Ministerial Statements – in the Northern Ireland Assembly at 10:30 am on 15th June 2021.
Members, I have received notice from the Minister for Infrastructure that she wishes to make a statement. Before I call the Minister, I remind Members in the Chamber that, in light of social distancing being observed by the parties, the Speaker's ruling that Members must be in the Chamber to hear a statement if they wish to ask a question has been relaxed. Members participating remotely must make sure that their name is on the speaking list if they wish to be called. Members present in the Chamber must do that by rising in their place as well as by notifying the Business Office or the Speaker's Table directly. I remind Members to be concise in asking their questions. I also remind Members that, in accordance with long-established procedure, points of order are not normally taken during a statement or the period for questions after.
Members may be aware of the recent Court of Appeal judgement relating to procurement competitions in 2015 that were awarded by the former Department for Regional Development (DRD) and of a new legal challenge served on the Department for Infrastructure that has prevented the award of the 2021 resurfacing contracts in four areas. The purpose of the statement is to update the Assembly on the impact of those legal challenges and the work in train to ensure that my Department can progress new contracts for resurfacing our road network in the areas affected at the earliest possible opportunity.
Members will be aware that a challenge was lodged by Northstone (NI) Ltd against the former Department for Regional Development’s handling and determination of a tender process for road resurfacing contracts in 2015. The Court of Appeal found, in April 2021, that there had been a manifest error in the Department’s approach to the award of multiple, term-type maintenance contracts across Northern Ireland. The judgement concluded that the Department’s post-tender evaluation and scoring interaction with one of the tenderers, McQuillans, and the resulting related contract award decisions were not in accordance with the governing EU legal rules and principles and were not permitted by the competition rules.
As I stated in the House on 26 April 2021, the judgement is a cause for concern for me, not least because of the potential impact of its findings on current and future public procurement practice, and I have been considering the matter very carefully in order to understand the implications of the judgement for my Department and future competitions.
This consideration has included detailed discussions with my Department’s legal advisers. My permanent secretary has also highlighted the judgement to Construction and Procurement Delivery (CPD) colleagues in the Department of Finance, and to other permanent secretaries, to ensure that our assessment took account of any risks for wider public-sector procurement.
A key consideration for the Department was whether parts of the judgement presented so many practical difficulties with accepted procurement practices that a further appeal to the Supreme Court may be required. On a fine balance, however, and after careful consideration, I have concluded that the Department should not appeal the Court of Appeal judgement.
Having considered various advice from our senior counsel and related information from my officials, I met with a senior solicitor from the Departmental Solicitor’s Office and senior counsel last week to discuss the actions taken by officials at the time and since; the legal issues and complexities associated with this case; the difficulties that the judgement created for future competitions; and the courses of action available to my Department, to limit the risk of future successful legal challenges.
By its very nature, the judicial process provides not only a detailed independent investigation of all the processes and documentation relating to this particular process but a detailed and independent outcome from that scrutiny. The Northstone judgements, therefore, present for Members and the public all the salient facts in this particular case.
It is essential to ensure that the Department, and others, learn from those judgements, and I have asked my officials for options so that I can consider how best to do that, with the purpose of designing revised procurement strategies and processes for my Department that can help in reducing the risk of successful legal challenge when contracts are awarded.
It is also essential that I understand how this situation arose and the action that has been taken since to address the problems from when they were first highlighted. I have, therefore, asked that an independent investigation is carried out, and I am consulting with officials and our legal advisers on how best we do that. I am conscious of the need to be fully respectful of the court proceedings that have taken place and the judgements handed down and that we do not do anything that would undermine those. It is important that we keep a focus on learning to ensure that this is never allowed to happen again.
While it is my intention that the independent investigation will look internally within the Department for Infrastructure in relation to procurement, I will also be keen to work across government to ensure that any learning is shared as widely as possible to help everyone involved in public procurement.
