I welcome Mr. John Conlon, Chairman of the Office of Public Works, OPW, to discuss its appropriation accounts for 2024. He is joined by the following officials from the OPW: Ms Kathryn Whyte, head of organisational capability and corporate services; Mr. Conor Sreenan, State architect and the principal architect; Ms Cathleen Morrison, head of estate management; Ms. Rosemary Collier, head of heritage services and capital works delivery; Mr. Jim Casey, head of flood risk management; and Mr. Robert Mooney, head of planning and climate adaptation.

We are also joined by the following officials from the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, who are attending in a representative capacity; Mr. Fionn Jenkinson, principal officer and Mr. Andrew Gray, assistant principal officer. They are welcome.

Finally, we are joined by officials from the Office of the Comptroller and Auditor General, including Mr. Seamus McCarthy, Comptroller and Auditor General who is a permanent witness to the committee, and Ms. Maria Reck, audit manager.

For the witnesses who are attending today, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references that may be made to other persons in evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. This means that they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege, and it is my duty as Cathaoirleach to ensure this privilege is not abused. Therefore, if statements are potentially defamatory in relation to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Witnesses are also reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue your remarks. It is imperative that they comply with any such direction.

I call the Comptroller and Auditor General to make his opening statement.

Go raibh maith agat, a Chathaoirligh. The 2024 appropriation account for Vote 13 - Office of Public Works records gross expenditure of €694.5 million. Appropriations-in-aid of the Vote amounted to €31.7 million. The surplus on the Vote at the year-end was €12.4 million which was surrendered back to the Exchequer.

The account is presented under two programme headings. Just under €563 million, or 81% of the total, was spent on the estate management programme and almost €132 million, or 19% of the total, was spent on the flood risk management programme.

The OPW provides office and other types of accommodation to other central government Departments and offices, using a combination of leased and State-owned property. The associated costs are a direct charge on the estate management programme. This includes rent payments totalling €111.2 million; property maintenance and supply payments of almost €83 million and public-private partnership unitary payments amounting to just under €22 million.

Costs associated with the OPW’s portfolio of heritage properties amounted to €54.5 million in 2024.

In parallel with routine management of its property portfolio, the OPW manages a large programme of new capital works, substantial building alterations and extensions. Under subhead B6, new works, alterations and additions, the OPW incurred expenditure of €141 million in 2024.

Separate from the building activity charged to Vote 13, the OPW also acts on an agency basis on behalf of other Departments and agencies. This mainly relates to the carrying out of major capital works and the leasing of accommodation. The expenditure associated with this agency activity is reflected in the respective appropriation accounts of the client Departments and agencies. As indicated in note 2.15, expenditure incurred by the OPW on an agency basis, and not reflected in Vote 13, amounted to €254 million in 2024.

I issued a clear audit opinion in relation to the appropriation account but drew attention to two matters disclosed by the Accounting Officer in the statement on internal financial control: procurements to the value of €16.3 million in 2024 that were not compliant with public procurement rules and control issues in relation to projects below €500,000.

Chapter 5 of my report on the accounts of the public services for 2024 reviews the development of a proposed national science centre, which has resulted in a contingent liability of €70.4 million disclosed in the appropriation account of Vote 13 The project originally commenced in 2003 as a perceived no-cost initiative to develop the science centre museum as part of a proposed major mixed-use development at Heuston Gate in Dublin. The initial agreement between the OPW and the centre’s promoters was for provision of a building of 4,645 sq. m, with the promoters taking responsibility for the fit-out and exhibits, and the recurrent operating costs. The property development did not proceed as originally envisaged.

In 2013, the OPW and the promoters entered a new agreement committing the OPW to provide a building of 9,580 sq. m at Earlsfort Terrace - more than double the original size and in a more valuable and sensitive location. Various cost estimates for the State’s liability in respect of the museum were provided at different stages in the development. By May 2024, the construction cost to be borne by the State stood at an estimated €70.4 million with the potential for further increases. To date, the project has cost the Exchequer approximately €4.27 million in legal expenses, State funding provided to the operator, and site preparation costs at both the Heuston Gate and Earlsfort Terrace locations. The examination found that the proposed science centre project has never been evaluated or appraised in accordance with the public spending code or other applicable capital expenditure guidelines. Furthermore, we found that as no formal sponsoring agency or sanctioning authority has been appointed for the project, the key controls designed to safeguard the Exchequer were not applied in the management of the science centre project. This ultimately led to a premature commitment of Exchequer resources. The key learnings of the examination focused on the need for robust project governance and safeguards to prevent and manage project scope drift and cost overruns. These learnings were accepted by the Accounting Officer.

Chapter 6 of my report on the accounts of the public services for 2024 examines the OPW’s management of office accommodation. The chapter reviews three main aspects: the sufficiency and appropriateness of property data collected, the extent of analysis undertaken to inform property decisions and the effect of the shift towards remote working on client requirements for office space.

