Real culprit of children’s hospital debacle is the tender process

Construction of the new National Children's Hospital taking place in Dublin. (Niall Carson/PA Wire)

Human beings know which side their bread is buttered on, and they rarely slap that butter side down on a dirty floor, writes Terry Prone

According to weekend media, everybody is to blame for the rocketing costs of the National Children’s Hospital. Companies. Ministers. Advisers. They’re all being lined up for excoriation, which is a pity, because the real culprit is the tender process itself.

Not this particular one. Or, rather, not just this particular one. Public sector tendering is hairy. Best of intentions hairy, but hirsute as hell, nonetheless.

It’s the living example of “the improvement that makes things worse”. The process came about because, in the bad old days, nothing stopped local authorities and government departments and ministers from sending lucrative gigs, gift-wrapped, to their best pals. That was just the way it was. It was crude. It was effective. It was exquisite in its monetisation of friendship. It made today’s ‘influencers’ look like door-to-door-peddlers of stinking old football socks.

It saved time, too. Back in the day, pals of one of the old big parties knew which local authority jobs were never going to come their way. Reason being that the local authority in question was effectively controlled by the other side. Those local authorities put the Mark of Cain on adherents to the ‘wrong’ side so they could not flourish: You chose to hitch your wagon to That Lot, you couldn’t cry over the payoff. Or lack of payoff.

Of course, even in those wicked times, companies existed which didn’t plight their troth to either side.That didn’t do them any good. They were regarded as naive rectitudinous loopers nobody would want to hire, anyway.

The rules were never stated but were clear as the proverbial, unstated. If you were into bribery, you knew who to hire as your middleman (sorry, girls, another missed historic opportunity) and how much you’d need to set aside for sticking in a brown paper bag. Like any good mafia, once bought, the lads stayed bought. They could be trusted to the boundaries of their venality.

Then came the EU and, at the same time, in Ireland, a new view of what was fair or unfair, ethical or unethical. End result? The objective tender. Even better, the Eurotender, where it was advertised and anybody who wanted could enter the fray, as opposed to the days when three companies would be nudged to enter, one to get the job, the other two poor fools to provide cover and the illusion of equity. With Eurotenders, we came — blinking — out of the corrupt dark ages into the sunlight of a clean new post-corruption era.

Everything was scientific and statistical. Numbers were set against each competence, all the better to prevent subjectivity, favouritism, and nepotism. Algorithms were applied, so if an applicant didn’t hit all of the basic qualifications, it didn’t matter how well they did on the others. This, of course, meant a pressure down towards the median and an active discrimination against the exceptional. The process seemed to be built on Stephanie Plum’s adage that the key to happiness is to be found in lowered expectations.

The first fine careless rapture didn’t last long. Smart companies in all sectors quickly copped on that corruption had not been eliminated, but simply bureaucratised. People on the inside slipped some tenderers information that made all the difference. Losers licked their wounds, inquired about information on why they had lost and were handed the consolation prize of being told they’d been very close. Really. So close… The tender process was supposed to eliminate the power of the personal preference, and give it its due, it tried. But, especially in this country, nobody can ever nail down the internal rationale, the self-censorship at the back of the mind that goes: “Himself [the lead shareholder] or Herself [the chairperson] is known to be close to Joe Bloggs from Contender Company X. Maybe we should tilt just a teeny tiny bit in their direction?” Even that is to make concrete a corruptive force that is rarely concrete, rarely articulated even inside the head of the executive within the company issuing the tender. Human beings know which side their bread is buttered on, and they rarely slap that butter side down on a dirty floor.

Gradually, over time, the EU-wide tender process went from the boon to the bane of a lot of lives. To misquote a former taoiseach, it became banier as it went along. But during the great years before the recession, companies were too busy making money to care much about the tenders they missed, and during the recession, companies were too busy surviving to do so.

The fact is that the tender system, first of all, militates against newcomers. If a company is newly set up, it cannot produce evidence of having recently dealt with particular situations which may be part of the tender requirement.

The directors of the company may, separately, have dealt with similar situations in other companies, but that may not count. That’s simply not fair on new companies. (As the chairman of a 10-year-old company, I have no skin in this game.) The second group it militates against are the ones — as mentioned earlier — who are the best in the country at one or two aspects of the job. Tenders hate exceptional geniuses. Tenders love the box-ticking average.

But most importantly, the tender process militates against companies which don’t lowball. Lowballing has been defined in recent days as underpricing at the outset, with the cunning plan of billing much higher prices once the tender has been awarded. It’s much more complicated than that. In some sectors, it’s a way to buy market share: Aim to be the cheapest supplier and you’ll definitely get the job, because the numbers by which the panel will make their decision are so heavily weighted towards cost. If, in the process, you put pressure on other, perhaps smaller, companies to go in at a lower price than they can afford, and thereby set a crippling trend, that’s just business. When you’re the leader in the field, you’ll be happy out.

When companies in my area — communications — look at state tendering, these days, they’re less enthusiastic than they used to be. The tenders have become much more elaborate. That presents a successful company with the question: “Can we take one of our most experienced executives off their day job for the length of time it will take to research, write, cost and treble-check this RFT?”

Some companies are now skipping State RFTs completely — the ‘life is too short’ argument comes into play. Life is too short to spend a fortune in time and money on a tender process which, even if successful, puts the winner under public scrutiny in a way which presupposes there’ s something wrong with the company. Surely that’s what the entire process was supposed to prevent?

As the economy booms, some companies prefer to take their chances in the private sector where demands and standards are just as high, but pitching for business is professional, simple, and clear.

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