The important thing to remember in all this is that public procurement is not simply a process. It is through procurement that we award contracts that get public services delivered for the people we serve. It follows, therefore, that procurement has to be able to withstand the toughest scrutiny in a fast-moving and incredibly complex legal context, otherwise it can pose a risk to the delivery of those critical public services.
That takes me to the second important matter on which I wish to provide an update. It relates to the impact of a new legal challenge that has prevented the award of resurfacing contracts in four of our council areas.
Members will know the strength of my commitment to addressing the impact of previous underinvestment in the structural maintenance of our roads network, a commitment that I was fully expecting to translate into action in this new financial year.
That is now at risk due to the legal challenges that are in play. It is an incredibly frustrating situation in view of the budget that I worked hard to secure for resurfacing across the road network, the improvement that that would have made to the condition of our road network and the boost that it would have provided to the economy and our local communities.
By way of background, Northern Ireland is covered by 12 term contracts for asphalt resurfacing work. Generally, there is one for each council district, but there are two in the Fermanagh and Omagh council area. A procurement competition was run to replace expired contracts in four areas: Newry, Mourne and Down; Mid Ulster; Derry and Strabane; and Omagh. After running a process that was designed in conjunction with the construction industry, letters providing notice of a decision to award four contracts were sent to tenderers in early March 2021. Writs of summons were subsequently issued on behalf of three of the unsuccessful tenderers in the four areas, thereby preventing the Department from awarding any of the four contracts. Officials engaged closely with departmental legal advisers to consider options for addressing that. However, on the basis of very clear legal advice that was provided by senior counsel, the DFI Roads and Rivers centre of procurement expertise (COPE) took the decision to discontinue the competition on 4 June 2021. That is a seriously concerning situation for me as Minister and for all road users as, at present, there are no contracts for resurfacing in those areas. That means that badly needed capital investment will be delayed. I assure Members that officials are rapidly developing a new interim procurement strategy for resurfacing contracts, working closely with legal advisers and procurement experts in the Department of Finance to endeavour to reduce the procurement risks in relation to that area of work and release new tender competitions to the market as quickly as possible. That is an absolute priority for me as Minister.
It is clear from the Court of Appeal judgement on Northstone that the judges concluded that parts of the process that were employed in that procurement were not fully in accordance with the public contracts regulations that were in place at that time, not detailed in the competition rules that were set and hence not transparent to other bidders. Since that time, officials advise that the procurement regulations have changed and that the Department's procurement processes have been reviewed and updated significantly, including improved pre-market engagement, revised tender documentation and assessment processes, and enhanced preparation for members of the tender evaluation panel.
It is important to keep in mind that, although the focus is always on the legal challenges, the Department successfully delivers hundreds of diverse contracts for works, supplies and services across many functions. Its status as a centre of procurement expertise is subject to independent review and re-accreditation at regular intervals. I am pleased to inform the Assembly that a review by the Civil Service's professional auditors, which was completed just last month, provided assurance that the centre of procurement expertise has in place established appropriate structures, robust management information systems and adequate policies, procedures and strategies, and that operational tendering, contract management and monitoring arrangements are appropriate to control procurement activity. Although an overall assurance has been provided for the COPE as a whole, there are, as I have set out, lessons to be learned, and I am determined that they will be learned.
There are limits to what more I can say about our resurfacing contracts given that they are subject to ongoing legal proceedings, but I felt that it was important to come to the House in person to provide this update, given the importance of these issues to me, all Members and the people whom we represent. I reassure Members that taking forward those pieces of work and fixing the problem is a priority for me. I will ensure that Members are kept updated. The situation brings into sharp and stark focus not only the complexity of the landscape in which public procurement takes place but the everyday impact on ordinary people living their lives when public contracts are delayed. That impact is unacceptable.
I assure Members that my Department will continue to take all possible steps, working collaboratively with other procurement experts and with our legal advisers, to find new approaches that allow us to move forward as quickly as possible and to award contracts that can allow much-needed resurfacing work to take place.
