Lyric Theatre: New report says awarding of rebuild contract reeks of rigging and manipulation
Probe highlights unexplained changes in tender and the destruction of vital documents
The tender process for a multi-million pound contract to rebuild a flagship arts venue in Northern Ireland may have been rigged, a damning report warns today.
Stormont's Public Accounts Committee said the process which awarded the £11m contract to reconstruct the much-loved Lyric Theatre was significantly flawed and did not follow good practice.
Its report details unexplained adjustments made to tender submissions, costs stripped out but later paid in full, and important documents which were wrongly destroyed.
It also refers to a potential conflict of interest, where the winning bidder had provided a £150,000 donation to the Lyric. The PAC said that, having considered all the evidence, it was left with "a strong impression" that the outcome had been "rigged and manipulated".
Its report examined seven capital projects which were delivered – and mainly funded –by the Department of Culture, Arts and Leisure.
The seven projects – which also included the Grand Opera House, the Mac and the Ulster Museum – collectively ran 32% over budget, costing £103.4m compared to the initial £78.5m estimate.
The Lyric alone ran £5m over budget, with costs spiralling to nearly £18m.
Some £87.4m of the £103.4m total came from the public purse.
The report finds flaws with all seven, adding that business cases were not robust and were based on "completely unrealistic cost estimates".
The PAC said: "The committee is astounded by the level of complacency demonstrated by the department in its appraisal of projects of this magnitude.
"It is a fundamental principle that project appraisals should be scoped correctly and based on accurate and realistic information."
However, the most serious criticism centres on the Lyric Theatre. It reopened in 2011 after a complete rebuild costing £17.8m – £12.4m of which came from DCAL.
The criticism focuses on the £11m contract awarded to construction firm Gilbert Ash in 2008.
Today's report does not find fault with the company, but criticises DCAL, the Arts Council and the Central Procurement Directorate (CPD), which advises Government on tendering issues.
Officials from the CPD – despite being tasked with providing advice – did not attend the tender evaluation meeting.
It also found "unexplained adjustments" were made to the tender submissions, which officials admitted was not normal practice. Consultants who produced the tender evaluation report destroyed the tendering documentation "very promptly".
A £413,000 scaffolding bill from Gilbert Ash was paid in full – despite being stripped out earlier in the process.
Gilbert Ash also provided a £150,000 donation to the Lyric, the report added.
The PAC concludes: "Taking all of the points in the round, the committee is left with a very strong impression that the outcome of the tender process was both rigged and manipulated."
PAC chair Michaela Boyle said that while the quality of the rebuilt Lyric Theatre is undisputed, the end did not justify the means.
"My committee has found that there were significant departures from good practice in the award of this £11m contract, and this is completely unacceptable," she said.
"It beggars belief that CPD – the organisation responsible for providing advice on the tender – did not attend the evaluation meeting for the award of this.
"DCAL, the Arts Council and CPD were unable to provide any assurance that the contract had been awarded in a fair and equitable manner.
"We believe they did not discharge their duty properly, and they failed to ensure the proper use of public funds.
"We recognise that investing in culture, arts and leisure products produces benefits for the whole community.
"However, this must be accompanied by ensuring that projects adhere to proper procedures and value for money considerations."
A spokesperson for Gilbert Ash said: "We had no control over the adjustment to tender costs made during the procurement process – a practice that is standard in our industry to allow for like-for-like comparison of bids.
"We were delighted to sponsor the Lyric Theatre, a fantastic arts venue and a major contributor to cultural life in Northern Ireland.
"We implemented a similar sponsorship partnership when working on the Waterfront Hall project and may follow similar practice in the future, should the opportunity arise."
A Lyric Theatre spokesperson said: "The Lyric welcomes the PAC's report into the department's handling of the seven capital projects, however it completely rejects the wholly unevidenced claims."
Culture Minister Carál Ní Chuilín welcomed the recommendations in the report, saying her department would consider the findings of the report and provide a formal response in due course.
"Our approach to capital projects is very different from those historic projects covered in the NI Audit Office Report, which date back 10 years in some cases," she said.
"Significant changes have been made to the way in which the department manages its capital projects and many of the recommendations (from an earlier Audit Office report) have already been implemented."
The Arts Council declined to comment.
Finance Minister Simon Hamilton said the Lyric Theatre project was grant-funded "and therefore it was not managed or procured by CPD".
"The project was actually managed and the contractor procured by consultants appointed by the Lyric Theatre. The consultants had full responsibility for assessing tenders and for awarding the contract.
"It is therefore a matter of serious concern to me that these external professional advisers were not able to demonstrate to the Northern Ireland Audit Office that they had applied best practice."