15 February 2008 (Examiner)
Taxpayer to foot €83m bill over ‘cock-up’
By Juno McEnroe
THE Department of the Environment has acknowledged that no one was fired or sanctioned after a "monumental cock-up" of a simple sewage scheme in Limerick left taxpayers with an €83 million bill.
Department secretary general Geraldine Tallon yesterday confirmed to the Public Accounts Committee (PAC) that "no heads had rolled" after Uniform Construction Ltd was wrongfully fired from the €9.5m sewerage scheme.
The final bill to the taxpayer is expected to be in excess of €83m after years of legal wrangling and the employment of another company to finish the job.
Ms Tallon also admitted the department ignored the advice of the Attorney General when it advised Limerick City Council to fight the case in the High Court, despite having been told during an arbitration hearing that the contract was wrongfully terminated.
The original €9.5m contract for the 2.6km of sewer work was awarded to Uniform Construction in 1999 but the company told the city council soon after that it had come across "unforeseen ground conditions" while tunnelling. But the council decided the company was to blame for significant problems with the work, such as roads collapsing. Its contract was terminated in 2001.
The company and council fought the case out at conciliation and arbitration hearings, where it was ruled the contract was wrongfully terminated.
However, Limerick City Council refused to pay the company the costs and damages it demanded.
Furthermore, the decision to stand its ground was backed by the department which supported an appeal to the High Court despite advice against doing so by the Attorney General.
Arbitrators ultimately decided to award the company €32m. With legal costs as well as a further €27m for a different company to do the sewer work, the final bill is set to cost the taxpayer €83m.
Comptroller and Auditor General John Purcell told the PAC yesterday that cases of terminating similar contracts were "very rare".
His report also noted that former Environment Minister Noel Dempsey had been first informed of the debacle as early as September 2001.
But stunned committee members queried how the simple sewerage job had cost so much. TD Niall Collins asked: "Has anyone been held responsible for this monumental cock-up? The figures are exorbitant."
Ms Tallon replied: "There’s no escaping the disappointment the high cost the exchequer has had to pay for this."
When pressed, she also admitted: "No, heads haven’t rolled."
Solicitors McCann FitzGerald advised Limerick City Council on the company’s termination and an independent review of the decisions taken is under way, said the department chief.
Fine Gael TD Jim O’Keefe asked why alarm bells had not sounded when the case first came before the department’s attention.
The PAC’s chairman, Bernard Allen, said members intended investigating all reports on the decisions that had been taken by the council and department.