water Service under DRD, as it was then. There does not seem to be any deep will on the part of the Department to go back and look at those bad practices.

    There have been issues about procurement. In some ways, it bugs me that those practices could have been going on and loads more money could have been blown, yet the Department does not take that on board, nor does it want to investigate those practices forensically in case there are attendant problems that, if there are personnel with shoddy habits, may pop up in some other guise within the Department’s remit. That concerns me deeply.”

  • “looks like the Minister was sold a pup by his Permanent Secretary”

    Or the other way round, Mick. I think the jury is still out on that one.

    Your power-plays make a lot of sense when you look at what’s been happening in various settings. In which case, the actual sums become less significant. Murphy mentioned a lower figure in the UTV programme. Perhaps that can be put down to the stress of the questioning. Luckily, he didn’t have a Paxman to contend with.

  • Bourgeoiis democracy is illusory. The MLAs are very important, crucial to our current democracy not because they ‘represent’ the people; but because they manage the people. Priestley and co are the administrators who run the show on behalf of the ruling class. They enact the instructions from above.

    If Murphy and Priestley are at loggerheads then that tells us something. The ruling class themselves are in crisis.

  • Michael Shilliday

    Chris said in his first para what I was going to say. No one is saying that £28m was lost, the problem is that £28m of contracts wern’t tendered for properly, and that IS a problem regardless of how the situation was handled from that point on.

  • Mick Fealty

    Chris,

    I’m not dodging Med’s point. I was trying to suggest that I think there is a much larger problem lurking underneath the one you and s/he highlight. If there is no reliable reporting systems inside government how is anyone to trust anything it says?

    And how are we to know the extent of problems so that they might be fixed? This especially includes the Minister; which was one of the key points I made the other night on UTV.

    I think the term ‘putting manners on people’ is unhelpful too. It’s the kind of sound bite that sounds good when you say it, but when a Minister of that party has his eye so comprehensively wiped as Murphy has, it just makes him look doubly foolish.

    It also assumes there are not good people in the public service. This is a point McGlone made on Talkback today, that with a greater degree of openness it should be easier for people of real talent to progress to senior positions. That’s not ignore the fact there will always be a tension, with the political side but…

    Lastly, Murphy is rightly going to take a hit on this. But he is a big boy with a large majority. He’ll get over it. But he needs to draw the right lessons: make sure he reads the reports properly next time, and questions his PS to within an inch of his/her life.

    And if his SpAd (whom I don’t know personally) is not up to the job… well… find someone else who is… The party is hardly short of talent…

  • Mick Fealty

    Yes, but as William’s explanation shows, it is the result of a bureaucratic obsession with ‘process’ rather than ‘outcome’.

    Are the rules important? Yes.

    Is it more important to check that if you are leaking (pardon the pun) money you can actually repatriate it to the company (so that perhaps the Health Minister, for instance, might be able to retain more beds)…

    Absolutely!

  • Pigeon Toes

    Michael I agree .
    However, I am pretty certain that if DRD had wished to justify NIW procurement procedures, then it would have done so at huge expense and using an IRT.;-)

    My feeling is that the procurement issue is a smokescreen, and we would never have heard about these problems, had it not become necessary from MacKenzie and Priestly’s viewpoint as an exercise to get rid of the troublesome Board.

    When have you EVER heard of any public organisation, telling the world that they may be open to legal challenge because of their crap/unlawful procedures.?

    NI Depts spend further fortunes every year defending such actions in court and in court appeals against disgruntled bidders.
    Now the practically invite action. Strange too that no company/person to date has taken any such action stemming from these unprecedented revelations …

  • Pigeon Toes

    “Yes, but as William’s explanation shows, it is the result of a bureaucratic obsession with ‘process’ rather than ‘outcome’.”

    Mick some of that process is there for good reason, i.e. fair competition rather than the chosen few mates and brown enveloped “friends ” of those in charge of distributing work from public funds.

  • Mick Fealty

    Of course.

