Committee Reports > List of Committees > Dáil > 1996 > Committee of Public Accounts > Report No. 01 - Value for money examinations

First Report on Value for Money Examinations

Introduction

Section 9 of the Comptroller and Auditor General Act 1993 provides the Comptroller and Auditor General (C&AG) with the powers to carry out examinations, as he considers appropriate, to ascertain whether the resources of Departments, persons or funds, audited by him, have been used economically and efficiently. He may also carry out examinations of the systems, procedures and practices used by audited bodies to evaluate the effectiveness of their activities. To this end a specific section had been established in the Office of the C&AG for the purpose of examining expenditure to test whether value for money had been obtained.

At the conclusion of any examination by the C&AG, a report of the examination may be presented to Dáil Éireann, and the Committee of Public Accounts has the power, under Standing Order 131 relative to Public Business, to examine the reports, if so presented, and report thereon to Dáil Éireann. The following report is pursuant to the provisions of the Act and the powers of the Committee, which were extended in March 1994.

At the time of this report, eight VFM examinations have been completed and presented by the relevant Ministers to the Dáil. The following report is as a result of the Committee’s consideration of four of these examinations.

1. LEADER PROGRAMME

1.1 Background

The LEADER programme was originally devised as a short-term pilot scheme to encourage rural development in the post CAP regime and ran from 1992 to 1994. At its conclusion on 31 December 1994, just over £80 million had been expended on it. Of the £80 million spent, £34 million came from the EU and the State on a 60:40 basis and £46 million was provided from private sources. The public funding availed of represented 98 per cent of that approved and, in overall terms, the private expenditure exceeded the original projections of the local development action groups. These groups were autonomous bodies who were given the task of overseeing the design and management of business plans, which were partly funded by the global grants.

The Value for Money examination on the LEADER Programme examined the way in which the Department of Agriculture Food and Forestry administered the LEADER programme and also the effectiveness of the system for evaluating its impact.

The report acknowledged that the Department’s administration was efficient, but stated that there was room for improvement, particularly in the areas of inspection and management information systems. At group level, administration costs were well within the 10 per cent limit stipulated in the regulations. However, the C&AG’s examination of administration at group level identified a number of issues which were worthy of consideration. These included:-

1.the use of the flexibility clause to circumvent the specific exclusion of certain types of projects;

2.the involvement of board members as project promoters;

3.cost overruns on a small number of projects

and

4.inadequate vouching in some cases.

The need to be constantly vigilant in the avoidance of possible overlaps with other area based initiatives was also referred to.

Attention was drawn to the fact that the scheme lacked specific performance measures and indicators, which made it difficult to establish the extent to which the scheme was having the desired effect. In addition, it was claimed that the numbers of jobs created by the schemes was, in fact, significantly less than that quoted by the individual groups. However, the scheme was successful in involving communities in developing opportunities in their own areas and formed a good base for future development. It also emerged that it was cheaper to create LEADER jobs in small enterprise projects than in rural tourism projects. Notwithstanding that fact, almost 40 per cent of the approved public funding went into rural tourism.

The Committee was informed that although rural tourism projects had constituted a majority of the projects of the groups, the assessments conducted had indicated that more new jobs had actually been created in local enterprise type activity than in tourism.

1.2 The Department’s Response

In evidence, the Accounting Officer, explained that the first LEADER Programme was a pilot exercise, not only in Ireland but throughout the European Union and that it was inevitable that certain things would be learned during its operation which would be of benefit to the planning of future schemes. While acknowledging the value of the C&AG’s report, he pointed out that much of the research had been done before the first LEADER programme had been completed and that some statistics contained in the report required updating, particularly in relation to the number of jobs created which, on the completion of the pilot exercise, was considerably higher than the 800 initially reported in the evaluation.

