Dáil Éireann Debate, Wednesday - 24 March 2010
59 Deputy Fergus O’Dowd asked the Minister for Transport the reason for the decision to terminate the facility management procurement process relating to terminal 2 at Dublin Airport; and if he will make a statement on the matter. [13065/10]
Amharc ar fhreagra60 Deputy Thomas P. Broughan asked the Minister for Transport if he will report on his recent decision to allow the Dublin Airport Authority to operate terminal 2 within the benchmark set by the Commission for Aviation Regulation; the reason he initiated and then dropped a facility management procurement process to find an operator for terminal 2 and thereby incurred a significant cost to the State; and if he will make a statement on the matter. [13025/10]
Amharc ar fhreagraI propose to take Questions Nos. 59 and 60 together.
The May 2005 Government decision on the construction of the second terminal at Dublin Airport provided for the selection of the operator of the terminal through an open tender process organised by an independent group. Consultants were appointed by my Department in 2008 to advise in the first instance on an appropriate facilities management procurement process. Having considered the consultants' report at the end of this first phase, I mandated the consultants to proceed to organise the procurement process.
The formal procurement started in July 2009 with pre-qualification submissions received in late September 2009. Following the evaluation of the pre-qualification submissions, the consultants reported that none of the candidates had met the minimum requirements for pre-qualification. Furthermore, having completed a market debrief process, the consultants concluded that there was a low probability that the process, if restarted, would prove successful. Unfortunately, I had no option but to terminate the procurement process in light of this advice.
Following the decision to terminate the facilities management procurement process, I announced, on 10 March, that I was mandating the Dublin Airport Authority, DAA, to operate terminal 2, while requiring it to demonstrate that it could do so within a benchmark set by the Commission for Aviation Regulation, CAR. In this context, the Dublin Airport charges determination for 2010 to 2014, made by CAR in December last year, has set very specific and stringent operating cost targets for operating an efficient terminal 2. I have asked the DAA to report back to me within three months on its capacity to operate terminal 2 satisfactorily with effect from November 2010.
It is my understanding that the DAA did not participate in the pre-qualification competition and was not asked to do so. It seems the DAA was effectively taken into the winners' enclosure while others were excluded. Why was the authority not required to take part in the pre-qualification procedures? In respect of those companies that did partake in the process, did the consultants make any recommendations? The Minister indicated that none of the applicants qualified, but did the consultants make a judgment as to whether any of the companies, despite not qualifying, had the capacity to deliver the requirements they did not meet on technical grounds?
The DAA participated in the process in the sense that it was involved in consultations on standards and so on in regard to the second terminal. However, it did not participate in the tender procedure. The process that was recommended to me was that the DAA would submit a benchmark for the operation of the terminal. The idea was that when we decided which facilities and so on would be managed, the authority would submit a price in a sealed tender document. That was one part of the process. The applicants we invited to tender formally would then submit their prices for running the terminal. If any of those prices were better than the benchmarked price set by the DAA, then that company would win the tender process. However, it did not get to the stage of benchmarking because none of the applicants was found to be qualified.
Does the Minister not agree that this looks to the public like he has simply blown away €700,000? First, the Department spent €200,000 directly on a process which did not seem to offer any type of result. I understand three companies — Goodbody Corporate Finance, Matheson Ormsby Prentice and Mott MacDonald — were involved in that. Did they fail completely to offer any type of basis for a competitive tender? Were they at fault in this regard? Second, the Department allocated €500,000 to the DAA for providing what amounted to some type of a benchmark. Did the Department not already have from CAR the Dublin aircraft charges determination for 2010 to 2014? Did the Department spend money twice in order to obtain the same result in each case?
In regard to the pre-qualification tenders, did the major companies in Europe with which we are familiar, including Ferrovial, British Airways, Servisair and so on, participate? Will the Minister indicate which companies put in any type of tender bid to operate the terminal? Has this entire process merely been a €700,000 scam to enable the Government to come forward and say to workers in the airport that their wages must be slashed by 40% or 50% because terminal two cannot afford them at existing rates? Does the Minister agree he has gone through an elaborate charade that cost the State €700,000 and which next year my colleagues and I in the Committee of Public Accounts will be investigating? The €700,000 squandered is in addition to the Minister's ongoing bill of some €110 million.