In relation to data held by the OPW, the examination found, based on a sample of properties examined, that there are material errors and inconsistencies in respect of its property database. At some of the locations visited by the examination team, it was not possible to reconcile the information on the database with buildings on the ground. Separately, it was found that buildings with energy ratings below the target A3 level are still being acquired by the OPW, contrary to policy.

Protracted delays in fitting out premises for occupation led to substantial rental payments for buildings that were unoccupied. In the case of the Distillers Building in Dublin 7, the lease commenced in July 2022 with an initial rent-free period of nearly two years. However, the premises remained vacant up to the time the report was being completed, at a rent cost of €12 million plus VAT.

The report sets out five recommendations, including initiatives by the OPW to improve the quality of the data in its property database, to better document its intentions as regards energy upgrading for new acquisitions and to commit to reporting publicly on the utilisation of its office accommodation portfolio. In relation to leased office accommodation, it was noted that the OPW should formally record decisions made on whether to avail of lease break opportunities and should document any significant departures from property-related circulars in force.

The Accounting Officer has accepted the recommendations, and indicated timelines for their implementation.

I thank the committee for the invitation to discuss the 2024 appropriation account on the relevant chapters in the report of the Comptroller and Auditor General. I thank the Comptroller and Auditor General and his office for their work in auditing the appropriation account, in addition to their work on the two chapters, which contain valuable insights and learnings for us. I am joined today by members of the OPW management board, who have responsibility for areas across the wide-ranging remit of the OPW.

The Comptroller and Auditor General has outlined the main areas of expenditure in our Vote. I will briefly comment on some of the notable examples of delivery across the OPW programmes. Our purpose is to protect communities from flood risk, manage the State's property portfolio, and safeguard, promote and maintain our natural and built heritage. The OPW has a multidisciplinary workforce of approximately 2,500 staff dispersed across some 140 sites. We employ staff across diverse roles such as engineers, general operatives, carpenters, horticulturalists, architects and quantity surveyors, as well as a wide range of roles across the general administrative grades. In the course of their varied work, our staff live our values of expertise, respect, excellence, collaboration and sustainability.

We lead Ireland's flood risk management and have delivered 56 major flood schemes, providing protection to almost 14,000 homes and businesses and an economic benefit to the State, with damage avoided estimated at around €2 billion. Major flood relief schemes are complex, multi-stage projects that rely on extensive surveys, environmental assessments and detailed design work to understand flood risks and develop effective solutions. Improving efficiency and timelines for delivery is our key priority, in line with the goals of the Department of public expenditure's accelerating infrastructure taskforce.

There are more than 100 schemes at various stages of implementation, with a capital allocation of €715 million over the period to 2030. We spent over €131 million on the flood risk management programme in 2024. Our teams work from depots across the country to deliver on flood relief projects, with five more flood relief schemes reaching construction or implementation in 2024. This brings the total number of flood relief schemes currently at construction to 11, in Athlone, Crossmolina, Glashaboy, King’s Island, the Morell river, Morrison's Island, the Poddle, the River Wad, Springfield, Templemore and Whitechurch. Upon completion, these schemes will collectively protect a further 2,900 properties. The estate management expenditure during 2024 was €563 million. At year-end, our portfolio included 531 buildings, 266 of which were State-owned, covering a floor area of 866,000 sq. m, with some 60% of total floor area being State-owned.

As a result of this expenditure in 2024, substantial progress was made on a number of key building projects, including the Rosslare Europort project, the Government data centre in Backweston and the construction of a new office block at Leeson Lane, Dublin 2 to provide flexible, purpose-built, value-for-money, energy-efficient and space-efficient accommodation for up to 360 staff. We also handed over Tom Johnson House, an exemplar deep refurbishment project financed by the national recovery and resilience plan in support of our climate action obligations, in 2024. This is occupied by the Department of climate and energy.

The OPW provides a service for statutory maintenance contracts and building fabric in more than 2,200 properties. In 2024, a total of €83 million was spent on the provision of maintenance in buildings occupied by Government Departments and certain State agencies. We maintain and operate 780 important national monument properties across the country, with 32 historic properties, balancing the protection of heritage assets with increased, more interactive and inclusive access for visitors. In 2024, our heritage sites performed well, with just over 14 million visitors. That good performance is continuing into this year.

Significant projects delivered in 2024 included Rockfleet Castle in County Mayo, the seminar room at the National Library and ongoing restoration works at the Four Courts. During 2024, heritage sites across the country participated in many local and national festivals, including National Heritage Week, Seachtain na Gaeilge, the Five Lamps Festival and the Discover Derrynane festival. These make a major contribution to local economies.