I thank the Minister for advance sight of her statement. I put on record my willingness to work collaboratively with her in my role as Chair of the Committee.
Will the Minister explain more about the independent investigation that she intends to put in place? When can we expect a report? Further to that, will she advise how those issues will impact on budgeting for the year ahead and whether contingencies are being put in place?
First, I congratulate Mr Buckley on his appointment as Chairperson of the Infrastructure Committee. I look forward to working with him.
As I said, I am consulting officials and our legal advisers on how best to carry out an independent investigation. For me, it is very important to understand what action was taken by officials at the time and since. It is important that we have a focus on learning to ensure that this situation is never allowed to happen again. I have not yet defined the terms of reference for the investigation. I have asked for options to come forward. As soon as I have the terms of reference, I will have more clarity on the timeline.
Similar to my approach to the issues that arose with the lifts in the Driver and Vehicle Agency (DVA), my intention is to keep the Committee and the House fully updated on issues as the situation progresses. That is why I was very keen to come to the Assembly in person to update Members on the issue and give that reassurance.
On the budgetary implications, officials are still working through the ramifications. My intention is that they will work at pace on a new interim procurement strategy. At the same time, we will have an approach that enables us to issue smaller contracts so that we can get critical resurfacing work done in the affected areas as quickly as possible.
Before I call Cathal Boylan, I remind Members that, if they wish to speak, they need to put their name down.
Cuirim fáilte roimh ráiteas an Aire. I welcome the Minister's statement and the fact that there will be an investigation. Will she give the House an assurance that the process will be open, transparent and fair? Will she ensure a zero-tolerance approach to the mismanagement of public spending on these types of contracts? Will she also indicate how much has been spent on legal fees for disputes up to this point?
I thank the Member for his question. I can assure him that, in the same way as I deal with all matters, I will deal with this in an open and transparent manner. That is why I have come to the Assembly in person. As I said, the judgments have caused me very serious concern, and I want to be absolutely satisfied that all the corrective actions that should have been taken were taken at the earliest opportunity, as soon as the problems were identified. As I said to Mr Buckley, I will, of course, keep the House and the Committee fully updated on that.
Will you repeat the second question?
I am sorry; it was about costs. At this stage, the damages are still to be determined by the court. The advice from my officials is that that may take some time to complete.
I am sure that the Minister will remain open and transparent, as she was during the DVA lifts crisis. Unfortunately, this has been a difficult year for everyone. However, it seems that a number of things were waiting in the Minister's in-tray when she assumed her portfolio. How did the process go so terribly wrong in the first instance?
The two court judgments provide significant detail on the complexities of the case. As I said, I want to investigate further so that lessons, including for future procurements, can be learned. I intend to seek further information from an independent investigation of the actions taken by the Department at that time and since. I will discuss the approach further with my officials and legal advisers because I am very keen that we get the independent investigation under way.
I thank the Minister for bringing this matter to the Assembly's attention. I declare an interest as the Chairperson of the Finance Committee and because the Minister of Finance now chairs the Procurement Board.
There are questions for both Ministers.
My main question is whether the Minister was fully aware of the issue when she received her first-day brief. Bearing it in mind that the procurement process was not in accordance with public contracts regulations, was not detailed in competition rules and was not transparent, the other fundamental question is this: why was the Department trying to defend the indefensible? There seems to be a pattern in the Department for Infrastructure of taking on legal cases that, it knows, it has no legal basis to continue with. There is something fundamentally broken that needs to be fixed and fixed early. Will the Minister answer those questions?
I thank the Member for his questions. The issue was not in my first-day brief. I assure the Member that, as soon as it was brought to my attention, I gave it careful consideration. I read at length and repeatedly all the information and advices that were available. That is why I came to the House today to announce the course of action that we will take.
I assure the House that the Department carefully considered the initial decision to appeal the original Northstone judgement and gave considerable thought to how the application of the decision would affect the future conduct of public business. The legal advice obtained by the Department considered the Department to have a reasonable prospect of success and that the judgement on appeal might assist the Department in its understanding of what was expected in future competitions.