Once again the Deputy has provided some lovely rhetorical flourishes.
I have set out the reality.
The decision in regard to the running of the second terminal was made prior to my time as Minister for Transport. I was required to implement the Government decision to put forward an alternative for running the second terminal at Dublin Airport, which had been requested by most people both inside and outside the industry, as well as by most Members of this House with the exception of Labour Party Members. I do not have available to me within the Department the expertise, skills and knowledge to conduct that process but I had a Government decision which said I must do so.
Therefore, we employed consultants to advise us, first, on how we might go about such an unusual process. It was originally envisaged that it would be fairly straightforward to put a new operator in place in the new terminal. However, significant complications arose from a legal standpoint in that the DAA owned the land on which the facility was built and thus might be found to own the terminal. The cost of hiring the consultants was partly met by us and partly by the DAA itself. The function of these consultants was to guide the process in order to secure the best possible deal and the most effective and efficient terminal 2. As it turned out, there were seven or eight bids, as I recall, but none met the minimum standards.
Can the Minister name the bidders?
I cannot do so. I am not even sure I should be——
I shall submit a freedom of information request.
The Deputy may do so if he wishes. I do not have the information.
That is what is wrong.
I saw the list at the time but do not have it with me. From recollection, most of the companies that are involved in this type of business were represented in the tenders.
The key point is that some of the companies that tendered are multi-billion dollar companies which run airports throughout the world and have larger budgets than the DAA and better qualified staff. Yet they were excluded from this process on technical grounds. The DAA was never in the race until the race was over, and it got the job without having to undergo proper due process. The authority got a sweetheart deal which facilitated a State monopoly at Dublin Airport to the detriment of consumers. Costs at the airport will be higher as a result. The Minister does not know what the DAA will charge, having given it three months to come up with God knows what figures.
We want competition, choice and reduced costs. Is it not a fact that the whole process was a con job to put the DAA in charge of the airport as a State monopoly, and to put the maximum burden on taxpayers as a result?
The Deputy is absolutely incorrect in his assertion. The fairest way of doing this was to get the DAA to put in its price at the appropriate time, and then give everybody else the opportunity to put in their prices. If there was a cheaper price than the DAA price, it would then have been taken. Unfortunately, if people do not comply with a tender document, whether for technical reasons or otherwise, as the Deputy is implying, we cannot ignore the process. The Deputy would have me before the Committee of Public Accounts and the Comptroller and Auditor General if I interfered with a tendering and procurement process——
Was the DAA in a tendering and procurement process? It was not.
——in any way at all. The Deputy made the assertion that this will cost taxpayers, but that is not the case. When this process was finished, CAR issued a recommendation on prices at Dublin Airport that is very stringent and that will keep the cost very tight for Dublin Airport.
I have the request for tenders in my hand that the Minister issued in April 2008. It is a very unusual document as it states that the Minister reserves the right to terminate the assignment after the end of the first phase. This means that there would only be a pre-tendering phase, which is something I have not seen in similar documents. Does this not confirm the point that we went through a kind of charade? Why was this necessary when we knew that the Commission for Aviation Regulation was making its own determination of airport charges?
Terminal 2 is a wonderful investment. It is a magnificent building and a wonderful piece of infrastructure for the nation. I commend those who designed and organised it. I do not believe that people should be flying out of a greenfield site without normal comforts when they are about to go through very stressful travel. I commend those people, but it is important that the terminal be efficiently run. Aer Rianta International was a proud standard bearer for our country and competed successfully for many airport management contracts in places such as Birmingham and other places in the US and Europe, so why did the Minister not ask the DAA to put its best case forward, given that it has competed freely and successfully before?
The DAA was going to get the opportunity to put its own best case forward. That was part of the process.
That was the end of the process, not the beginning.
It was part of the process. The consultants came forward with the proposal that it should be a two phased thing and should be benchmarked. The right to terminate the competition at the end of the first phase was included in the document just in case there was no second phase, so that we would not fork out €800,000 to the consultants for a phase of work that they were not going to do.
The Government spent €700,000 instead.