The proposal to develop a national children's science centre dates to the early 2000s, as the Comptroller and Auditor General said, on foot of a then programme for Government commitment, with sponsorship and financial support for the project driven through the then Department of Enterprise, Trade and Employment, with financial support also provided by the then Department of Arts, Sport and Tourism. The role of the Office of Public Works was that of a contracting authority to design and oversee the construction of a facility to be located at the Heuston Gate development. Our role in this respect was similar to an undertaking of capital projects as a contracting authority for client bodies, whereby funding issues from the relevant Votes for these client bodies. As Chairman of the OPW, I have met and advised representatives of the children's science centre company. While I fully accept that there is a binding arbitration award on the OPW, on behalf of the State, the fact remains that there is no sponsoring authority to fund the development of the project. The Vote for the OPW provides capital allocations for flood risk management and OPW estate management, and does not provide capital funding for projects outside of these defined expenditure programmes. The OPW, as a contracting authority in this case, does not provide funding for the capital works development for the science centre project.

In addition to identifying a sponsoring authority, in line with the infrastructure guidelines, the issue of the source and quantum of ongoing operational funding required for the science centre requires examination and evaluation by a sponsoring Department. I share the key learnings identified in the report of the Comptroller and Auditor General, namely that the roles and responsibilities of project sponsor and contracting authority should have been clearly defined from the outset. More robust project governance, with a clearly identified project sponsor, would have provided safeguards in respect of the other clear learnings from this project and around the scope of this project, in addition to the appropriate oversight of costs.

The OPW estate portfolio generates an immense amount of property-related data that informs the management of the estate. A number of data anomalies were noted in the Comptroller and Auditor General's report on our estate management and a project is already under way to correct this and to validate existing information in our property database. There have been no financial implications for the State associated with these data anomalies. On foot of the audit's recommendations, the OPW is now also formally documenting decision-making in relation to lease breaks in rental properties, and energy rating standard exemptions in our buildings. This work forms part of a wider programme to continuously improve how we manage our property portfolio transparently. The timescale for the delivery of office accommodation construction projects and fit-out costs is dependent on several variables. Purpose-built new accommodation can take up to five years, subject to the scale and complexity of the project. The acquisition and fit-out of new premises such as a lease can typically take up to three years.

Facilitating multiple clients in appropriate leased buildings in a challenging environment results in delays achieving full occupation. For instance, the Distillers Building and Bishop’s Square projects highlighted in the report were both impacted by the pandemic and supply chain disruption, as well as factors including expansion of the base build by the landlord, and change of ownership during the project. However, these projects have allowed the OPW to exit multiple costly leases in older, poor-quality premises to consolidate staff in modern energy-efficient buildings. The Distillers Building is now being occupied and will shortly be fully occupied.

We continue to review and improve our governance processes. For example, new guidance on capital works projects with an estimated value of less than €500,000 was implemented earlier this year. I would like to reiterate our ongoing commitment to deliver on the Government's commitments, on a value for money basis, under the next phase of the national development plan. This delivery is enabled by the hard work and commitment of our staff, who I would like to acknowledge as consistently delivering across our broad remit of responsibility. Every day, they serve both the State and communities nationwide through the provision of vital flood protection measures and the management of our extensive property portfolio.

During 2024, our teams managed multiple capital projects, including the recently completed €230 million Rosslare Europort terminal, which was delivered on time and on budget. This was one of the biggest capital infrastructure projects of its kind delivered in Ireland. Our heritage team combines conservation expertise with the delivery of excellent visitor experiences. Their work preserves and presents Ireland’s built and natural heritage, enabling regional tourism to improve. These multidisciplinary teams, which operate across the OPW, are united by their professionalism, dedication and strong sense of purpose, which I would like to acknowledge and thank them for.

I thank the Cathaoirleach and committee members. I welcome their questions. I might ask some of my managerial colleagues to assist with answers where such answers will help the discussion.

I thank Mr. Conlon. Just to note, we will suspend the meeting for ten to 15 minutes at 12 noon and we will resume shortly afterwards. We now open the floor to members. The lead speaker today is Deputy McGrath, who has 15 minutes. All other members have ten minutes. I call Deputy McGrath.

I thank everyone from the OPW for being with us here this morning and for sending on documents in advance of the meeting. Obviously, my time is limited so I will get straight to it. From the outset, I want to go to the national science centre project and the relationship with the Irish Children's Museum Company Limited. I am not going to go back over the whole project. We know it goes back to 2003 at the time of the Heuston Gate site and proposal. Obviously, there were issues there around governance, the lack of due procedure and the fact that the advice of the Chief State Solicitor's Office in relation to a clause was not agreed to. I suspect no one here today was involved in any of that back 22 years ago. Equally, the approval of the Minister of Finance was not sought despite it being recommended and so on. Obviously, arbitration was opened up in 2013 and, as a result of that, there was an agreement to provide a space at the Earlsfort estate which is still occupied by the museum charity. Is that correct?

The north wing of the Earlsfort Terrace complex remains largely vacant. The national children's science centre has two rooms as office space but, by and large, the large space that was earmarked for the development of a science centre is unoccupied.

What size of an area is that? Give us a sense of the kind of square meterage we are talking about.

It is in the region of 9,000 sq. m. That includes both the north wing of the Earlsfort Terrace project and, if the project is to be built, the building beside that. The north wing is approximately 60% of that 9,000 sq. m.