I thank the Minister for coming to the House today to give her statement. It is a serious matter, and it warrants an independent investigation. It is so serious that the court ruled that the Department:
"engaged in a secret, bilateral and unrecorded process with one of multiple bidders. In short, McQuillan's was accorded special treatment in a clandestine and purely bilateral process, and, in consequence, the level playing field was distorted for other bidders."
That is very serious. The Minister got a 29% increase in her capital budget. Will she outline what she will do to ensure that that road resurfacing can take place across Northern Ireland? If it cannot take place in the areas that are affected by the judgement, will increased investment occur in other areas to ensure that that investment gets used on the ground and that the judgement does not affect it?
I thank the Member for his question. I have said that, after careful consideration of the judgement and detailed consideration of advices and the information provided by officials, I am clear that there needs to be an external investigation.
In respect of the impact of this on the budget, my approach is, I suppose, threefold. The first is accepting the judgement and then, through an external investigation, understanding what happened and what action was taken then and since to address the problems as soon as they were highlighted. The second piece of work will be on revised procurement processes to mitigate the risk of further legal challenges. The third piece of work, which is key for me, will be to ensure that we work as quickly as possible to deliver the capital investment for the resurfacing that is required on our roads.
I assure Members about the approaches that we are taking. As I said, officials are working at pace to devise an interim procurement strategy for the asphalt resurfacing. For Members' information, the planned timeline is to undertake pre-market engagement during the summer and to bring the first contracts to market in the autumn, with contracts to commence in early 2022. I am not at all content with the situation, but I want to make sure that, while that process takes its course, we do everything that we can to ensure that we can resurface our roads. In addition to that procurement work, the Department plans to progress at pace one-off contracts and bundles of contracts for release and award later this year so that we can get roads in the affected areas resurfaced as quickly as possible.
In Mid Ulster, the rural west is being hit once again with a lack of investment in infrastructure. I appreciate the reasons why. Can smaller contracts that are in place there be increased somewhat to get some of the money spent? The road users and the engineers who are trying to repair the roads will see the outworkings of the situation when the winter comes, when we will all see the negative effects of the lack of investment.
As the Member has correctly identified, Mid Ulster is one of the four affected areas. I assure the Member that surface dressing, patching and gullies work will continue. However, as I said, I am looking at moving forward a larger number of tender opportunities, so that we have a continuous pipeline of tenders. The focus is that, while we work on the new procurement strategy, we are able to initiate smaller contracts as quickly as possible, so that we can get the work on the ground in Mid Ulster at the earliest opportunity.
I thank the Minister for her statement. The fact that the legal challenge has prevented the award of resurfacing contracts in Newry, Mourne and Down, Mid Ulster, Derry and Strabane and Omagh is totally unacceptable. I can speak best about my constituency, where the roads are in a dire state, particularly in the rural areas.
I was going to ask about a time frame, but you have outlined that. It is concerning that it will be 2022 for a lot of the roads. Will the areas that are already part of a huge backlog be prioritised for interim repairs to improve the quality of those roads until the contracts are awarded and proper resurfacing can be done?
I assure Members that roads will continue to be inspected and repairs carried out in line with policy in all of the affected areas. While the current timeline for the interim procurement strategy for asphalt resurfacing is expected to commence early in 2022, as I have said, I have asked officials to work simultaneously on delivering one-off contracts and bundles of contracts to try to get the resurfacing works carried out in the affected areas as quickly as possible. The time frame for that is later this year.
I thank the Minister for her statement. I put on record my thanks to the local division office. We have a lot of issues in south Derry with road surfaces, and it is a massive bugbear for constituents.
It is concerning that the six contracts were allocated to a single company that reportedly did not have the necessary resources to undertake the work. Can the Minister provide clarity as to whether the Department knew that fact at the time of making the decision? Is your Department now taking the required steps to ensure that firms have the resources to do the job?
