Government defends decision to give go-ahead to National Broadband Plan
The Department of Public Expenditure has called for the procurement process to be cancelled.
The Government has defended its decision to give the go-ahead to the three billion euro National Broadband Plan, despite being strongly urged not to proceed with it.
The top civil servant in the Department of Public Expenditure warned that the plan poses great financial risk and called for the procurement process to be cancelled.
But Finance Minister Paschal Donohoe defended his decision to go against the advice of his own officials, saying it was the “best decision available to the Government”.
Documentation released by the Government on Wednesday showed that Secretary General Robert Watt and his officials had strongly recommended against the Government appointing the preferred bidder on grounds of affordability, risk and value for money.
“The state is taking an unprecedented risk with this project,” Mr Watt warned.
“Poor take-up of the service or emerging new technological solutions in this fast-moving market could leave the state having funded a stranded, or potentially obsolete asset – an asset that the state will not even own despite investing up to three billion euro in it.”
The advice was contained in a memo to the Finance Minister earlier this month from Mr Watt, Brendan Ellison and other senior officials at the Department of Public Expenditure and Reform.
It read: “We strongly advise against approval of the appointment of the preferred bidder to the current NBP (National Broadband Plan) procurement process.”
The officials said the department believed the plan involves “excessive costs and risks for the Irish taxpayer with questionable benefits, many of which are private benefits but to be funded at public cost”.
They maintained there were alternatives that could deliver rural broadband and would offer better value for money for the taxpayer.
“The department believes that significant progress can be made with an alternative, affordable approach, with strong deliverables possible in the short term within the context of a more realistic and affordable budget (of, say one billion euro),” they wrote.
“This approach could increase broadband availability rapidly while minimising the unprecedented risk associated with this project, including construction cost inflation, potential low take-up and commitment to an approach for the most expensive premises which over time will in all likelihood be surpassed by cheaper technologies.”
The department believes that significant progress can be made with an alternative, affordable approach Department of Public Expenditure
The memo was one of 24 documents relating to the broadband plan, which were published minutes before the Dail was due to resume on Wednesday afternoon after its Easter break.
The Government gave the green light to the project on Tuesday.
A consortium led by Granahan McCourt was announced this week as the preferred bidder after Cabinet approval.
It was the only remaining bidder for the contract to deliver high-speed broadband to more than 540,000 homes and businesses.
The rollout of the scheme, which will bring fibre broadband to 1.1 million people across the country, will begin at the end of the year.
It is expected to take seven years to complete.
Speaking at the Department of Finance on Wednesday evening, Mr Donohoe said that he had made the decision after a considerable amount of reflection.
He said he had looked at alternatives but it had become clear that there was no certainty that an option could be found that could deliver universal coverage to citizens in a cheaper way.
“Having weighed up all the pros and all the cons in relation to this and being fully aware of the risks, I believe on balance this is the right thing for us to do,” he said.
He admitted that rolling out high speed broadband to homes and businesses across the country was “inherently risky” but that if it was not, the private market would have already done so.
Despite ignoring his advice, Mr Donohoe said he had complete confidence in Mr Watt, describing him as “one of the most talented people” he had ever worked with.
“My department has a different view in relation to this and I’ve published that advice but I’ve also explained why on balance I believe it is the right thing to go ahead to see if we can conclude the process,” he said.
The National Broadband Plan was first announced in 2012 by then communications minister Pat Rabbitte.
Since then it has been mired by delays and setbacks.
At the outset there were five bidders. Three were selected as preferred bidders but two pulled out, leaving one consortium in the running.
Last October, Denis Naughten stepped down as communications minister amid controversy over the rural broadband plan after it came to light he held previously undisclosed meetings with the head of the last remaining bidder.
An independent review was commissioned by the Taoiseach following concerns about the procurement process, but it found it had not been influenced by Mr Naughten or businessman David McCourt, who is part of Granahan McCourt.
The cost of the project was originally estimated at between 355 million and 512 million euro but last month Taoiseach Leo Varadkar confirmed the cost would end up being closer to three billion euro.
He maintained the original cost estimate of 500 million euro was for a very different project.