Okay, it is a large space and the Irish Children's Museum Company Limited is occupying it since 2013. Is that correct?

No. It is occupying two rooms in it.

Yes. That is what I mean. To clarify, what area of space is it occupying?

It is occupying two offices.

What is the square area of those offices?

It is quite small, Deputy; whatever two offices take up. I can get that figure for the Deputy but it is a small fraction of the overall number.

Okay. Those offices are rent free.

That was agreed as part of the arbitration settlement in 2013.

Okay. Does Mr. Conlon have an estimated cost of the rent? As in, what would be the market value of that rent if that space were to be utilised or commercially rented out?

I do not have that information with me, but I can get back to the Deputy in that regard.

Okay.

We have never valued them on that basis. We just provided the accommodation because it was agreed under the arbitration settlement.

Okay. Back in 2013, it was estimated that the overall project cost would be in the region of €13 million. Is that correct?

There were figures done at that stage which are outlined in the Comptroller and Auditor General’s report. To be very frank, I cannot stand over those figures. No great detail was provided with them and earlier costings were done which were more than double those figures. The current costings now are in the region of €70 million. I cannot stand over that figure of €13 million.

What I am getting at is that there was no cost-benefit analysis or proper capital appraisal done at that time but yet there was an agreement entered into without that proper procedure being followed.

The agreement that was entered into arose from the legal obligation, Deputy. It arose in response to the arbitration process that was commenced and subsequently settled. There was quite a short timeframe for that. I fully agree with what was set out in the Comptroller and Auditor General’s report. The implication of the Deputy's question is that there should have been proper value for money assessments done, but they should have been done by a sponsoring authority rather than the contracting authority. I do accept that we entered into that arbitration-----

Ultimately, it is the OPW that is on the hook.

Yes, it is.

You would argue that that goes back to the root cause of the initial 2003 agreement and that obligations were entered into that are continuing to be placed at the feet of the OPW, effectively.

In 2003, there were de facto sponsoring Departments in place. A lot of that was driven by the then Department of Enterprise, Trade and Employment. It continued to be the principal sponsor of this up to as far as 2008, broadly.

There were findings from the arbitration process in 2022 that the OPW was to proceed to seek planning permission and do some preselection in terms of contractors. Has any of that been done?

Planning permission was secured from Dublin City Council and there was a subsequent appeal from the then An Bord Pleanála. The planning permission now dates from April 2024. We have not entered into preselection because of the lack of funding for this project.

At this stage, if this project is to be progressed, Mr. Conlon’s best estimate is somewhere north of €70 million.

Yes. The estimates date from the 2024 period. They are fairly robust estimates and they were quite detailed at that stage, with contingency built in as well. I am far more satisfied with those estimates than the previous estimates, which we just mentioned a few moments ago.

At this point in time, we have absolutely no timeline in terms of this project progressing. We have no certainty that it will progress. Where does Mr. Conlon see it overall as a project?

It is a difficult question to answer, to be frank. We have the interim award from the arbitration process, which is effectively a final award, dating from 2022. The arbitration process will probably be finalised over the next number of weeks which will then give a timeline for development. There will be a significant issue of funding for this project. No Department sought funding for it in the recent NDP discussions. It is not a priority for any of the sponsoring Departments previously involved in this. That remains a fundamental issue.

Is it possible it may never proceed?

I cannot comment on that because we have a legal obligation. I really cannot comment on that.

Turning to the costs incurred to date in relation to this project, which may or may not ever happen, it has been estimated that over €4 million has been spent in various costs, including surveys, legal costs, site works, consultants and statutory applications. Is that figure broadly correct?

It is. That was paid by various Departments, including ourselves, over the period. It is set out very well in the Comptroller and Auditor General’s report. There are some further costs to be paid from the more recent arbitration which have not yet been settled.

In terms of legal costs so far, we know the legal costs relating to 2013, but the costs have yet to be settled for 2022.

That is correct.

It is €550,000 in relation to the process in 2013. Will it be of a similar order for 2022?

I am not sure but I do not think it will be far removed from that. We have sent the bills to the State Claims Agency to assess them on our behalf. I am not sure what the final amount will be, but I do not think it will be significantly different from the previous figure.

Broadly speaking, we are looking at €1 million in legal costs between two arbitration processes incurred by the OPW in relation to this project.

That is correct.

It is a staggering amount of money in legal costs. The OPW has been in the headlights a number of times regarding its projects, such as the bike shelter and so on. When it comes to trying to build public trust in how we spend public money, this is yet another example that erodes public trust. Does Mr. Conlon agree with that?

I set out very candidly my views on this in the views of the Accounting Officer in the Comptroller and Auditor General’s report. This has been going on now for 22-odd years. I find it difficult to explain, for example, why legal advice was not followed in the early 2000s. I am quite frank on that.

I understand.

I wish there were far better governance over this project over the years, but there was not. I am not going to defend that.

Does the fact that there is a private entity providing the centre question the viability of this project?

