Committee Reports > List of Committees > Dáil > 1997 > Committee of Public Accounts > Report No. 03 - Value for money examinations

AN COISTE UM CHUNTAIS PHOIBLÍ

COMMITTEE OF PUBLIC ACCOUNTS

Dé Céadaoin, 26 Márta 1997.

Wednesday, 26 March 1997.

The Committee met at 11.00 a.m.

MEMBERS PRESENT

DEPUTY DENIS FOLEY IN THE CHAIR

Mr. John Purcell (Comptroller and Auditor General) called and examined.

Mr. John Hayden (Secretary/Chief Executive, Higher Education Authority) called and examined.

Ms. Mary Kerr (Higher Education Authority) called and examined.

Mr. Pat Dalton (Bursar, St. Patricks College, Maynooth) called and examined.

Mr. Des English (Treasurer, Trinity College, Dublin) called and examined.

Mr. Cyril Deasy (Assistant Finance Officer, University College Cork) in attendance.

Mr. Tom Callaghan (Finance Officer, University College Dublin) in attendance.

Mr. Frank Soughley, (Finance Officer, Dublin City University) in attendance.

Ms. Mary Dooley (Bursar, University College, Galway) in attendance.

Mr. John O Connor (Director, Finance Division, University of Limerick) in attendance.

Mr. Stephen Falvey (Department of Education Representative) in attendance.

REPORT ON VALUE FOR MONEY EXAMINATION.

PROCUREMENT IN UNIVERSITIES.

Public Session.

Deputy Ellis: On correspondence, we received a reply from Mr. Dowling on the legal fees paid in respect of the beef tribunal. Interim payments have been made in some cases while in others there have been none. Despite this, £9.5 million has already been spent on legal fees. What amount is outstanding in the two cases named in the Secretary’s reply? What is the total claim? In one case an interim payment of £754,000 has been made and almost £5 million in another.

Chairman: Both are the subject of an appeal.

Deputy Ellis: It states the amounts shown are interim payments. What is the potential liability from the two cases?

Chairman: The balances are being appealed by the Office of the Chief State Solicitor.

Deputy Ellis: But we are not told how much the balances are. Can we request that information?

Chairman: We will seek that information.

Deputy Ellis: We should ask what efforts have been made to get other legal groups involved to submit their claims.

Deputy B. O’Keeffe: Arising from the letter from the Office of Public Works on the Pierse construction company, a single tender is said to have been received in respect of nine projects and the total amount of money involved is £100,000. Did the Comptroller and Auditor General establish why this amount was given to this firm through the single tendering process? Is he concerned about that?

Mr. Purcell: In his letter, the Accounting Officer corrected earlier details when he had described two particular jobs as being the subject of a single tender. He mentioned the refurbishment works at the north block in the Department of Finance costing £13,000 and at OPW headquarters costing £15,700. If those are taken out, it reduces the number of cases. Generally speaking, single tendering is not used but there may be occasions where a small extra job has to be done which was not envisaged at the time of contract placement.

Deputy B. O’Keeffe: But, for example, the work at St. Stephen’s Green cost £50,000, a significant amount of money. I would have thought we would not have gone down the road of single tendering in such an instance.

Mr. Purcell: That would be an exception. The works may have been of an urgent nature and the contractor may have been on site. In this case, the Accounting Officer has assured us that the single tender procedure was agreed by the Government contracts committee, as it has to be. That is the most significant of them as the Deputy rightly pointed out. The others are relatively small, costing between £1,000 and £2,000, but this procedure should be the exception rather than the rule. In this case, the Government contracts committee was satisfied that the OPW was justified in awarding the work to the company concerned on a single tender basis.

Deputy B. O’Keeffe: That surely does not make it right from the point of view of the Comptroller and Auditor General or from that of the Committee that a job of the order of £50,000 should be given out on the basis of single tender irrespective of whether the contractor is on site. It is a significant amount of money and one would have thought that the Government would have complied with its own procedures. If this was to happen across departmental boundaries, it could be significant.

Mr. Purcell: I agree with the Deputy. All work of a material nature should be subject to the tendering competition requirements. I can look at that specific case for the Committee and report back within weeks. I will outline the circumstances and the issue can be considered in that light.

Report on Value for Money Examination Procurement in Universities

Mr. Hayden (Secretary/Chief Executive, Higher Education Authority) called and examined.