The Accounting Officer acknowledged that there was considerable importance in striking a balance when the new rules for LEADER were being drawn up and he accepted the role the report will have in assisting the Department in drawing up the rules for LEADER II. He pointed out that LEADER had not been established as a semi-State activity, but as a method of assisting local communities in their own development. He agreed that there should be clear accountability and no conflicts of interest and that the criteria must be understood and adhered to, as far as possible. However, he stated that it was imperative that the main purpose of the programme i.e. the development of these communities, should not be lost sight of and that the role of community initiative be retained.

1.3 Job Creation

Attention was drawn to the fact that the creation of jobs was only one of the aims of LEADER, but that it had been used as the main indicator of economic achievement of the programme. The other aims of the programme included the development of local communities, the raising of awareness of development of local communities, training community workers, etc, which were issues not generally addressed in detail by other agencies that would be working in the area of job creation. For this reason, while it was accepted that some overlap with other agencies had taken place, this was not regarded as significant.

The groups claimed that the number of persons employed as a result of the LEADER projects was 2,558, 39 per cent of whom had been previously unemployed and 21 per cent had been underemployed. An evaluation of the programme, which was undertaken on behalf of the Department, disputed this claim and attributed only 800 full time jobs to the programme. The Accounting Officer pointed out that the evaluation had been carried out prior to the completion of the programme and that the actual number of jobs created at the completion of the programme was closer to 2,000. However, he acknowledged that many of the other issues referred to by the consultants, particularly in relation to whether the jobs created could be sustained, were valid.

1.4 The Flexibility Clause

At the commencement of the programme, the Department issued a circular letter to the groups which set out the kinds of projects that were eligible for LEADER funding. A number of ineligible categories was also given but some flexibility was allowed for groups to invest in projects not normally regarded as eligible. It had not been intended that this clause would be applied to projects that had been specifically excluded from the programme.

The Committee discussed the flexibility clause and noted the general concern that had been expressed in relation to the way in which it had been applied, which had allowed the inclusion of projects which would otherwise not have met the criteria. The Committee was told that, as a result of the stated concerns, in drawing up the guidelines for LEADER II, a policy decision had been made to remove the flexibility clause.

The Accounting Officer stated that by removing the clause, the same level of flexibility would not be allowed in the forthcoming programme, but that the new criteria would be broad enough to encompass most activities that a local community would wish to engage in.

He stated that the possibility of introducing some degree of flexibility would be examined but that the shortcomings in the operation of the programmes, which the original flexibility clause involved, would be avoided.

1.5 Future Plans

The Accounting Officer stated that in future he would prefer to see a wider spread of projects with increased emphasis on small enterprise. He believed that the formalising of systems, with output targets being set for projects at the beginning, should be encouraged. To this end representatives of all the LEADER groups would be meeting in order to discuss the arrangements for the new system collectively. Performance indicators, including job creation, would be requested at the start of each project and constant monitoring would be required.

A range of output and impact measures would include elements such as jobs, the number of training courses, the number of people trained, the degree to which the LEADER group tries to develop an awareness in the community of what it was trying to do and what the community might be able to do. There would also be a number of output and impact measures which would be included under different subprogrammes including acquisition of skills, rural innovation programmes, training, rural tourism or small firms.

1.6 Conclusions

The Committee believes that the success of area based programmes is vital for rural communities and as a result it is imperative that they be administered efficiently and effectively. It welcomes the positive response of the Accounting Officer, but stresses that any future evaluation of the programme should review the role of LEADER in sustaining employment and examine the importance of part-time jobs as a means of keeping people in rural communities. The Committee is encouraged by the fact that many issues raised in the report have been taken on board by the Department and notes that it is the intention that LEADER II will operate in a way which will address the problems identified.

The Committee wishes to be informed of any progress that is made in relation to this matter and suggests that a full economic impact evaluation of the LEADER programme should be undertaken by the Department and requests that the results of any such evaluation be reported back to the Committee.

2. ENERGY MANAGEMENT IN THE HEALTH SERVICE

2.1 Background

The second of the C&AG’s value for money examinations sets out to review the management of energy by health boards and voluntary hospitals, which are funded from the Exchequer. The study was undertaken as a result of a number of indications that savings of up to 20 per cent could be achieved if correct energy management policies were applied.