I thank the Member for her question. She has highlighted an aspect of the judgement. I have taken the decision not to appeal that judgement. The reassurances that I seek as a Minister provide a rationale for initiating the independent investigation. I want to be satisfied that I understand what happened in this instance, what action was taken by officials at the time and, importantly, as I have said in response to other Members' questions, what subsequent action was taken to adopt learning and correct problems from the first moment that they were highlighted. While the terms of reference have yet to be finalised for the independent investigation, it is important that I, as the Minister for Infrastructure, have full understanding and reassurance but also that Members across the House and the public are reassured.
The Minister's statement is honest and frank. Her openness with the Assembly is welcome and appreciated.
Minister, I drove from Crossmaglen to Silverbridge, then to a meeting in Newtownhamilton and on to Armagh, and, on parts of the road, I felt like I was travelling over the Himalayas. You will know from the local papers, that, every week, we have a list of Sinn Féin Members and councillors attacking you on roads issues and then claiming the resurfacing works that have been done, taking the people for fools. Can you tell me that the works will be undertaken through other procurement mechanisms to ensure that roads will be repaired and people will not feel like they are driving over the Himalayas in parts of south Armagh?
I thank the Member for his question. As I have said, I want to reassure Members. I am adamant that my Department will take all possible steps to find new approaches that will allow us to move forward as quickly as possible and get resurfacing work on the ground in Mr McNulty's constituency and other affected constituencies. Officials are working at pace to devise an interim procurement strategy for asphalt resurfacing. As I have said, it is planned to have pre-market engagement during the summer to bring the first contracts to market in the autumn. In the meantime, I want to make sure that we do what we can to get resurfacing works on the ground.
That is why, as a mitigation of any delay in the interim procurement strategy for asphalt resurfacing, it is planned to progress one-off contracts and bundles of contracts at pace for release and award this year.
I thank the Minister for coming to the House in such an open and transparent manner. In his judgement, Justice Horner said that officials had committed "a manifest error". Can the Minister inform the House of the potential implications for those officials and for the officials who, RHI-style, did not take any minutes of a crucial meeting in September 2015 and, indeed, the implications for the centre of procurement excellence, given the failure to perform such a basic function as minute taking?
I thank the Member for his question. As I have said, I am very concerned by the judgement and the salient facts that have been outlined. That is why I am initiating an independent investigation. It would not be appropriate for me to pre-empt the outcome of that investigation at this stage.
Gabhaim buíochas leis an Aire as an ráiteas seo. I thank the Minister for her statement. My question follows on from Mr Nesbitt's. It seems that the contracts were given out without written records, and the same issue of written records came up with the DVA faults. Can the Minister indicate that that is no longer accepted practice in the Department?
I thank the Member for his question. As soon as I took up post as Minister for Infrastructure, the situation with the DVA lifts arose and I became aware of it. In my response to that, I initiated two independent reviews. One was to establish exactly what happened, who knew what and who was responsible. The second piece of work was to ensure that we had clearly identified all the actions that should be taken to prevent that happening again. Of course I am concerned about any situation where there is not a record of meetings held. I have no doubt that that will feature as one of the issues examined as part of the independent investigation.
I thank the Minister for coming to the House and giving the update. It is a serious matter. I share the Minister's concerns, particularly about how it happened. I welcome her commitment to finding a way through in the interim. Can she offer us some more detail and assurances on how road repairs will be progressed? I know that she has said something about that already, but it would be helpful to have a little more detail on how those will be progressed in the meantime.
I thank the Member for his question. I reassure Members that surface dressing, patching and maintaining gullies — small-scale intervention work — will continue to be carried out in the affected areas. While the Department's officials are working at pace to find an interim solution to the procurement contract, the clear focus for me is making sure that officials do what they can to get resurfacing work done on the ground in affected areas at the earliest opportunity. That is why we are looking to plan one-off contracts and smaller bundles of contracts. All those issues are being explored so that we can get those contracts out this year and get that critical service delivered on the ground this year.