Chairman: I welcome Mr. Hayden and the representatives from the other universities. Mr. Hayden will introduce his colleagues.

Mr. Hayden: I am accompanied by Ms Mary Kerr, the deputy secretary of the HEA; Mr. P. J. Dalton, Bursar of Maynooth College who is also chairman of the Committee of Chief Financial Officers of the universities this year; Mr. Frank Soughley, Finance Officer, Dublin City University; Mr. Tom O’Callaghan, Finance Officer, University College Dublin; Ms Mary Dooley, bursar, University College Galway; Mr. John O’Connor, director of finance, University of Limerick; Mr. Michael McGrath, Director of the Committee of Heads of Irish Universities; Mr. Cyril Deasy, Deputy Finance Officer and secretary, University College Cork; Mr. Des English, Treasurer, Trinity College; Mr. Stephen Falvey, building unit, Department of Education and Ms Mary McGarry, Principal Officer, Department of Education.

Chairman: We are dealing with the value for money report, No. 12, on Procurement In Universities.

Mr. Purcell: The report before the Committee is the result of an examination of the procurement practices in the seven universities in the State. This aspect of management has been touched on in previous value for money reports - two that come to mind involved Garda Transport and Energy Management in the Health services. This is the first occasion that a separate report has been compiled on this important area of expenditure.

Universities spend approximately £76 million on goods and services annually. While they receive the bulk of their funding by way of State grants through the Higher Education Authority, they are autonomous bodies. Consequently, the policy and practice of the HEA has been to regard matters such as procurement as being within the internal remit of the universities.

It is clear that there is growing consciousness in the universities of the savings that can be achieved by improved procurement management and practices. Nevertheless, the examination found wide variations in prices paid for similar items both within and between universities in the nine categories of goods and services reviewed which collectively account for the annual spending of £17 million. The report cites examples of these but it is only fair to point out that individual comparisons can be misleading as they cannot always take account of quality, quantity and availability considerations. That said, they are valid in the sense that they clearly illustrate the potential for achieving savings through better purchasing arrangements.

The report suggests that the greater use of centralised purchasing or collaborative arrangements would produce significant benefits. These kind of arrangements proved their worth when introduced in UK universities and in the Irish public and private sectors, where savings of between 5 and 15 per cent were achieved. The universities have two such arrangements in place in the area of information technology where special deals were made at more favourable prices and conditions than were previously available.

The report outlines what would constitute best practice in procurement and identifies a number of areas where improvements could be made including, drawing up clearly defined procurement policies and procedures in all universities - at the date of the report, only two had done so; generating regular and comprehensive information to enable management to evaluate the effectiveness of its purchasing function; and training all staff involved in the purchasing area. I understand that since the publication of the report each university has undertaken to review its procurement practices with a view to making improvements and to report back, within a reasonably short period, to the HEA. They have also agreed to examine the possibility of extending collaborative or centralised purchasing arrangements to areas other than information technology. I am glad to note this positive reaction to the report. I am sure that the lessons learned in the university sector can be applied to the regional technical colleges and, perhaps, further afield throughout the public service.

Chairman: Does the Universities Bill, 1996 have any implication on the procurement policies of universities? If not, why?

Mr. Hayden: To answer the Chairman’s question I must provide some background information. The authority wants to express its welcome for this report. At a minimum it will provide the colleges with good comparative information which will be useful in considering areas where action is required. In our opinion, the report provides clear signals for potential savings on procurement and not only in areas surveyed or identified in the report.

Speaking on behalf of the HEA, which has been in existence since 1971, I must state that we have been concerned with the overall budgets and finances of the colleges. We operate under the Higher Education Authority Act, 1971, which requires us to examine requests from universities and designated institutions for subvention by the State. The authority recommends to the Minister the amounts, both current and capital, which should be provided. When the amount is decided in each year’s Estimates, the authority allocates this money among the institutions taking account of the income they obtain from fees and other sources. Building projects and the capital funding for them are dealt with separately.

Since its establishment on a statutory basis, the authority has developed procedures for considering these requests for funding from the institutions. Each year the universities submit a budget to the authority for its approval and that budget is based on the grant notified to them and their estimates of their income from fees and other sources. In 1972, the universities had accumulated deficits of approximately 11 per cent of their State income. At present, they have no deficits on the recurrent side. Everyone agrees that this orderly development of their finances has been accompanied by tremendous developments in respect of the number of students catered for, courses provided, staffing and standard of facilities. However, the increased funding does not match the increase in student numbers. There have been major productivity gains over the years.