As I have indicated in my comments, there is a question on the ongoing operation and cost of this project if it were to be built and who would fund that. Obviously, the promoter will generate own-resource income, but it is not clear to me whether that income would also require State subvention. That is an issue that should be assessed and determined by whoever sponsors this project before any go-ahead is given to it.

This is not personal to anyone here because it goes back many years, but there has been a catalogue of mismanagement, failed governance, failed oversight and a failure to follow proper procedures in relation to this project. It is a running sore. We do not know if the project will ever reach fruition. There is an estimated potential cost of more than €70 million, with more than €4 million already incurred and growing. It is an absolute unmitigated disaster.

Again, this is not personal to anyone here because I know it goes back to the early 2000s, but in terms of trying to build public trust in how money is spent this certainly does enormous damage. I will move on at this stage to other-----

Can I just make a comment on that, if I may?

Yes.

As I said, I have indicated my views on that as Accounting Officer and I am not disagreeing with the Deputy, but I would make one point on the north wing of Earlsfort Terrace. It represents about 60% of the construction budget of €70 million for any project that would be done. If that not were to be used for a science centre, we would find alternative uses for that. It would be an ideal cultural space, for example. There are alternatives that would abate some of the concerns the Deputy has just addressed.

That goes back to the point about the opportunity cost and what could be accommodated.

Yes, but that is a building that deserves investment.

I understand that.

I need to move to some other items. Flooding is obviously one of the OPW's key roles. There was an underspend in 2024 of €7.8 million. The officials will appreciate how communities out there which are at risk of flooding might see this. Ballinhassig in County Cork is an example. It has flooded a number of times over the past 20 years. When people there see there is an underspend by the OPW on flood management, it is difficult for such communities to accept.

I take the Deputy's point. I will ask my colleague Mr. Casey to come in in a moment. In 2024, there was a slight underspend, mainly related to timing issues. The Minister and I were at the finance and public expenditure committee yesterday seeking a Supplementary Estimate, so we have slightly overspent this year. We sought an extra €5 million this year and we have a higher allocation next year, so we are ramping up in that space.

Mr. Conlon is saying it is a timing issue, largely speaking, and the OPW is overspending this year.

Yes.

Okay, we will leave it at that.

We have a higher allocation for next year.

I turn to the measured term maintenance contract, as highlighted, from 2018 to 2022. Originally estimated to cost €20 million, it has cost €125 million. This is one contractor, is it?

It is two contractors. One is for north Dublin and one for south Dublin. This has been rehearsed in previous PAC hearings. The main reason for that overspend is we dedicated some of the resources in that contract to the Brexit works in Dublin Port. There was, as the Deputy can understand, an immediacy to getting those works done and we used that contract to provide contracting services for the project.

It became a very different contract, effectively, from the one that was entered into.

Because it was procured competitively and we were getting a good price for it, we felt at the time, given the urgency of proceeding with the Brexit works in Dublin Port, the most efficacious way of proceeding with that in the manner we had to, given the time commitments, was to use that project.

Mr. Conlon believes all the works carried out there provided value for money-----

Correct.

-----and everything was above board in terms of the contract.

Yes. It was procured competitively with prices in that contract, so we used it and it gave an effective outcome and a quick outcome, which was necessary at that time.

I will turn to a number of different issues I picked up in the Comptroller and Auditor General's report. There was a landlord paid €373,000 mistakenly. That landlord no longer owned the property. That certainly would sound alarm bells in terms of procedures and control measures in place in the organisation. Would Mr. Conlon like to comment on that briefly?

I would. In late 2024, a rent payment of approximately €373,000 for a property leased by the OPW was sent in error to the previous landlord. That arose because of the change of ownership of the property at that time. The new landlord's details were not fully updated because of the change of ownership.

I am really caught for time here but are procedures in place to ensure this will not happen again?

I have put more compliance in place in our financial payments unit. The money was quickly refunded.

It was refunded fully. Similarly, there was a mistake in payroll and €249,000 was overpaid, I understand, with recovery mechanisms in place for €69,000 of that.

We are putting more recovery mechanisms in place. Payroll delays occur for many reasons. We have quite a dispersed organisation so-----

Will all of that overpayment be repaid?

We will recover all of it.

Mr. Conlon is confident of that.

We will put repayment procedures in for that. Some of that is done through the National Shared Services Office and some of it is done through our own payroll.

I will turn briefly to the buildings that are in lease agreements and are unoccupied for large periods. Take the Distillers Building for example. From July 2022 to March 2024, €12 million was paid in rent. Mr. Conlon said earlier the building is now partially occupied.

It is being occupied and will be fully occupied before the end of the year. It is quite a big operation to move four separate organisations in there.

What about the delay from 2022? Why did it take so long? We were paying rent over that period to the value of €12 million. Mr. Conlon will understand how the management of that raises serious concerns.

