Health board admits starting work on HQ without securing funds

CONSTRUCTION on a €9.5million building for the North Western Health Board began before formal funding for the project had been secured, a Dáil committee heard yesterday.

The NWHB admitted yesterday to breaching Irish and EU regulations over the construction of its headquarters at Manorhamilton, Co Leitrim.

The Dáil Public Accounts Committee heard that the NWHB had signed contracts for the new building before it had obtained any approval for its funding from the Department of Health. The Comptroller & Auditor General John Purcell said an audit of the NWHB’s accounts in 2001 showed that the board had signed a formal contract with an Omagh-based construction firm in March of that year.

Mr Purcell said he had been informed by the NWHB that the project would be largely self-financing as a result of the savings it would make by centralising its operations in the new HQ.

He told the committee that construction work on the building had begun before the Health Department had even become aware of the project.

Mr Purcell pointed out that the NWHB had also breached EU procurement regulations by engaging a design team without going through a formal tendering process.

Fianna Fáil TD John Curran said it was “absolutely bizarre” that anyone would sign a contract for the construction of a building before financing for the project was secured.

The Dublin Mid-West TD said he was baffled why the NWHB only sought loan approval from the department for the first time in 2001 when the project was irreversible. He accused the NWHB of being reckless and engaging in “atrocious management”.

However, NWHB chief executive officer Pat Harvey defended the decision to go ahead with the project on the basis that it was “essentially self-financing”

Mr Harvey said it was the board’s deliberate intention not to seek funding for the building under the National Development Plan. He said the NWHB believed there would be no difficulty in obtaining loan approval from the Department of Health because the project made sound business sense.

Mr Harvey said the board was satisfied that annual savings on rent, travel and other accommodation would be almost €700,000 and sufficient to fund any loan.

He explained that staff at the existing HQ in 1998 had been faced with an accommodation crisis as most buildings were “one step away from prefabs.”

A Department of Health official, Dermot Magan, said the only way health boards could fund capital programmes was through the National Development Plan. He claimed the manner in which the NWHB sought loan approval was “never going to be a runner, irrespective of the merits of the case.”

Labour leader, Pat Rabbitte said that while any breach of regulations could not be condoned, he expressed concern that bureaucracy over value for money could sometimes stifle initiative by officials.

Mr Purcell reminded the committee that it was imprudent to embark on any major capital programme without having funding in place. If similar latitude as was shown to other health boards, the health service would be “in the mire”.

Mr Purcell also told the committee that problems in the NWHB’s purchasing system had been identified. Mr Purcell said such discrepancies between goods which had been received and those not invoiced could have been overstated by around €2m.

Mr Harvey admitted: “We have to put our hands up and say the system was not working as we had intended.”