It is important to realise that 70 to 75 per cent of the universities current expenditure is on staff. Therefore, that has been given considerable emphasis in the past.

Chairman: I apologise for interrupting but Mr. Hayden is straying from the point.

Mr. Hayden: It is important to realise that this is a very sensitive area for the colleges and the HEA, within the State’s policy in respect of numbers, pay, etc., has been successful in permitting the universities to manage their affairs as far as possible. This means that they have considerable discretion between the amounts of money provided for pay and non-pay. It is also clear to the HEA and the State that the matter of university autonomy is understood by everyone and was always meant to encompass the internal administration and management of the institutions.

The Bill currently before the Oireachtas will, if anything, underpin the autonomy of the universities with accountability. In that context, the question of procurement is increasingly one where the universities will be obliged to consider the effective and efficient use of the resources with which they are provided. Their autonomy is recognised but if they are to use those resources effectively and efficiently, they will be obliged to have regard to procurement. We hope the report will provide them with the opportunity to consider the broad issues raised in respect of procurement, the principle of collaboration between and within institutions and the many detailed observations made by those responsible for its compilation.

Regardless of the provisions in the Bill, the universities, like other organisations, are considering their management structures in one way or another. There may not be a procurement department, manager or officer but there will be a person in top management responsible for overall policies in this area.

Chairman: Do all universities have an internal audit function? If so, what role will this play in the area of procurement?

Mr. Hayden: The internal audit function is developing within the universities. I cannot say whether all of them have it and Mr. Dalton might comment on that in a few moments.

Of course, an internal auditor would have to look at issues, such as procurement and particularly see that the procedures for procurement were followed, but, while monitoring is one aspect of procurement, the provision of the best possible service of procurement would have to involve a wider set of considerations than those which an internal auditor would bring to it.

Deputy B. O’Keeffe: I am not sure if Mr. Hayden is grasping the enormity of this report. The State contributes £310 million per annum to the universities and £76 million of that relates to the procurement of goods and services, which is practically one quarter. The Comptroller and Auditor General has examined £17 million pertaining to procurement. Within that figure, he envisages savings of between 5 and 15 per cent. A saving of 15 per cent of £76 million amounts to £11 million. A minimum saving of 5 per cent amounts to £4 million. That is an indictment and it represents a waste of public money. It is not a question of stating that at minimum we can see where there are price variations. What will the universities do following this strident report to ensure they get value for money for the goods and services which they procure?

Mr. Hayden: I can assure Deputy O’Keeffe that there is no complacency in the authority or the colleges - I can only speak for the authority - about this report. The HEA welcomes the report and is aware of the kind of information and indicators it provides to colleges. There are particular historical reasons why universities have had this measure of autonomy even though they received large amounts in public grants. Judging by the contributions on the Universities Bill through the Oireachtas it is obvious Members understand the importance of autonomy.

At the same time collaboration and co-operation between the institutions must be a feature of higher education, not only in regard to this area of management and the finances of the universities. The HEA emphasises, as it has over the years, that the colleges do not have sufficient money within their budgets for equipment and so on and would be only too delighted to realise the kind of savings mentioned.

Deputy B. O’Keeffe: The bottom line for the Committee is that while Mr. Hayden is saying that the colleges are strapped for cash the Comptroller and Auditor General is pointing out to us where £11 million can be saved on the procurement of goods and services. When can the Committee be assured that the universities will come together with the HEA to put in place a system to examine the possibility of bulk buying in various areas? There are obvious purchases which are common to all educational institutions such as universities, RTC and DITs. Perhaps the net should be spread wider than the universities. While I know the HEA does not have a remit for the RTCs and DITs surely it must be possible to consult with the NCEA, the Department of Education and others to make substantial savings. Mr. Hayden should set a time limit so that when he appears before the Committee next year he will be able to say that the job, which is, to save this State £10 million, has been done. That is what this Committee seeks. Will Mr. Hayden give an assurance to establish a group will be set up immediately to co-ordinate and integrate the procurement of goods and services to ensure these savings are achieved?

Mr. Hayden: Since this report was obtained, the HEA executive and chairman spoken to the committee of heads about it. Recently Ms Kerr and I met the finance officers of the universities about it. The finance officers work as a group under the committee of heads and they have set up a sub-committee which will report back to them and, importantly, the HEA by the middle of June on the specific matters mentioned in this report.

