Department was overcharged by more than €40,000 for running colleges

The Department of Education was overcharged by a total of more than €40,000 by two private partner companies for the running of major colleges.

The biggest figure was a €38,600 overcharge last year for the yearly public private partnership (PPP) in relation to Cork School of Music (CSM) for which the department paid €8m.

The contract for operating and maintaining the college began in 2007 and has, so far, cost €52m, with €177m remaining to be paid, based on latest calculations. The annual charges are based on complex calculations that include variable elements linked to inflation, but an error was noticed in the private company’s indexed calculation last year.

It was picked up after the department asked the National Development Finance Agency to review these calculations in respect of this and the four other PPP projects in the education sector. The incorrect calculation in respect of CSM resulted in the department being overcharged €38,600. A subsequent review found the 2011 calculations were correct and the company refunded the department in February of this year.

The NDFA review also found an inflated figure in charges for the National Maritime College which, along with CSM, is a constituent college of Cork Institute of Technology (CIT). The potential overcharge arising from the error could have been around €4,800 a year, but a subsequent invoice was issued a year ago, and the department is examining if any refunds were due.

The C&AG report recognised the skills available to the department through the NDFA for managing PPP contracts, but said CIT risks being over-reliant on the single contract manager overseeing both its projects.

The department deducted €235,000 in payments on three groups of schools built under PPP last year. These deductions can be made if a firm does not meet standards in the contract, including inadequate response time to request for services such as cleaning, heating or caretaking. The 15 schools in the three PPP projects made around 5,000 calls last year to a helpdesk through which they make service requests.