The review of energy policy in these bodies involved:-

1)a survey of 166 health board hospitals and homes, and 25 voluntary hospitals;

2)the development of performance indicators for energy consumption using the survey data;

and

3)energy audits in 20 hospitals and homes by a firm of consulting engineers commissioned by the Office of the C&AG.

In excess of £20 million is spent each year on fuels and other energy sources in health boards and voluntary hospitals. The examination concluded that savings were readily achievable principally in the areas of fuel substitution - where the transfer to heavier grade oils can yield savings sufficient to recoup the initial capital outlay inside 12 months - and in the area of centralised purchasing - where, for example, it was estimated that central procurement arrangements for fuel oils would generate annual savings of £114,000 for the North Western Health Board.

In addition, there was scope for low cost initiatives, such as optimisation of boiler efficiency and improvement of lighting efficiency, which could save £500,000 a year. The report concluded that a once off capital outlay of approximately £6 million could realise further annual savings of £2.2 million for at least ten years.

The report concluded that health boards had been active in the matter of energy management and acknowledged that the bodies had recognised that savings could be made. Several examples of initiatives which have been successfully implemented were cited by the C&AG.

It was noted that some boards were more active than others in specific areas and this was illustrated by the range of prices paid for different types of fuel, and the regional variations in energy consumption. It was reported that the potential for savings was much less in the voluntary hospitals than in health board hospitals and homes because considerable progress had already been made by the voluntary hospitals in exploiting cost saving opportunities.

2.2 The Department’s view

In evidence, the Accounting Officer stated that the report provided a good comparative picture which was very useful. The Department had consulted with every health board and as a result a forum for technical services officers was being established which would have a wider remit than energy alone. He said that there was a commitment on the part of the Department, the health boards and the hospitals to provide value for money generally and particularly in the area of energy management.

Since 1984, the Department had been in regular dialogue with the health boards’ technical services officers in order to minimise energy use and energy costs and to take any practical and achievable steps which did not conflict with the primary aim of the service.

The Accounting Officer pointed out that in some areas investment is necessary if savings are to be achieved and he outlined a number of initiatives that had been taken by the Department in recent years particularly where capital expenditure had been invested in the rationalisation of boilers. In addition, the Department had approved a number of loans where it was clear the revenue savings would repay the loan. The approval had been given with the agreement of the Department of Finance.

The Accounting Officer also drew attention to the fact that health boards, in commenting on the report, had referred to a number of initiatives which had been taken by them, including boiler decentralisation, better controls, improved insulation, draught proofing, leak elimination, building management systems and good housekeeping programmes as well as better procurement in terms of fuel. Significant savings had already been achieved in energy management and further improvements were expected. A considerable input would, however, be the extent to which old buildings are replaced by new modern buildings. Nevertheless, he did agree that even with modern lighting and heating systems in a modern building, much could still be done to save energy.

2.3 Conclusions

The Committee believes that this value for money examination demonstrates that worthwhile savings on energy can be achieved and that the role of the Department of Health is a significant one in this regard. It agrees that centralised purchasing of fuel is a good initial action but urges the Department to encourage a better and more economical use of energy in hospitals by setting standards for energy use, issuing guidelines on energy saving possibilities and examining the way in which funding for energy saving initiatives can best be provided.

The Committee welcomes the Department’s undertaking to continue to avail of opportunities with regard to combined heat and power which will be limited mainly to large centres. It agrees that agencies should be encouraged to seek grants for both combined heat and power, and that energy audits from the Irish Energy Centre and the units that have been identified in the report as performing poorly should be followed up.

The Committee urges health boards to assist this process by preparing energy management plans with clear and measurable targets. Measures to ensure savings that are achievable with minimal investment should be pursued immediately. In addition, the Committee believes that the negotiation of a national arrangement with the ESB would be beneficial and recommends that the Department should pursue the possibility.

Finally, the Committee recommends that the energy saving measures recommended in the report should be taken on board by those responsible for the management of other public sector buildings particularly as many of its recommendations could be applied across the public service.