From our discussions with the colleges, we know that some of these areas are being examined for potential savings while in other areas the colleges would query the basis for the figures. They will report back to the HEA in June and I hope, on behalf of the HEA, that it will be possible to report progress on this in six to nine months.

Deputy B. O’Keeffe: What evaluation takes place in universities with regard to procuring value for money in the purchase of the most effective computer systems? I ask this in the light of the Committee’s findings that Departments have put in place computer equipment which does not fulfil the functions for which it was purchased. Is there a common evaluation system of computers for the universities because this is a major spending area?

Mr. Hayden: I would like to pass that question to Mr. Dalton.

An advisory group, representative of the colleges and the HEA, had been in operation since the mid-1970s. One of the reasons it was set up was that the cost of replacing computers in the 1970s was so large - they had to be purchased, rather than hired in those days - that co-operation was needed. The colleges have an ability to get the best deals in respect of software. There is HEANET with which I am involved; I am chairman of the committee. It was set up by the colleges in the early 1980s so that they could get the developments they needed in regard to interaction between the universities on computer. I am happy to say that has spread throughout the universities and higher education systems.

The Deputy asked earlier about the RTCs and DIT.

The Minister for Education issued a statement at the time she was placing the report on procurement before the Oireachtas. She also asked us to liaise with the universities in regard to this matter. We intend to involve the RTCs and the DIT because the final consideration is not so much bulk purchasing as combined purchasing power but that the whole system could have great leverage if it collaborated in this way.

Mr. Dalton: On computers, there is a great deal of expertise in the colleges in so far as they have heads of computer centres who have particular expertise. On the procurement of computers equipment worth £2,800 in June 1996 had decreased in price by 17.5 per cent by August, by December it had decreased by a further 15 per cent and by March 1997 it had decreased by a further 11 per cent. If we had made large purchases on fixed order the universities would have lost substantial amounts. Heads of computer systems and academics in departments of computer science are up-to-date on the changes in the marketplace. I am not aware of any systems purchased by the universities that had to be dispensed with because they were out of date. The integrated committee which Mr. Hayden spoke of and of which I am a member, is getting great backing from the universities to ensure that the systems we purchase for student records, finance and so on will last into the next century.

Deputy O’Malley: Mr. Hayden said that he strongly supported the policy underlying the Bill before the Oireachtas at present and that it would increase the autonomy of universities. First, I do not think the policy questions are a matter for him. I fail to see how the autonomy of the universities can be improved or increased if legislation lays down what universities are supposed to do and what their objects are. I find it somewhat unacceptable that a university of world status such as Trinity College in Dublin, which has existed for in excess of 400 years with considerable success, should now have to operate under a proposed statute which will say the objects of a university are as follows and you shall do as follows and you shall accept the directions of the Minister.

How is the autonomy of universities improved by legislation of that kind?

Regarding the financial aspects which concern us, I saw recently the accounts of some of the universities. I looked in some detail at the accounts of Trinity College because they drew my attention to them. They are unusually detailed and the certificate of the auditor is unusually specific. Among other things, he was able to certify that there was no fraud, which one rarely sees, because an auditor will normally say that he cannot spot that or certify that it did not exist. What is wrong with the accountability of universities at present? Have there ever been major financial scandals in universities in Ireland in more recent times? I cannot recall any. How will that situation be improved? This Committee meets every week, sometimes twice a week and we spend our time listening to frauds in the administration of public finances or fiddles of one kind or another. I have never heard of any such complaint in regard to universities. If something is not broken why is Mr. Hayden so keen to fix it?

Mr. Hayden: My personal views are of no relevance here. The HEA issued a statement about the Bill and it was noted widely. In fact it took space in the newspapers to give its views. The HEA said in that document that it had worked with the universities for almost 25 years and that it had developed procedures which had improved the working environment of the universities. It said that instead of a situation where they were burdened with a deficit to the tune of 10 per cent of their annual grant they now have no deficits and have not had for many years.

There are controls under existing legislation about the number of staff; this depends on the institution. Trinity College and St. Patrick’s College, Maynooth, for example, are not governed by Oireachtas legislation. The NUI colleges operate under the 1908 Act. Dublin City University and the University of Limerick operate under Acts going back to the late 1970s. They all make different demands on the institutions.