It does, and I fully accept the concerns identified by the Comptroller and Auditor General. There are a number of reasons, including the pandemic which delayed the progression of that contract. Some of the changes within the building took time to resolve. From time to time, you get rent-free zones within which the work was done but the delays were caused by factors that, frankly, were hard to control.

Okay.

We have worked very hard to complete the project.

I will wrap up, Chair.

If you can, Deputy.

This is not the only example. There is the building at Bishop's Square. Since May 2019, €7.9 million has been paid and I believe it has only recently been occupied, if it is occupied.

We have had the Bishop's Square building for quite a number of years and it has been occupied by a number of Civil Service Departments, including Revenue, the Department of Social Protection and the Department of justice. Over the years, people have moved in and out. With that building, there were landlord changes that did not help in our progression of the fit-out, which took some time to resolve. That was also delayed over the period to 2022 by supply chain issues and the Covid pandemic - something we found hard to control, to be very frank.

My time is up. I thank Mr. Conlon for his answers.

Our next questioner is Deputy Boland.

The officials are very welcome. I will briefly touch on the science museum. As a lawyer, I was absolutely aghast at how this has been managed over the last 20 years. It was 20 years ago, so I am not going to focus on the original instructions, but I wanted to understand what the Irish Children's Museum Company Limited currently does. What is its raison d'être?

I cannot speak for it but my understanding is it is the promotion of STEM education.

Does it currently provide anything?

I am not aware of what services it provides, to be very honest.

Does Mr. Conlon know how it is funded and how the wages are paid? I understand it has a number of permanent workers.

I understand it is financed from philanthropy and other sources.

On what legal basis does it occupy this 9,000 sq. ft. building?

As I was indicating to Deputy McGrath, it occupies two offices within that complex. It does not occupy the full complex.

Why is there no one else in the complex?

That complex, which as the Deputy knows is very large, had been vacant for quite a number of years, since UCD moved out, and-----

On what legal basis does it occupy this building?

It was by agreement in 2013 in-----

Is it a tenant, under licence or what is its legal basis of occupancy?

It is a form of licence.

What about being able to terminate that licence? It pays no rent and nothing towards insurance. It pays nothing to the State for occupying this building for 11 years.

That was the agreement entered in 2013.

On licence.

That is my understanding.

There are no tenancy rights accruing.

I do not believe there is a tenancy right but-----

I think it would be important to check it.

Yes, okay.

It would be good to get some clarity.

My understanding is that the clause in the 2013 settlement agreement was to provide the company with access to the property that was to be developed as the museum, which to me sounds like a different kind of provision. The concern would be that there is no landlord and tenant relationship formally in place.

Access to the property sounds very different to giving it an office space for 14 years rent-free, with no insurance and no contribution to the State.

The factual position is that what the company is occupying is two offices.

Rent-free for 14 years, with no insurance and no contribution.

I am not standing over this but that was agreed in 2013. I cannot-----

The Comptroller and Auditor General is saying his interpretation is slightly different. Anyway-----

Sorry, but again for clarity, two offices are currently occupied but the remainder of that space remains unoccupied. It is larger than two offices. It is 9,000 sq. ft.

The only occupation is in those two offices. The rest of the building is vacant.

Will you give me my time back, Chair?

Absolutely.

On the projected €70 million, I note €46.5 million is for construction. What does the other €30 million relate to?

I will ask Mr. Sreenan to come in on that.

Very briefly, please.

VAT would come in on that, professional fees and other fees.

The VAT on professional fees cannot be at €30 million.

The question relates to the total project costs estimate of €70 million. That is a gross cost estimate. That is based on the most sufficient detail we have with respect to the planning permission and the design elements. It includes all of the development costs. So, it includes contingency, inflation assumptions, all of the levies we will be obliged to pay. It includes all other related costs to develop the project.

It seems like an extraordinary figure. To put that into context-----

We can provide a breakdown.

-----that is 60 Dublin buses.

It may be helpful to get clarity from the Comptroller and Auditor General.

Just one point to bear in mind is the €70.4 million does not include the site value.

Thank you.

Do we have an estimate as to what the site value is?

We do not. It is part of a big heritage property which we do not value.

In terms of the property portfolio management, the lack of data around all of the assets is really quite staggering. It is a key part of the OPW's role to make sure it knows what it is supposed to be in control of on behalf of the State. I find that quite staggering. I also find staggering the fact that the occupancy rate, which was admitted to in the briefing, averages at 30% to 45% occupancy. In terms of the opportunity costs and the costs in relation to leases that were paid to private landlords, does the OPW have an estimate how much on an annual basis the State is paying for not occupying property?

Not occupied is different from vacant, which is what I take the Deputy to mean. In terms of occupancy of buildings, that can range. The average occupancy rate is about 60% as I understand it.

I am pretty sure Mr. Conlon's briefing says 30% to 45% occupancy.

I think it is higher than that. I might ask Ms Morrison to make a comment on that.

Mr. Sreenan wants to come in on that, Deputy Boland.