  • Chris Donnelly

    Mick
    …agree with the ‘put manners’ point, which I put in inverted commas for that reason in my post above. A number of eye-opening comments have been made by politicians in recent days which suggests that some don’t realise that their voters are from that sector….

  • PACE Parent

    Isn’t it interestng that of all the dedicated members of the PAC Patsy McGlone has emerged as the pointman?
    If his attendance record for PAC Committee Members is examined Mr McGlone seems to typify the cursory and cavalier attitude to public service responsibility. 28% in 2007/08 and 0% in 2008/09. I have no doubt that it is not only DRD that suffers from the cozy relationships and expensive reliance on consultancy problem that allowed the current expose in the NI Water Service to float to the surface.
    On a more practical point -when will the DUP replace Jim Shannon? It seems he got out just in time.
    Which other government department will be next?

  • magnus

    I have looked at the 3 hour PAC session. By far the most effective member was Dawn Purves – courteous, well briefed and persistent. Patsy McGlone frequently missed the point. John Dallat was a little boorish and this sometimes distracted from what he had to say. Both could learn a lot from Dawn Purves.

  • Mick Fealty

    Purvis’s performance was indeed a class act, quiet calm and in command of her brief (and accordingly the witnesses too).

    But don’t underestimate the contributions of the others. Dallat nailed McKenzie/DIxon on the emails. McGlone on the bypassing of the Public Appointments Commissioner.

    In hindsight, the most serious failure of judgement was Roy Beggs’, who, believe it or not, praised McKenzie as a whistle blower… I wonder who put that idea in his head?

    Jim’s to be replaced by Gregory Campbell. I wouldn’t expect him to be as easy going as Jim. The critical thing for ALL members is to make sure they get themselves properly breifed this time.

    As Fred Cobain has said, everyone’s credibility is at stake here.

  • Mick Fealty

    On the 27th March, Francie Molloy laid down motion in the Assembly:

    “That this Assembly calls on the Executive to review the roles and functions of quangos and arm’s-length bodies of government Departments to ensure that there is accountability and value for money.”

    Molloy goes on to lay out the following as his party’s position in the direct wake of his own party’s Minister’s audacious sacking of four out of five non executives from NI Water:

    “I welcome the opportunity to move a motion to ensure that quangos and arm’s-length bodies are accountable to, and provide value for money for, the Assembly and the Executive.

    “What are we talking about?

    “What if the public body concerned is not part of the government? That is the problem, and that is what we must stop and change. Such bodies must be made accountable. At present, they are one step removed from government, but to whom they are accountable is sometimes not too clear.

    “We must make quangos and arm’s-length bodies accountable and responsive.” [Emphasis added]

    That was the theory. In fact, the Department’s Stakeholder Unit was all over NI Water like a rash. And it still could not find the value for money problem. Bringing NI Water back into government will not of itself solve this problem.

    They, at the very least, need to find an accountancy firm that can find money that was actually misspent. In DRD and every other department in the administration before they go fiddling with shifting governance arrangements.

  • Pigeon Toes

    http://www.newsletter.co.uk/news/Note-links-Murphy-to-report.6482832.jp

    “CONOR Murphy was under fresh pressure last night after the emergence of a hand-written note requesting changes to the report which he eventually used to justify the sacking of NI Water directors.
    On Tuesday evening the regional development minister said that the position of his most senior civil servant, Paul Priestly, was “no longer tenable” and throughout yesterday there was focus on the reasons – not yet officially revealed – behind Mr Priestly’s suspension until a review has been conducted…..In an apparent reference to the Sinn Fein minister, the note states: “CM view:

    “1) IRT need to set out clearly what the problem is and deal with it in direct way!

    “2) Must be clear in what IRT are saying – leave as little as pos (presumably possible) to the (illegible word); needs to be explicit!

    “3) Will want to meet IRT.”

  • Fascinating find, Mick. How long has that been SF policy? I understand the Minister sets DRD policy. When Paul Priestly moved into post in December 2007 what brief was he given by the Minister with regard to quangos and arm’s length bodies? Did, for example, the Permanent Secretary become an implementer of SF policy?