The present Bill will standardise the approach in this regard. The Bill talks about guidelines on staffing levels in the universities. These guidelines, which will not be mandatory, will be provided by the HEA. Under existing legislation, if University College, Dublin, for example wished to appoint a professor they would have to go through the NUI system and then a statute was issued through the HEA, to the Department of Education and to the Oireachtas. If passed it then became law. A number of factors increase the autonomy of the universities. The objectives of the Bill are wide-ranging from the point of view of the universities. On the other hand, it tries to level the playing field for all colleges in their dealings with agencies like the Higher Education Authority and Government Departments, while, on the other hand, it gives them the powers they need as their functions have developed beyond recognition since receiving their original charters.

Deputy O’Malley: The specific questions I asked were not answered. Would you not set up a procurement board now for all of them and get on with it? Obviously that would be helpful to them. Mr. Hayden’s seems to think that legislation which sets out guidelines, curtails their powers and so on will be of help to them. If Trinity College was able to operate successfully for 407 years without legislation, how will it be improved now because it has people from the Department of Education telling it what to do? Will the HEA concentrate on trying to save money for the colleges and, accordingly, for the taxpayer? For example, why do universities buy books without any discount when the mark up on them is huge? Why does the HEA not buy all their books and get a discount of 25 to 30 per cent? Similarly with the other examples given by the Comptroller and Auditor General. The same commodity costs 12 times more in one university to procure than it does in another. Is that not what the HEA’s function should be rather than philosophising about academic controls?

Mr. Hayden: First, there have been no scandals in any of the colleges. I have been with the HEA for 24 years. I pay tribute to the finance officers for that.

Deputy O’Malley: I wish we could say that for many other places.

Mr. Hayden: Indeed, and for many years Universities have had no recurrent deficits, which could not be said for many State funded institutions. Credit is due to the HEA but particularly to the colleges. It is very important to remember that the HEA and the Minister in commenting on the Comptroller and Auditor General’s report pointed out that universities are autonomous, independent bodies. Procurement policy and action inside colleges is a matter for their governing bodies. A great deal has to be done in that regard, as outlined in the report.

The colleges have to co-operate. They have the expertise and knowledge of their business built up, as the Deputy said, in one case over 400 years. They have the ability to judge what is best. If they get together, as they have in some fields, for example, libraries, I have no doubt they will look at these questions and if there is an advantage to be got by collaboration between the institutions, it will happen. That is why the working party which is to report to us by the middle of June will press for results.

Deputy O’Malley: Why delay so long? Why is it only when the HEA got a report from the Comptroller and Auditor General pointing out the money being wasted it bothered to do anything about it? Why was it not done during the past 24 years?

Mr. Hayden: The question of the autonomy and independence of universities has always been seen to encompass the internal management of the institutions. It was up to the colleges to maintain and run themselves. That worked until the 1960s when universities were still small and did not make enormous demands on the State. That all changed from the 1960s onwards to a situation where over 50,000 people attend universities. Not alone must they manage themselves, they must also account for such management. While international comparisons are always very difficult and the HEA is cautious about making them, but if one looks, for example, at Queen’s University, Belfast, an example of one of the more expensive universities in the British system, one will see its funding per student is about £8,000 per annum. Ours is about £4,500 per annum. That is only one indicator of the efficiency-----

Deputy O’Malley: But they get maintenance grants.

Mr. Hayden: That is not encompassed in that; it is separate.

Deputy O’Malley: I accept Mr. Hayden’s point about academic freedom in reply to my question about books. I see academic freedom by universities in the procurement of books being exercised by them in choosing which books they want to buy. The HEA or anyone else should not lay down to them what books they should buy, but every university has to buy books. They should choose the books they want but have a centralised purchasing agency where they will get a 30 per cent, or more, discount. How is their academic freedom being impinged upon if they get the books for 30 per cent less than they pay under the present system? Nobody dictates to them what they should buy, but simply how they should buy it.

Mr. Hayden: A great deal of pre-work has been done on that question, even before the report was produced. Librarians got together and it is one element that will feature in the report that the finance officers will make to us in June. I accept the logic of what the Deputy said. Of course, they have to choose the books but they already have ways in place of trying to avoid multiple purchasing of books and journals where possible. Once they are available in one college, they will be available to others. They have addressed that problem.