I thank the Minister for coming to the House to update us on the issue. Insufficient resurfacing has resulted in increasing levels of emergency pothole repairs, increasing numbers of compensation claims and deteriorating roads, resulting in additional costs as well. The difficulty stemmed from the initial tender process in 2015. What were the values of the tenders at that stage? Who exactly approved the contracts at that time? Which Minister was in place? Why on earth have we not learned from the mistakes at that time?
I thank the Member for his question. He is right to point out the historical element, first, around the state of our roads, which is a result of historical underinvestment. The Member is aware of the Barton report and the fact that it objectively identified the requirement of an investment of £143 million per annum to maintain the current road network. As the Member rightly identifies, the Northstone judgement applies to the 2015 contract award process. Obviously, the judgement is there for all to see. The Member has highlighted a number of issues for which I have asked officials for timelines. This is also part of the rationale for my asking for the external investigation.
I am sure that the Minister is concerned about this deeply troubling issue. Members will have made reference to work that needs to be done but now is not happening. Will the Minister provide assurances again, especially for the people in my area of South Down — the Newry, Mourne and Down part — as to how works may take place, going forward, to assist them with the road network in the area?
I thank the Member for his question. I appreciate that this is an issue of utmost concern to Members, who want to see this critical service delivered in their areas. I share in the ambition to improve the surface of our roads. That is why I made a significant bid and a significant allocation in my capital budget. I wanted to translate that commitment into action. It is hugely frustrating to find myself in this situation, but, as I have said, I am trying to understand, through an external investigation, what happened and the actions that were taken subsequently.
Officials are working at pace to devise an interim procurement strategy. I have set out the timeline for that, but I am also reassuring Members that I have said to officials that we need to do everything possible to ensure that we get resurfacing work on the ground at the earliest opportunity. That is why we plan to progress one-off contracts and bundles of contracts at pace: to get that much-needed work on the ground this year.
The Court of Appeal judgement was a shocking indictment of the Department, its relevant officials and its processes. The Minister is not prepared to tell us whether, in consequence, any staff will be disciplined. Is she prepared to tell us whether the Department is still relying on the legal advisers who told it that it had a worthwhile appeal and wasted further public money? Is the Department aware of further pending challenges apart from the one referred to in the Minister's statement?
I thank the Member for his question. With respect to the issue of staff, I am clear that I am so concerned by the situation that I am instigating an external investigation. It would not be appropriate for me to pre-empt or pre-conclude what the findings of that investigation might be.
I reassure the Member that I have asked officials exactly that question about pending challenges. I am waiting for information so that, if it is the case that there may be further pending challenges that will affect the Department and the delivery of its services, I have a clear understanding of what they may be.
The Minister said that we needed to learn from the judgement. That is obviously true. I cannot help but agree with Mr Nesbitt that the ethos of RHI ran across Departments and the Executive. The Court of Appeal ruled that the Department engaged in:
"an egregious breach of the principle of transparency".
That is a serious charge. How much was this an isolated case, or how much of it happens in the Minister's Department or across other Departments or happened in the previous Department? We spend at least £1 million a day on PPPs and PFIs, so I would be seriously concerned if a lot of that money or some of it was being wasted on unsound practices, to put it lightly.
I thank the Member for his question. He references the scandal that was RHI. I reassure the Member and all Members that I take my role as Minister for Infrastructure extremely seriously. I am there to represent the people of Northern Ireland, and I will not shy away from going to the difficult places. That is why I have asked for an independent investigation. I want to be reassured around those matters, and I want Members to be reassured about them.
At the same time, as I have said, while that work takes place at pace, it is a priority for me that we do absolutely everything we can to ensure that critical resurfacing work takes place on the roads that need it in the affected areas.
That concludes questions on the statement. Members, please take your ease for a moment or two.
(Mr Deputy Speaker [Mr Beggs] in the Chair)