Tender of €200m less was rejected in building centre

THE state awarded the contract to build and operate the new National Convention Centre in Dublin at a cost of €416 million, despite receiving a bid for about €200m less.

The Comptroller and Auditor General’s annual report also revealed that the Government had an independent consultant’s report which showed that the economic benefits of the new conference centre would not cover its cost.

The C&AG, John Buckley, has recommended that there should be a change in how bids for public-private partnerships are assessed following his examination of the contract to design the NCC which was won by the Spencer Dock Convention Centre Dublin consortium. It showed that the Government estimated in December 2004 that the convention centre, which officially opened last month, would cost €414m even though it would only deliver €236m in economic benefits.

The C&AG noted that only 20% of total marks used to assess the rival bids were allocated to the financial cost of the project. He pointed out that 30% of overall marks were allocated to financial criteria in the PPP project to build the new Criminal Courts Complex in Dublin. The C&AG also described the differential in price between the two tenders to build the NCC as significant. Although the estimated construction costs between the rival bids were similar, the main difference was in the operational and marketing costs. The C&AG’s report noted that a separate report by consultants employed by Fáilte Ireland and the Department of Tourism estimated that any expenditure in excess of €321m on the project would see its costs outweigh any benefit.

The Office of Public Works, which oversaw the awarding of the contract, was required to develop a public sector benchmark (PSB) against which tenders from the private sector could be assessed. It estimated the cost of the project at €422m which represented the maximum sum the Government could afford to spend on it. Mr Buckley has suggested that the value of the PSB could be made known to bidders in future to ensure more cost-effective solutions.

He also proposed that the evaluation process should be changed to assess the non-financial elements of a project first before examining the financial criteria to allow the state calculate the relative cost of additional benefits proposed in more expensive bids.