Mr. Purcell: Deputy O’Malley rightly states that the affairs of universities have not been brought before the Committee. That is almost entirely due to the fact that university accounts did not fall within the remit of this Committee until the implementation of the Comptroller and Auditor-General (Amendment) Act, 1993. My predecessor had statutory audit responsibility for most universities prior to that but the accounts did not come before the Committee. I remember a fraud in at least one university but I will not mention it because I am relying on memory rather than evidence.

Deputy O’Malley: Mr. Hayden cannot remember any; I cannot and if there was only one----

Deputy Broughan: I can. I have listened to the Deputy and it is like listening to something out of fantasy land. The Deputy and his party went into the House and made a case for universities. Universities were perfectly autonomous and this report is a damning indictment of the way universities have handled their procurement policy. The Deputy wants it both ways. He wants the Secretary/Chief Executive of the HEA to implement a procurement policy, but in the Dáil he insisted on total autonomy for universities. The Comptroller and Auditor General spoke about where responsibility lay.

Responsibility clearly lay with the colleges that are indicted in this report. The Secretary stated that they maintained themselves until the 1960s, etc. The point is that the public - including the people I represent on the north side of Dublin, most of whom never saw the inside of Trinity College or Dublin City University - paid for it. Our money was spent very badly. The report clearly shows that and also illustrates the necessity for legislation. It shows the need for a framework whereby there would be some responsibility in respect of the spending of moneys obtained from the public purse.

In 1994, the Government, of which my party was a member, introduced reforms to the Comptroller and Auditor General’s powers to enable him to oversee this kind of public spending.

Chairman: We must get back on course.

Deputy Broughan: I am making the point that this document refers to the failure of university administrations to adequately-----

Deputy O’Malley: The Committee is supposed to be examining the accounting officer, not listening to diatribes such as that engaged in by Deputy Broughan.

Deputy Broughan: This is the reality. We listened to Deputy O’Malley’s diatribe for the past 20 minutes.

Mr. Purcell: I was making the point about why the accounts had not come before the Committee in the past. That was the only point I wished to make.

Deputy Broughan: Procurement practice reveals an incredible state of affairs. For example, in respect of insurance, the largest cost for Trinity College was £430,000 while £123,000 was paid for SPM. It has emerged that the UK universities were able to obtain a 15 per cent reduction through a joint organisation in respect of the insurance market. Something similar occurred in respect of the amount spent on chemicals in the science area. It is incredible that UCD obtained a piece of equipment for almost £1,500 which when purchased in bulk costs only £284. DCU purchased 600 litres at a cost of £1,000 which would only cost £233 when purchased in bulk. A similar situation obtained in respect of UCC.

On books, Trinity College is one of the three universities in these islands which must be offered a copy of every book published in Britain and Ireland. It is one of the great universities but an amazing situation exists in respect of discounts. DCU received a 10 per cent discount from a certain supplier while another institution did not receive any discount. In other instances, DCU receive a 5 per cent discount, TCD 7 per cent and UCD 5 per cent. On furniture the position appears similar. For example, there was a 150 per cent difference between TCD and UL with regard to the price of computer chairs.

Does the Accounting Officer agree that this identifies the necessity for putting in place adequate financial planning by the universities for procurement and, perhaps, other areas of performance so that this House and the taxpayers will receive value for money in every aspect of university administration?

Mr. Hayden: I quoted such information as was available to me. In my opinion, and that of the HEA, on a comparative basis, Irish universities have produced graduates of world class at a lower cost than universities in Britain. Given the fallout rates in universities in France, Germany, etc., Irish universities give value for money in that regard. I made clear in my opening remarks, in respect of the items identified in the report, that the authority noted the striking value of the comparisons made. We know, from meetings with the colleges since the publication of the report, that they would query certain findings in the report and question how the figures were obtained.

It is clear that within and outside colleges there is a need for colleges to consider the questions raised in the report, both in terms of specifics and in respect of the general area of procurement, and provide answers. This matter is now being addressed at the request of the HEA and the Minister for Education. The finance officers of the universities in this area are to respond within three months. I hope the universities will be able to report progress in connection with these issues within six months.

Deputy Broughan: On international travel, have the seven major colleges ever consulted each other in respect of their respective programmes for any given academic year? Is there any way that they could maximise benefits in this regard? Has such consultation taken place heretofore?

Mr. Hayden: I do not know but I doubt it. With regard to the best way to organise international travel, I do not know whether this should involve appointing a travel agent officially for each college or some other arrangement, this area must be considered. It is important.