I might just add some information to the cost assumptions. The overall development gross area is about 9,500 sq. m. Of that, 6,000 sq. m of that relates to a protected structure, so that obviously incurs additional costs with respect to development.

This is on the-----

The cost estimate.

In relation to the occupancy quote the Deputy mentioned, they are spot checks being carried out. So, from day to day it depends on the work schedules between hybrid working and full working.

That can be managed. The private sector manages that. It reduces its floor space on the basis of what is being occupied, but we seem to be doing the opposite. We seem to be taking more and more office space, with no one sitting in it. With hot-desking, etc., there are ways to actually save money rather than continue to spend it, which is what we seem to be doing.

This is what we work with Departments and tenants on, because a lot of the Departments have their own hybrid arrangements. Three-day working-----

You must have the data. You have to know what square footage you are talking with all of the different offices.

We have more data on this that we can provide in relation to occupancy and the wide range of buildings we have, which are occupied by a wide range of different types of operations and Civil Service and State agencies. Some are higher than that 30% to 45%. We encourage higher occupancy because we want to compress our portfolio to have more numbers in it. That is something we continuously work on with our client Departments and we have undertaken to do more work through the Civil Service management board to make sure those rates increase.

It is essential, however, that the OPW has the data and knows how much floor space is in what building.

We are committed to do that and we will be working with our Government colleagues to get that.

It should include all key terms such as what the rent is, who the landlord is, what the break option is, when the break option is. I am not sure if this is agreed with the Department of public expenditure and reform but I noticed that the OPW does not necessarily comply with that Department's Circular 17/2016. Is that actually signed off by the Department of public expenditure and reform?

In terms of lease breaks?

Yes.

We work with the Department of public expenditure and reform on that. To make a point on lease breaks, I think it was pointed out by the Comptroller and Auditor General that there were 62 leases with break clauses that could have been activated during the period 2022 to 2024. None were activated but we have ongoing engagements with the clients for these accommodation requirements and, if there is not suitable alternative available accommodation within the portfolio, we continue with the lease. Sometimes, it is more advantageous to not have the lease break, because we can continue with the existing rents. We do it on a case-by-case basis. I fully admit that it is a failure that we do not record that properly but we do it on a day-by-day basis. We work with clients when we do come up to lease breaks.

Take for example Trinity Point. That is a building that was purchased. It has a floor area recorded at 0 sq.m. The first floor was unoccupied at the time of the Comptroller and Auditor General's inspection. The third floor was unoccupied. That is a phenomenal amount to spend on a property to have two whole floors unoccupied and your database saying you have zero square meters of a building.

The database needs to be corrected. In relation to the floor space, we are working with clients and we are moving people into those floors.

I should hope so. In terms of the break clauses, take Bloom House. Why did the OPW not act on the correspondence notifying it that the tenant occupying it was looking to break the lease?

I will ask Ms Morrison to address that question.

We continually engage with our clients in relation to their requirements. We did engage with the clients in this particular instance. There were two clients in that building. One had a requirement for additional space. We were looking at the building as a whole and felt we could accommodate the expanded requirements of both clients within that building.

What is the occupancy of it now?

I do not have that figure off the top of my head-----

What is it roughly?

-----for that particular building.

How many floors?

I think there are three floors in it.

How many floors does Ms Morrison think are occupied?

The occupancy on one side of that building was fairly high and the occupancy for the other client was lower. The average occupancy of that building was maybe around 40% or 45%.

Is it at 40% or 45% now?

We are working with them. It requires changes to accommodate that.

How long ago did the other client leave?

The other client has not left. It is just consolidating. There are still two clients in the building. For the first time, under Circular 1/2025, which was published by the Department of public expenditure and reform earlier this year, our client Departments are obliged to report into the OPW on their utilisation of space to collect that data.

Why is that only happening now?

It is as a result of blended working.

The OPW did not think of doing it.

It is a result of that circular. We drafted that circular and worked very closely with the Department and with our clients. It replaced an earlier circular going back to 2013 on the management of property.

Is Ms Morrison saying that the 2013 circular did not require notification of occupancy?

It did not require clients to report to the OPW on their day-to-day utilisation of space. This one does and there is a digital form now available to our clients online and they have to return that to us by the end of January 2026. We have agreed with the Comptroller and Auditor General's recommendation that, once that data is consistent and mature because it will need some refinement, we have committed to making that data publicly available by 2027.

I thank witnesses for the presentation. To return to the measured term maintenance contracts, in simple terms this is effectively the outsourcing of the maintenance of public buildings to private companies. Is that a fair description of what we are paying for?

We use contractors all over the country for building purposes and maintenance purposes. We do not have the workforce to do all the work ourselves. We find it more efficacious and effective to contract a lot of work out. We can scale up or scale down as need arises. We have regional contracts to do building works around the country and maintenance. This is a Dublin-focused contract. As the Deputy knows, we have a lot of buildings in Dublin which require constant intervention and constant maintenance. We need to be able to react quickly and scaling up and down with contractors is a effective way to do it.