The Committee will review the extent of progress in this regard in the future.

3. GARDA TRANSPORT

3.1 Background

Garda transport services cost about £15 million a year. This figure covers the purchase of vehicles, parts and fuel and the payroll costs of gardaí involved in maintaining and repairing the fleet and those involved in ministerial transport and other driving duties. It also covers those repair and maintenance jobs which are contracted out.

The VFM report in relation to garda transport deals with a study into the efficiency and economy with which the garda transport services are delivered. It examines the management and performance of the garda vehicle fleet, which is a key resource of the Garda Síochána in its law enforcement duties, and was of particular interest to the Committee as garda fleet management had been the subject of comment by the Public Accounts Committee on regular occasions since 1983. The Committee had been particularly critical of the arrangements applying to stock control, delays in the purchase and delivery of vehicles, the lack of management information and the absence of computerisation.

The main criticisms contained in the report were in relation to

(i)the purchase, delivery and mix of vehicles;

(ii)the turnover, allocation and disposal of vehicles;

(iii)the relative cost and efficiency of the Garda garage;

(iv)the level of utilisation of vehicles;

(v)the arrangements for the purchase of fuel and parts;

(vi)the need for changed management structures and better management information;

and

(vii)the need for improved vehicle maintenance arrangements, specifically in the Garda garage.

The Committee was informed by the C&AG that in almost all of the aspects of the operation examined, there seemed to be considerable scope for saving Exchequer funds, particularly in relation to the following:

(i)The procurement and delivery of vehicles.

(ii)Advantage was not taken of the Department’s purchasing power which would enable it to negotiate centrally for the supply of all fuel.

(iii)Productivity in the Garda garage is very low by industry standards.

(iv)The cost of maintenance of vehicles at the Garda garage was up to three times the cost of vehicle maintenance at commercial garages which was partly due to the low productivity rates and also the relatively high pay rates in the garage.

(v)The expense of the use of Garda personnel for routine driving work not having a security dimension. For instance, the average gross pay for these Garda drivers for 1994 was nearly £35,000.

The C&AG went on to state that his Office had identified a number of value for money opportunities, a combination of which would realise substantial savings and which could result in annual savings of anything up to £750,000 a year, and maybe even more. The main opportunities for the savings lay in the combination of civilianisation or contracting out, with better management practices.

3.2 Progress to date

In evidence, the Accounting Officer stated that, prior to the commencement of the C&AG’s examination, a committee of senior Garda management and the Department had been established to deal with the subject and had worked very closely with the C&AG’s staff during their examination. Considerable progress had been made and “just in time” purchasing had been introduced in 1993, which has resulted in a cut in the value of stores by about 50 per cent. In addition, the Department had taken steps to acquire a computerised fleet management system and at the time of the Committee’s examination considerable progress had been made.

Following the publication of the report, revised practices had been introduced in relation to the tender arrangement for the purchase of vehicles during 1996, which would ensure the placing of contracts for the main purchase of new vehicles at the start of the year, thereby taking four or five months off delivery time. In addition, it had been agreed that vehicles would be fitted out by the suppliers and not at the depot and that this would facilitate the speedier delivery of the newly purchased vehicles to garda stations and thereby eliminate the situation where a large stock of new cars was sitting at the depot for unacceptably long periods.

The Accounting Officer also stated that fleet allocation models had been developed, with the input of the garda research unit, to assist with the setting of targets for the mix of vehicles. It had been proposed that the proportion of motorcycles would initially be reduced from 17 per cent - which he accepted was unacceptably high in view of the cost of their repair - to 10 per cent, which is the figure set in the United Kingdom. It was also proposed that the motorcycles would be replaced by small vans, which have lower maintenance costs, and were, in the view of the Department, needed much more than motor cycles in the context of rural crime and rural policing. Some Committee members questioned whether this was in fact the case.