Deputy Broughan: Is it not astonishing that these institutions which attract a huge chunk of the Education budget, amounting to £76 million, which has been increased by the Government by the removal of third level fees, is not subject to the public sector tendering policy? I may be reading between the lines but it seems that the Comptroller and Auditor General implies that proper public tendering procedures are not followed by the universities. When accounting officers of other organisations, health boards, VECs and educational institutions have appeared before the Committee Members have been tough on them because they failed to follow adequate tendering procedures. In respect of the products selected by the Comptroller and Auditor General, which represent 25 to 33 per cent of the total cost, how are we to know that value for money was achieved? How can we be sure that a cosy cartel was not in operation?

Mr. Hayden: I will ask Mr. Dalton to respond on those specific items. The colleges are advised of the procedures put in place by the Department of Finance for the public service and circulated to other Departments and ourselves in respect of contracts for goods and services. I have no doubt that they are observed. The authority is aware of this through its work with the universities regarding building projects and other major contracts. I have no doubt they are fully observed in respect of other areas. Perhaps Mr. Dalton will comment on some of those items, including travel.

Mr. Dalton: The universities welcomed the report of the Comptroller and Auditor General. We accept that several of his recommendations must be developed by some of the colleges. As part of the ongoing collaborative arrangements, the finance officers of the universities meet every six to eight weeks and each college’s insurance arrangements are compared. Three of the colleges use the same broker and two of the other colleges use another company. All colleges are well aware of the different rates. Perhaps the rates would have been a more appropriate comparison rather than the premium. The colleges meet regularly on that matter and compare information on certain aspects, including the pay area which, it must be remembered, amounts to 70 per cent of the expenditure of the universities. As part of those ongoing collaborative arrangements between the universities, it has been agreed that a working group, which has been established in consultation with the HEA, will examine all the individual recommendations of the report to ensure that the procurement potential of such areas, internal centralised approaches and purchasing consortia are fully realised.

Deputy Broughan: Did Mr. Dalton put the cleaning contract for St. Patrick’s College, Maynooth, out to tender?

Mr. Dalton: In the case of the cleaning contract, the comparison includes the pay element in relation to Maynooth as well as the non-pay element. We do go to contract. In fact, the company we use is a contractual firm. It is not the college’s cleaning company. It is actually a local company.

Deputy Broughan: Did the college follow the public sector tendering rules in the allocation of the contract?

Mr. Dalton: The college does not use the formal tendering documentation. Companies are simply asked to tender and such items as quality come into the decision in a major way. The classrooms of the college are cleaned in the early morning and the college feels it gets an extremely good service from a local team of contract cleaners. If there are better firms around when the college examines this issue, the college will be interested in them. The college is somewhat removed geographically from the centre city where the major companies are located.

The management of the universities derive their impetus and effectiveness from the active participation of its pool of expertise, the specialists available to its staff. This confers a sense of proprietorship in all aspects of the life of the institution. The application of this principle ensures that the prime responsibility for the management of the various cost centres or departments, be they academic departments or otherwise, is devolved directly on the head of department. The college feels this is best internal practice. If they overspend, it is taken out of their budget the following year. This fits into the global budget which has been agreed with the HEA and which ensures that no department can overspend.

It would be extremely difficult to provide central expertise for those departments. For example, this week I spent a morning finding out how the chemistry department tenders. I was surprised at the extent of the procedure. They seek tenders from five companies in the State in minute detail for relatively small items. They are driven to get the best possible value for money for that department.

That department shares some tenders with the biology department but there is no formal agreement. While I accept the recommendations of the VFM report on this aspect, there would be formal agreements for the larger capital items and we rely on the expertise of the smaller departments.

I look forward to the value for money exercise because, while I realise ——

Deputy Broughan: Was Mr. Dalton surprised that St. Patrick’s College, Maynooth had the highest security costs according to the Comptroller and Auditor General? They were higher than DCU, which one would assume would be among the highest because of the difficulties in the area.

Mr. Dalton: I reserve judgment on that until I examine how those figures were derived.

Deputy Broughan: The Comptroller and Auditor General makes some interesting points about stock control, for example. I accept the point Mr. Dalton makes on how a university functions, the role of heads of departments, etc., and we are not making a comparison with a commercial semi-State body for obvious reasons. Would Mr. Dalton agree that St. Patrick’s College, Maynooth, or other colleges, should look at this with regard to science departments, libraries, etc.?

