Gerard P. Craughwell: Don't Put Defence Eggs in One Basket

Thank you very much. Professor Davis, thank you so much. That was a truly excellent summary of where we should be going and what we should be doing. A couple of questions for you with respect to defence purchase. I'm somewhat concerned that we are focusing on a single provider, a single nation providing our defence equipment, if you want. And I'm wondering political change, geopolitics, all of these things playing. You make the point when we purchase defence, we should be looking to the long term. We should be looking maybe 10, maybe 20 years down the road. How comfortable are you that we would pile all our eggs into one basket, relying on one single country to provide the primary radar, sonar, military equipment, aircraft, all coming from one country? I think the question has to be a more generic one that I'd answer rather than a specific one on those issues because they're current tenders that are currently ongoing. I think the question is sovereign capability. If we go ahead and go through a contract for anything that you've just mentioned, so any of those elements, the basic question is can we recreate that work 10 years from now? Are we going to be dependent on a body that may act differently to our requirements into the future? So if you're a government procurement is an excellent resource and that's something we have to take advantage of because it enables us to build capacity. Capability is different. Capability is making sure that when the contract ends that we're not dependent or when the conditions shift such as in geopolitical climate and the changes occur that we are not left without the support that we can manage on our own. So if you're asking me from a traditional sense of if I was buying from a sole supplier, so not a sole country but a sole supplier, then there's risk in that. And when you've got sole supply, you have to then ask what's the dependency into the future on that sole supply? Are you building an additional capacity that you can manage without that sole supply? And what happens if that sole supplier decides through circumstances that change, through economics that change, through political will that changes that they are no longer going to support a contract that was put in place? Where does that leave you? And that's the sovereign test. Economic that change, through political will that changes, that they are no longer going to support a contract that was put in place. Where does that leave you? And that's the sovereign test. Your asking the question is, in 10-15 years, if the situation changes and we're left, do we have the capability ourselves to manage? Do we have the capability to go back and recreate that contract again with somebody else? Because if we don't, then we've built a dependency that we are putting at risk our sovereign state. Thank you. The Department, thank you very much for being here. So your job is to oversee the procurement by the Department of Defence in this particular instance? Actually, we don't oversee any department in terms of their procurement. We just outline the rules. We provide the guidance and the policy, but we don't actually oversee. Unfortunately, we have no governance authority or any oversight. So in other words, we can't tell them what to do. So how certain can this committee be that if the Department of Defence are entering into a procurement process for, let's say, aircraft, that the aircraft that have been chosen are consistent with government policy? Who oversees that? Well, in terms of the actual procurement process itself, obviously it's governed by its own directive within the EU rules. If national policy applies, then they have to ensure that it is aligned with that. But I would doubt in the case of defence for something like that, that national policy would apply because it's too low. National policy applies to a much lower value. So essentially, it is the accounting officer in each. So in the case of defence, it will be the accounting officer, the secretary-general in this case, in the Department of Defence to basically satisfy themselves that they have met those conditions. Unfortunately, we work in a... It's a question that comes up a lot with the OGP in the sense that we work in a decentralised model in terms of each department obviously is their own and each contracting authority has their own accounting officer and each accounting officer is responsible. OGP don't... If you set aside the CNAG, who obviously has auditing capabilities for contracting authorities and departments, there's actually no other body that oversees the procurement, for example, of contracting authorities. So I think that was very evident, for example, when we've seen some of the recent issues in terms of Arts Council, IT system, OPW and the famous bike shed, OGP has no capacity to be parachuted in to actually independently audit those procurements. That is done by the agencies themselves. See, this worries me greatly, Chair. This really worries me because looking at another organisation that did some public procurement, and I don't want to deviate too far from defence, but part of the, I suppose, the rationale that was offered that we followed all of the correct procedures was some company outside, some third party, reviewed the bidding process and ticked the boxes that yes, there was a tender put out, yes, the tender was correctly worded. It wasn't oversight. My problem is where is the oversight? Who is actually... The Children's Hospital has been mentioned, the recent SAR contract has been mentioned, the purchase of vehicles by the Coast Guard, a disaster as per the Comptroller and Auditor General. So if you're not overseeing the purchase, who is? It would be the body themselves. We certainly are seeing more, and I don't disagree with you by the way, it's something OGP has looked at a number of times, we just don't have a mandate to do it. But technically it is the accounting officer that is responsible. But what we are seeing more and more for sure is that there is more governance being put in by individual bodies. We see that now with the high level public procurement group that's been set up in defence to oversee their procurement. We see it in HSE, you'll have seen John Conlon talk about it in the OPW, so they are putting in their own governance layers. Now, I could go on and say that promotes other challenges because then you've got, is that going to delay the process? Is that to something that's already complex and can be a lengthy process? The other challenge that I see across the system is that we depend a lot on outsource consultants to deliver some of these very complex and kind of one-off type procurements. And in some cases, depending on where those consultants come from, they may not necessarily always understand maybe the local rules or they may, in some cases, it's all dependent obviously on the specification, if they leave something out of the specification. Because that's where everything, to be perfectly honest, that's where things start to go wrong. If the specification, Dr Davies made a point about the process, the process can be compliant. But if you don't get your specification right to begin with at the very start, which takes most of the time, then you're forever going to be in trouble. It's something that concerns us when we talk about, when we look at things like the Metrolink coming up, which is going to be a massive drain on this state's spending. It is a concern for us as to how that specification is going to be built. Because I'm running out of time, I'm going to cut you off there. But what I will say is that anecdotally, any time I query public procurement, any time I query the methodology used in it, I'm told deeper frustrations all the way. You guys are causing all the problems. You just mentioned external consultants. External consultants, I'm aware of one particular and I'm not going to go into the details, but the consultant's qualification to be the person advising is hugely questionable, massively questionable. So again, it goes back to who's overseeing. And with respect to Dr Davies, you mentioned taking funding away from the current model. We talk about cyber security, we've been looking for the state to put a billion euros aside over a five-year period to allow for the state to upskill itself to become a cyber-aware, the most cyber-aware state in the country. But there's no facility for that sort of ring-fencing of cash. You might just address that and I'll finish up that. Thank you, Chair. No, I understand. Indulgence. I think the issue becomes a misunderstanding of what public procurement is. The OGP as a central body is very good at what it does. And let's not underestimate the skills or capabilities. And when it was set up, it was set up to bring efficiencies about in the purchasing of standardized materials right across. And it does that extremely well. The issue is translating that down at the sectoral delivery. When you translate that down at the sectoral delivery, particularly at a strategic level, the capabilities and capacities are not necessarily always present. We've diluted those over the years. So when you ask the question of if we ring-fenced money to put away, the biggest issue, and here we will all agree, is whether the capacity or capability is still present in the organization. Because in many ways, we've hollowed out organizations over the years. The problem that is also there is that the capability that is present will turn to the OGP. And you used the word blame. It's not a blame. It's more a case of the guidance that we seek is issued by the OGP. So if I don't have the capacity or capability within my own department, I'll look to that guidance and use that. That may not be the most appropriate guidance, and it may not be the most appropriate piece of legislation to use in order to go procure the equipment that we're doing. And we mentioned the two pieces of legislation here. Not all of those two pieces of legislation can be used in tandem. They sometimes have to be used very separately with different conditions. So if you want to ring-fence a billion, you've got to make sure you have the capacity and the capability within the department to be able to deliver it. And that probably is a secondary question that may be asked next week. But that's certainly something that I think we would all agree that needs to be looked at.