Martin Daly: Indra 'gamed the contract' - 50% low-bid?

Thank you to the witnesses for coming this morning, and I don't want to rehash what has already been covered, but it really is difficult for an ordinary person, and I see myself as an ordinary person, to understand the contract situation whereby, reading through the submissions, that as early as 2020, there were flags going up on this contract. I mean, if you've entered into agreement, and that early in the contract, this multi-billion corporation, supposed to specialise in this, is failing to meet very basic requirements of the contract, that the red flags aren't going up all over the place. Is there any answer to that? I suppose just, and I will hand over to Paul because he'll be able to go into more detail, but I think if you review the correspondence that we've put before you, there were red flags being raised, and they were being raised, and if you go back to even the first commercial resettlement, there were assurances given by INDRA that they were addressing. They never raised any issue with specifications, or that they couldn't meet the criteria. They accepted, they signed up to the rebasing of the contracts, and they unfortunately didn't deliver. And that would have led to Paul and his team flagging very, very serious concerns in early 2020. It's four years, and I see INDRA use things like the pandemic to explain which pandemic has been blamed for everything. But I can't understand, that's four years. These flags were going up very early on in this contract. Four years is a long time. The concerns that were raised, yours was the DaVinci 2.0 platform that they're advising as post-contract, haven't advised at any time going into the contract that they're going to move from 2.0 to 3.0, and it does cause a concern. We go through a due diligence process with them, with our team, to say, look, what does this mean? They're reassuring Irish Rail to say that, look, this is the next generation of the product. It has a product development history, had previous 1.0, 2.0, and they're moving to 3.0 as a business, and this would be the case for other TMS applications that they were doing in other jurisdictions, so that they wouldn't be doing 2.0 in one place and 3.0 in another, that they would roll it out consistently. And I suppose the concerns we would have had is to make sure that we were still going to be getting the same level of offering from what we were being promised for 2.0 and 3.0 in the 3.0 version. And they were the undertakings that they gave to the business, and we worked forward on that basis. But what I suppose happened then from 22 to 24 is where we have these program – I can slip it to you because I know it's the word we've used in it – but significant program concerns, whereby the movement from 2.0 to 3.0 has turned into a whole new process for Indra as a business, and they're developing the next version of the product, what's called outside the project. So in other words, there was an activity that they were doing as a business that the project that they had committed to doing for us was dependent on. In 2020? From 2020, yeah. You're saying now between 22 and 24 serious slippage happened, but we're talking now about two to four years. And they promised us that that product development process, what's called the generic product, you might see in the note, they promised us that that would be finished, they guaranteed it would be finished in 2021, such that it would have no effect on the program whatsoever. In the end, it took them until the end of 2023 to get that generic product process that they were doing as a corporate organization outside the project done, and that was a driving factor that really pushed the delay of the project out from… But it really feels like they gamed the contract. It really feels that they gamed the contract. And what's really interesting is they were 50% less expensive than the next tender. Did that not raise concerns that they low-balled the state on this contract? And we've seen it in other big infrastructural contracts of the state, low-balling and then coming back and back and back and back until the cost escalates, or they can't meet the terms of the contract. Well, as part of the procurement evaluation process, we would carefully examine the commercial offerings of any bid to assess them from a point of view… 50% is a huge gap. You know, there's a gap of 10%, 50%. Someone says somewhere, wait a minute, I don't want to ask who the other firm tendered. You probably can't tell me that, can you? Were they a reputable corporation? Yes. Okay, international? Yes. Okay, so 50%. It's just incredible. If someone came in, a builder came in and said, I can build this for 50% less, you're expecting wet bags of concrete to be stuck in the wall. Someone is cutting costs somewhere. So it is incredible. It's just a reflection. It's incredible. The third-party advice to support this corporation, who did you bring in to provide that third-party hand-holding advice to a multi-billion euro corporation that's supposed to deliver a huge infrastructure project? I noted in the note that you brought in some external contractor to help them through some of their issues. Was that another contractor? We had two organizations called Ricardo and Torres who provided, effectively, temporary staff to help us to manage the project, both technically and from a project standpoint. They were helping Irish Rail, I should say. Helping Irish Rail. They were working for Irish Rail and they were helping Irish Rail. And was anyone brought in to help Indra advise them? Or did Indra subcontract any work? I'm not sure, to be honest, exactly what way Indra staff were contracted. They had a lot of people working for them and advising and doing the work for Indra directly. I suppose it really, and again I don't want to rehash what's come in. When do you think, so now the contract is with the NTA, Irish Rail deliver it, the advice is that you're going to have a review to decide on how to terminate this contract. Is that what I'm reading here? I'm misinterpreting that. The contract is between Irish Rail and Indra. So Irish Rail will need to have those conversations directly with Indra in terms of managing the next steps here as well. And then the NTA will continue to work with Irish Rail to support any sort of way forward. And the ticketing system going to Indra, it does seem again for the ordinary public to understand how a corporation who hasn't delivered on a project are brought in to provide another development within the NTA, the new generation ticketing system. I mean, how do you explain that to the public? Again, there was a compliant procurement process where Indra was successful in that particular contract as well. As I mentioned earlier, there was a lot of pre-mortem, if you like, prior to sort of developing the procurement strategy about all the things that needed to be included. And in the same way that there was a review of all the different expertise globally, the different organizations that deliver against these projects, Indra have got that global presence in this particular field as well. It is very different technology to rail. Are you confident they will deliver on that contract? It's currently being delivered on time and on budget. All the milestones are being met. And the teams are co-located and working successfully to deliver against those milestones. Do your external consultants who advised you on the original contract, was it Ricardo it was? Are they culpable here in any way? I mean, if I get advice and it's deficient, which obviously their advice was deficient. Well, maybe deficient is too strong a word. Let's put it this way. They've given you advice, which as a specialist company, which has turned out to be erroneous. There's obviously going to be the EY reviews that NTA mentioned that will look at everything that's happened as a full look back. But what I would say based on the evidence and documents that I've reviewed, which a lot of this was happening before my time in the business. I'm not here trying to defend anyone, just to be clear. The facts are the facts. But based on the undertakings and the representations that Indra made through the prequel and the bid process. But how Ricardo and the project team assessed it was not unreasonable based on the information that they were given to review is what I would say. But that's just my opinion. So it comes back to Indra, really, not delivering and undervaluing what was required and a whole range of things, low balling, I would say. And just finally, for the NTA, I mean, the public, the state's going to spend a lot of money on Metrolink. Do you think you're capable of delivering Metrolink? Obviously, we're coming close to the next approval gate for Metrolink as well. There's been a lot of work to develop the project team, a lot of work to make sure that we've got the right design and systems in place as well. There's been thorough assessments around both the project execution of that, how it's going to be delivered, what is being delivered, all the costings, etc. All of the process of being assured against that as well. You could accept, because I've run out of time here and I don't want to take anyone else's time. You could accept the public have perhaps their confidence shaken in the NTA and Irish Rail and the management of this particular contract. I suppose that's all I can say. I can't answer that. Thank you.