Mr. Dalton: I agree it is something we should look at but I would point out that apart from the severe health and safety requirements in the storage of such items which are practised by the universities, the storage facilities available to universities are quite limited. The wastage in terms of deterioration of the quality of chemicals which are purchased in bulk is something which must be considered apart from having large stores of combustible chemicals in a place where there are many people.

The departments of the colleges are very conscious of the costs in this area. The percentage in relation to chemicals is 0.6 per cent. It is a relatively small item among all the colleges but I accept there is every reason to try to achieve the best value for money. The working group will look at the matter and see if we can match the sort of examples taken from the UK, where, it must be remembered, there are a large number of universities in relatively homogeneous areas which are close geographically whereas the Irish colleges are dispersed in different regions. The related transport problems would have to be taken into account, for instance.

To answer the Deputy’s question, we need to examine all of these matters to be able to respond to the points raised by the Comptroller and Auditor General. We would find some difficulty with some of the comparisons but the college welcomes the report as a useful tool in focusing on various areas in the colleges.

Deputy Broughan: With regard to the recent report on information technology available to students and staff, it is generally accepted that people become computer literate at third level.

Would you be happy about some comments on procurement in that area? Perhaps more could be done in future to develop resources along the lines described by the Comptroller and Auditor General.

Regardless of what happens to the legislation and how future Governments perform, do you accept the remit of this Committee and of the Comptroller and Auditor General is to ensure value for money, especially in this area of third level education with its large and increasing costs? Will the financial planning discussed in the Dáil a few months ago be put in place so that, three or four years from now, the Comptroller and Auditor General’s report will not contain these discrepancies which raise question marks over previous financial management?

Mr. Hayden: I assure the Deputy that these issues are being dealt with as both the colleges and the HEA want to see progress on them soon.

The issues concerning information technology arose for specific reasons. Mr. Dalton spoke earlier about the price of computers and this was the reason why agreements with a number of suppliers were terminated or allowed to lapse. Better deals could be made individually rather than through this method because of the rapidly changing technology. That is not to say that, as markets settle down, it will become possible, profitable and necessary to have agreements.

Legislation is pending on the management of colleges but they are also examining their management structures as are other public and private organisations. The HEA will work more closely with the colleges in the years ahead. As the State now accepts long-term budgeting, it is important our management systems are based on and geared towards long-term planning.

Chairman: Has any staff training taken place, as recommended in the report? If so, what level of expertise has been reached?

Mr. Hayden: I cannot answer that in detail.

Chairman: A brief reply will do.

Mr. Hayden: There is a training for trainers programme. I ask my colleague, Ms Kerr, who deals with that programme for the authority, to mention briefly what it entails.

Ms Kerr: It is an ESF-funded programme for short courses. An expert committee examines proposals from colleges for running courses each year. It met in January this year and supported a proposal on procurement practices from the Irish University Training Network.

The course has not yet taken place but will do so within the year.

Chairman: Expenditure on security arrangements for universities was approximately £2.2 million. Does each university use a separate security firm? Has the cost of a collective arrangement with some of the larger national firms been examined? If so, what was the outcome?

Mr. Dalton: We do not have a central procurement policy for all security areas, partly because of each university’s geographical location and partly due to each one’s circumstances. This issue will receive specific attention. We have been increasingly using newer equipment, thus largely displacing the need for security guards. We will examine the matter to see if there are firms which will quote nationally to the advantage of the universities.

Mr. English: Not all colleges employ security firms. In Trinity College, security people are part of the college staff. The same applies to the cleaning staff who are directly employed by the college. It would not be possible to contract out our security or cleaning services, because people are employed by the college in full-time permanent posts in both areas. The comparisons show that that is not all bad either.

Chairman: The Committee welcomes this value for money report on procurement in universities and encourages the HEA and universities to take account of the many recommendations made in it. The wide variations in prices paid for similar goods and services clearly illustrates that there is potential for benefits through better procurement arrangements and serious consideration must be given to this, most likely by greater use of centralised purchasing. The Committee believes that lessons learned by UK universities and within the Irish private and public sectors could prove invaluable in this area. It trusts that the HEA and the universities are aware of the need for swift action and it would like to be kept informed of any decisions taken in the area.

I thank Mr. Hayden and the various university representatives for attending this meeting. It was a good exercise.

The witnesses withdrew.

THE COMMITTEE ADJOURNED AT 12.40 P.M.