    Do you mean shareholder unit? Were the NEDs and the SHU performing similar/overlapping oversight functions? It looks as if the PS and the SHU were relatively ineffectual until MacKenzie came along; there appears to have been a stand off between them and the Board. The fact that SHU requires a Business Advisory Panel (BAP) indicates that the SHU isn’t fit for purpose. Do I detect a certain Ministerial glee that MacKenzie was moving things in the ‘right’ direction?

    Interesting to know who were the ‘we’ in MacKenzie’s ‘We commissioned further work, which is known as the deep-dive audit.’ when you set it beside Murphy’s claim on UTV [transcript on NALIL] that he ‘asked for further inquiries’ into the wrong-doing.

  • joeCanuck

    They enact the instructions from above.

    Yes Minister, of course they do.And enact them to the letter, with all due speed and diligence, regardless if they think that the Minister is a first class idiot. What would we do without them, in their obesience and total agreement with their Ministers superior intellect and always perfectly wise decisions. The Education Department can explain this to you in much better detail than I ever could.

  • Mick, Northern Ireland is a small place 😉 Perhaps Beggs likes decisions and actions to be taken promptly rather than the customary soul-destroying fannying about by public agencies.

  • Will want to meet IRT? Doesn’t the I, er, stand for Independent? Shouldn’t the Minister and his PS have kept out of the process until they received the IRT report?

  • drumlins rock

    Did he ever mett the IRT? and do minutes of that meeting exist? Whilst I think CM might not have been in on the whole scheme, I suspect he conviently set aside any suspicions as the process suited the SF agenda.

  • I don’t get how that note could put the minister under ‘fresh pressure’ since it states that IRT need to set out clearly what the problem is and deal with it in direct way! that the IRT be clear in what they are saying and that he will want to meet IRT (which you would presume he would – that only implies he wants them to inform him of what they found). I don’t see how any of that could be construed as Murphy requesting changes to the report. Unless asking that the IRT set out clearly what the problem is and deal with it in direct way as opposed to the traditional nonsensical fudge is now considered a breach of ethics and protocol.
    You really need to lift the 2-D party political glasses off for this if it is going to morph into the ‘political story of the year’. This is really about transfering political power to the minister’s offices away from the PermSecs and those that were really in charge under direct rule (i.e. the final transfer of power in a way). There aren’t legs in this as a populist story as it is almost too arcane in terms of the ethical breaches and esoteric technicalities (how many people know what defines a non-executive director)? MSM are generally finding difficulty getting a sensible handle on it, too.

  • Mick Fealty

    PACE:

    Was this a senior moment, or an act of omission. Here’s the actual figures:

    Mr Patsy McGlone (from 29/06/09) Total 33 Possible for McGlone 1 Attended 0

    And the year before:

    Mr Patsy McGlone (until 04/03/08) Total 37 Possible 21 6 28.6%

    I understand he withdrew in March because he was unable to keep up attendance.

    All information PAC attendance here: http://url.ie/7833

  • aquifer

    Civil servants often procure on the basis of ‘the devil you know’, and this will often save the bother of thinking through what is actually needed, and avoid the embarrassment of having to ask advice from people who know more than you do about your own business. Why not pay the private sector extra to keep the problem off your desk and the snotty noses of your public sector colleagues out of it?

  • JoeCanuck

    I am sorry if it’s unclear. I mean the state bureaucracy take their instructions from the ruling class. The political parties paly a role of befuddling the people, distracting them from the true nature of rule by one class.

    Murphy’s sojourn into the state labyrinthe can only mean that the system of bourgeois rule is in crisis.

    And that is the case because the bursting of the credit bubble has exposed the feet of clay of international capitalist economy.

    The machinery of class rule is up a blind alley.

    Here lies the oppourtunity for the world’s people to end the profit system. Here also lies the certainty of barbarism if the socialist revolution is not won.