The Accounting Officer stated, in relation to the turnover of vehicles, that a recently introduced flexibility in the purchase and delivery system should ensure that the vehicles would be replaced at the most opportune time, thus reducing the proportion of vehicles with unacceptably high mileage and that every effort would be made to adhere to an upper mileage target of 100,000 miles.

Detailed fleet management objectives had been set by the Garda/Department of Justice committee and were being finalised at the time of the examination. The Accounting Officer undertook to return to the Committee at a later date with a report outlining progress and including these fleet management objectives in it.

The Committee expressed concern at the fact that non-security duties requiring the use of vehicles were being performed by gardaí who are much more expensive to employ than civilian drivers. In response the Accounting Officer stated that the Department shared the Committee’s concern and were at an advanced stage of recruiting 20 civilian drivers in order to undertake specific duties such as delivering urgent mail, computer tapes and similar duties which were being carried out by gardaí. He stated, however, that progression in this area might be slow in view of the current Government restrictions on recruitment to the public service.

As a separate initiative, the Department agreed to provide much less support to the prison service, and that, in future, gardaí would be responsible only for remand prisoners. Suitable alternative arrangements for the transport of prisoners to courts or hospitals were being examined and the Department expected that a further 20 to 25 gardaí would be released for operational duties.

3.3 Fleet Management

The Accounting Officer outlined the progress that had been made in relation to the purchase of fuel. The situation at present was that almost 40 per cent of garda fuel was purchased in bulk and stored in tanks which are maintained around the country and 60 per cent was purchased locally. The Department had adopted the report’s suggestion that there should be bulk purchasing of the remaining 60 per cent and had drawn up a new tender document to deal with the matter. He pointed out that, in view of the fact that the annual value of the 60 per cent was about £2 million, the tender competition would have to be advertised in the EU journal, in accordance with procurement policy. Nevertheless, the Department expected to save approximately £100,000 as a result of this policy.

The Accounting Officer conceded that there was considerable merit in the idea of an independent fleet management function. He agreed that the skills were not ones which gardaí could be expected to obtain in the course of their employment, especially given the high changeover of senior management at the transport depot. Management structures were being examined and new arrangements were expected to be implemented in the near future.

The introduction of computerisation would be critical to the question of whether the operation was managed by gardaí or by civilians and would be crucial to the new operations of garda transport. Its introduction would be beneficial in that warnings would be automatically issued by the computer when the ratio of repairs to mileage exceeded a certain limit. The system would be expected to advise the amount to be spent on any vehicle given its mileage and previous record. Recurring faults for particular models would be identified and the models to be avoided would be outlined. In addition, a complete picture of the lifetime costs would be provided.

3.4 Vehicle Maintenance

The area of vehicle maintenance requires radical change particularly in relation to the operation of the garda garage. The C&AG identified that the cost of maintenance of vehicles at the garage per completed mile is over three times that of vehicles maintained in commercial garages and other serious productivity deficiencies are highlighted in the report.

According to the report, Garda mechanics only work as mechanics for about 50 per cent of the hours available. Despite this, there had been an overtime bill of £100,000 for the garda garage in 1995 and £300,000 of maintenance work was contracted out.

The senior garda and departmental management committee had set a target of 80 per cent instead of the current 50 per cent proportion of hours worked which was similar to the practice in UK garages. However, attention was drawn to the fact that regardless of the productivity improvements, the core salary costs of the garda operation were crucial in view of the fact that the mechanics were paid as gardaí rather than at the rates that apply in commercial garages.

In order to increase the commercialisation of the operation four options were being examined -

(i)the possible civilianisation of the garda operation,

(ii)the closure or partial closure of the garage and the contracting out of more work,

(iii)contracting in mechanics from commercial garages to carry out some of the work of the garage,

and

(iv) taking steps which might be taken to achieve the required levels of productivity and cost effectiveness. In relation to (iv) attention was drawn to the fact that as long as garda mechanics are paid about twice the salary that is paid in the private sector, radical change would be required if the problem was to be addressed.

