C&AG report: Questions over value of €38m Eircode

The State’s spending watchdog questions whether Ireland’s €38m postcode system will be value for money, and raises concerns with a number of aspects of its introduction.

Comptroller and Auditor General (C&AG) Seamus McCarthy dedicates a chapter of his annual report to Eircode, and concludes that “it is not clear that benefits to the value projected will be achieved as a result of the implementation of Eircode”.

The report found the postcode project was subject to a number of delays; that the Government failed to deal with identified risks in a timely manner; and that the costs of the “project increased substantially relative to the estimates upon which decisions were based”.

The C&AG said it identified a number of ‘shortcomings’ in the cost-benefit analyses used to justify Eircode’s costs.

It said the analyses were based on a ‘postal sector’ model rather than the address-specific postcode eventually introduced; the resource costs of the department or the cost of consultants were not included; and there was “insufficient documentation to fully support many of the assumptions used in the projections”.

Eircode business development officer Liam Duggan during the launch of the new system at the Shelbourne Hotel, Dublin
Eircode business development officer Liam Duggan during the launch of the new system at the Shelbourne Hotel, Dublin

“Improved data matching by Revenue was expected to be the main public sector benefit,” the report states.

“Revenue have indicated that this benefit has largely been achieved through other address-related developments such as the Local Property Tax register and improved data matching processes.”

The C&AG report also found that:

  • Eircode’s estimated cost to the taxpayer is €38m, not €27m as previously stated;
  • Capita, the company which won the contract to run Eircode, sought €1.2m in extra compensation from the Government because delays in introducing data-protection legislation for the postcode held up the Eircode launch. Capita argued this delay led to additional costs and foregone revenue. The department agreed to pay €340,000;
  • A number of contracts, worth €423,520, were entered into with six consultants without a competitive process. Government departments are required to prepare an annual statement of contracts worth over €25,000 which are awarded without a competitive process. While seven of these consultancy contracts met the criteria for inclusion on the department’s statements, only two of the contracts were included.

C&AG report: Questions over value of €38m Eircode

The C&AG also noted that the European Commission found a provision requiring consortium members bidding for the postcode contract to have a minimum turnover of €40m “seemed to preclude” companies from relying on the capacities of the other consortium members. Such a possibility is allowed under a European Directive.

The commission investigation came as a result of a complaint by Gary Delaney, director of location-based Loc8 Code. Mr Delaney argued that he was unfairly precluded from bidding for the postcode contract, and yesterday said he was “vindicated” by the C&AG report.

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