NI Water: Mr MacKenzie walked away from ‘identified savings’…

The BBC the other day made rare mention of Northern Ireland Water’s irregularities over the issuing of contracts. These are the breaches that were taken by the Minister (acting on the rather pointed advice of former Permanent Secretary, Paul Priestly) as a premise for the high profile sacking of four non executive directors of the company.

It was taken to mean at the time that this represented losses, or monies misspent. But as we’ve demonstrated on Slugger time and time again, that would be an entirely misleading perception.

Even if you only look for proportion in terms of the whole of NICS in the Auditor General’s report, the figures which feature account for a mere 3% of the total breaches. And remember, because of its large industrial base and the long term run down of in house capacity, NI Water has been compelled to seek outside contractors just to tread water (no pun intended).

Recent Assembly Questions lodged with DRD by John Dallat have determined that the greatest value of these breaches occurred in the old DRD run Water Service. And of those reported at the time Conor Murphy sacked the four NEDs it would be useful to find out exactly how many were initiated in Declan Gormley’s time on the Board.

But what continues to intrigue me; why has no one asked why one of the first actions of the new Chief Executive was to disband Northern Ireland Water’s own value for money team?

This had been, with the blessing of the Board, examining in fine detail the detail of all recent contracts under the direction of a specialist director David Gilmour working with his own internal team and Contracting Out. They identified potential savings that ran into tens of millions of pounds.

Yet within months Mr Gilmour was restructured out of the company and this team, who had been working on a review of a substantial IT contract with the French company Steria, was dispersed. Interestingly if you examine the Northern Ireland Audit Office report, Mr MacKenzie has had his knuckles wrapped for not launching a risk assessment of what in hindsight looks like a precipitive action.

With Northern Ireland Water’s internal capacity to identify further savings severely curtailed, they dropped their aggressive court action and instead were sued by Steria for withholding payments: ironically, for work done on the means to collect domestic water rates that may never be collected.

Mr MacKenzie’s reasons for restructuring Mr Gilmour out of the team have never been adequately explained. But his explanation to the PAC of why he called in the forensic accountants Contacting Out contract is just bizarre. He told the Committee that he would not sign off on a contract that merely identified savings rather than delivered them.

It’s bizzare because the company was never to be paid for merely identifying savings. In fact they were only to be paid on delivery of those savings. Had the company delivered no savings, they would have been paid 6% of nothing. Which is? Yep, that’s right, nothing.

However his real fear appears to have been that 6% of >£20 million is ‘a very large number’. (A very large number which, presumably, the company could be doing with just now the departmental cuts are settling in.)

Two things to say on that. >£20 million would have represented some serious value for money. Also, it is Slugger’s understanding that the contractor never expected to find anything like that kind of figure when contract was agreed, and had communicated to NI Water that they would have agreed something a great deal lower.

Given Mr MacKenzie is now looking at huge cuts (the very cuts the last Board fought him over), to turn your back on such potential savings seems careless to say the very least.