The substantial industrial relations issue involved in any radical change was also referred to. It was pointed out that the people in the garage had been working in a system which, up to the time of the report, was thought to be reasonable and indeed consistent with security requirements which dictated that the people repairing garda cars should automatically be gardaí. Nevertheless, change was required, despite the fact that relevant security arrangements would have to be taken into account during the examination of the required changes.

3.5 Conclusion

The Committee welcomes this report and recommends that the money saving policies proposed in it be pursued and achieved at the earliest opportunity. The Committee is encouraged by the Accounting Officer’s response to the report and notes that changes on hand had already achieved savings of £175,000 per year at the time of the examination.

The Committee points out that it would have been useful to have made comparisons with similar fleets in commercial organisations or, if that was not possible, in the public sector and notes the Accounting Officer’s suggestion that an examination of the fleet from An Post could have made in interesting comparison. The Committee does, however, accept the C&AG’s point that in a situation such as this comparison has to be made like with like.

The Committee notes the Accounting Officer’s commitment to keep the Committee informed in relation to this matter and looks forward to receiving a report from him in the near future on the progress that has been made in commencing the remaining initiatives identified in the VFM report.

4. MANAGEMENT OF TELEPHONE FACILITIES IN THE CIVIL SERVICE

4.1 Background

In 1989, the Government established a private network in order to realise economy and efficiency gains through the low unit cost of calls routed via the network. The Government Telecommunications Network (GTN) used high-capacity circuits leased from Telecom Éireann to link Government departments both in Dublin and regional centres.

The total cost of telecommunication services to Government departments for 1994 was £22.5 million and, in view of this, an examination was undertaken to establish the following:-

1)whether the GTN system, which was established to save money, was cost effective;

2)whether the potential for economy gains was being realised;

and

3)whether there was proper monitoring of telephone costs within departments.

The examination involved an in-depth analysis of the GTN and a detailed review of the telephone costs in five Government Departments, Health, Education, Defence, Arts Culture and the Gaeltacht and Transport, Energy and Communications, all of which accounted for approximately 10 per cent of the total Civil Service telecommunications spend in 1994.

The GTN is currently used by all Government Departments serving a total of 17,300 civil servants in 94 offices in Dublin, elsewhere in Ireland and in the Irish permanent representation in Brussels. It carries an average of 25,500 calls per day and supports the computer networking requirements of 50 offices countrywide.

The report commented favourably on the GTN, and stated that estimated annual savings of £2 million, on the basis of the alternative cost of using the public network, were as a result of its installation. However, it found that more savings could be achieved by greater use of the GTN. The report established that two out of every five calls made in the departments examined could have been made through the GTN but that only 57 percent of those calls were in fact made on the network, partly because technical problems had occurred in the GTN service to three of the departments during the period examined. The Department of Finance estimated that, in relation to the Civil Service as a whole, approximately 75 percent of potential GTN calls are carried on the GTN.

The review of the management of telephone costs in the five Departments examined showed that the level of control varied from one Department to the other. Major technical deficiencies in the Department of Health and the Department of Transport, Energy and Communications were highlighted and the report stated that the particular deficiencies militated against the achievement of realisable savings.

A more general problem seemed to be the low rate of recovery of the cost of personal calls made by staff, in almost all departments, with the notable exception of the Department of Defence.

4.3 The Department’s response

The Committee was told that the Department of Finance had originally set up the GTN because international practice had shown that significant reductions in telecommunications costs were possible through effective management and co-ordination of telecommunications facilities. In addition the ongoing decentralisation programme needed to be approached with a view to containing the additional telecommunications costs which would undoubtedly ensue.

The GTN was thought to be an appropriate way of minimising the expected telecommunications costs particularly as various provincial centres already had significant numbers of civil servants employed in them. Its main purpose was to provide telephone and computer networking facilities between Government offices in Dublin and their regional offices. It offered opportunities for additional cost saving by enabling long distance telephone calls to be routed through it rather than on the public network.

At the time the GTN was established no private network on its scale existed in Ireland, especially one which could carry both voice and data traffic and as such it was a unique venture in Ireland. A number of technical difficulties had to be resolved in putting together a coherent infrastructure to meet the specific needs of the Civil Service countrywide. This was not a simple task, given the newness of the approach and the complexities of a technology that was changing very rapidly.

The Accounting Officer outlined the way in which the network operated. High capacity links, which are leased from Telecom Éireann, are used to interconnect the various GTN centres across the country. The cost of leasing these links, at £60,000 each per annum, represents the single largest element in the overall running costs of £1.2 million and, as such, remain central to decisions relating to the scope of the GTN in terms of its geographic coverage and the types of service available.

The annual lease charges paid by the Department of Finance for the GTN circuits between centres, and the amounts paid by user departments for access circuits to the GTN, comprise the running cost of the network. Lease charges paid by the Department are recovered from departments in proportion to their usage of the GTN. Some of the traffic, which passes over the public network, is subject to further charges by Telecom Éireann.

In view of the high cost of leasing links, coverage of the network is limited to those areas of the country where large numbers of civil servants are in single buildings. Prior to any extension of the GTN to a new location, a detailed analysis of potential savings is undertaken by staff in the Department of Finance. As a result, no loss making GTN links had been installed.

The Accounting Officer referred to a number of issues which had been raised in the C&AG’s report on network utilisation and explained that it was virtually impossible to build a cost effective network which guaranteed that 100 per cent of call attempts would be successful at all times. He pointed out that in the telecommunications industry, a 95 per cent success ratio is considered to be an effective norm. The practise on the GTN has been to provide this level of availability and the network had been configured accordingly.

4.3 Future plans

The report suggested ways in which an increase in usage might be achieved by taking advantage of more recent technology, by managing the system more efficiently and by providing more information to users and it estimated that a 30 per cent increase in usage could yield further annual savings of approximately £300,000.

The Accounting Officer told the Committee that his Department were continuously tracking technical developments and had been examining new public network technology called virtual private networking (VPN). It is claimed that use of VPN would significantly reduce overall telephone costs for high volume customers while at the same time providing value added services such as desk to desk calling and call transferring equivalent to those which were heretofore only available on private networks.

Since 1994, there had been ongoing contact between the Department and Telecom Éireann with a view to acquiring VPN and a joint study to assess the potential value of a VPN service had commenced in September 1995. The Department was particularly anxious to establish whether the new technology would allow for the extension of the existing coverage of GTN, both within the Civil Service and to the non-commercial public service, more economically and cost effectively than is the case with the GTN infrastructure at present.

The Committee was also informed that the possibility of using Telecom Éireann’s new 1890 service, to allow the public access to Government services for the cost of a local call, was being examined. In view of these investigations the planned developments to the GTN had been postponed.

The report had identified deficiencies in the day-to-day management of telephone costs in four of the five Departments examined and as a result the Department of Finance had issued a further circular to Departments and offices with a view to advising on improved management and control of telephone costs. The Department would continue to issue instructions to departments as required and would continue to keep the systems under constant review.

Attention was drawn to the fact that the Department of Finance was in a continuous process of promoting the usage of the GTN and in the event that the system is replaced by VPN, it was expected that there would be discussions with individual Departments in relation to their appropriate usage targets.

4.4 Conclusion

In welcoming the report the Committee congratulates the Department of Finance on the introduction of the GTN which has resulted in a net annual saving to the Exchequer of approximately £2 million. However, the Committee stresses that it is important that any money saving system should be run in such a manner so as to maximise its potential savings and it requests Departments to examine and pursue the areas, identified by the C&AG, which could yield further savings.

The Committee points out that, in view of the savings achieved to date, the importance of carrying out a detailed analysis to determine the optimum approach to the delivery of telecommunications services, in the future, cannot be overemphasised, in particular with the demand from other bodies in the public service such as health boards and local authorities.

The Committee wish to be kept informed of any developments in the telecommunications area and in relation to the management of telephone services in the civil service and will keep the matter under review.

DENIS FOLEY T.D.

Chairman

9 May 1996.