On the October 2018 contract, Mr. Conlon said there was two contractors involved. Is that two contracts, or one contract between them?

We split Dublin north and south. One contractor does north Dublin and one does south Dublin.

Do they tender separately for the two?

We tender both at the one time, but in two different areas.

How many companies tendered for the contracts?

For that contract, I think three companies tendered.

Three companies tendered for two contracts.

For two areas.

Did all three apply for the two?

I think so. I will have to check that. We tendered it again. We are now assessing a new tender, which has a higher number of contractors tendering, thankfully.

It has been publicly reported that the north Dublin one at that time was PJ Hegarty, and in south Dublin, it was Sensori.

That is correct.

Mr. Conlon was asked earlier about the fact it had an anticipated value of €20 million and ended up with expenditure of over €125 million. Mr. Conlon said that, effectively, this is accounted for by the extra expenditure due to Brexit, in particular at Dublin Port.

By and large.

How much was the expenditure related to Brexit?

I will have to check that figure. It was a substantial amount.

Previously, it was said that it was €71 million. Would that be accurate?

It was in that region. I was going to say €75 million. I will have to double-check it.

Okay. If we strip out the €71 million or €75 million, whichever it was, we still have expenditure of €50 million in a contract that was due to be €20 million. Does Mr. Conlon not accept there is still a problem there?

I accept that we overspent on that contract, which is why we subsequently re-tendered in 2022, and we will now be tendering again. I was not the Chairman at the time. The level set at €20 million was probably too low for the volume of work that was coming at us. We should have assessed that to be a higher amount.

That was then fixed for the next contract.

Yes. We are now re-tendering it again, and we have put in a far higher figure because of the volume of work we are doing.

For the next contract, which I think commenced in May 2022, there was an anticipated value of €40 million but the total expenditure was €50 million. Once more, we anticipated a certain value and we ended up spending significantly more.

This is a reactive contract. We react to requested works on a wide range of buildings across the country. That is sometimes hard to assess in advance, which is why it came in slightly above. It is also why we are now re-tendering. We will be putting in higher values with a better assessment of the works that we think will come at us over the next number of years. A lot of the buildings in Dublin are very old, and they can sometimes be more expensive.

Yes, but that is not new information. When the OPW put out the tender back in October 2018, it knew how old the buildings were. The same goes for May 2022 and more recently. They seem to be very lucrative contracts for the companies.

Over the period, we had a lot of construction inflation and supply chain issues, all of which drove costs as well.

Does Mr. Conlon know how many companies have tendered for the most recent contract?

I understand it is five.

Is that for one or two? Is it north Dublin and south Dublin?

Two areas.

So five for two and, again, Mr. Conlon thinks all five would have tendered for both.

I think so. I would have to double-check that, but I think there was good interest in it.

Has that contract been signed or awarded yet?

No, it has to go through an evaluation yet.

It is ongoing. I will move on to the leases. Maybe I am naïve. I am certainly surprised by how many public buildings we are leasing and the expenditure on that. It is fair to say that half of all public buildings are leased rather than owned by the State, and about 40% of square footage is leased rather than owned. What is the total annual cost of that?

I will have to double-check the annual cost. I will get that for the Deputy. Leasing gives us flexibility in terms of accommodating agencies and Departments. Our long-term goal would be to increase the number of State-owned properties but that is subject to getting the funding to do that through the NDP. For example, this year, we are buying a building in Dublin 1. We are just completing the contract, which is in the region of €24 million. That will give us a payback in lease foregone of eight years. We are trying to increase the square footage of State-owned buildings over leased buildings. That is a good example of where we go into the market to buy when we see good opportunities like that.

The OPW is trying to increase the percentage that is State-owned rather than leased, which clearly makes more sense.

It is subject to capital funding, which is hard fought for.

Over the past 20 years, what has been the trend? Has the percentage that is State-owned increased or decreased?

I will have to get back to the Deputy. I do not have that information to hand.

I would be very surprised if it is not the case that we are leasing more now as a percentage than we were 20 years ago.

The Civil Service and the Government in general have grown quite fast in the last number of years. We sometimes have to react to that demand. We get demands from new agencies that are set up and Government Departments that are expanding. We sometimes have to react very quickly, and a lease may be a better way of reacting. I would like to have a stock of Government buildings to put people into, but I do not have that. Leases are a fact of life in terms of reacting to the demands that are put on us to accommodate staff.

From memory, when the crash happened and there was a restriction, there was an embargo on the purchase of buildings. Any property that was acquired had to be acquired under lease. I suspect the numbers would have gone up in terms of leased property, but I do not have the detail.

The figure for rent is about €111 million. That would be rent and service charges, and is VAT-inclusive.

In terms of reacting quickly, when was the lease first signed on the Distillers building?

I will ask Ms Morrison to answer that.

Agreement was reached with the landlord in 2019 and the lease commenced in 2022. The building was not finished when we agreed terms.

Is the building occupied?

It was substantially completed at the end of September. The clients have started moving in straightaway. They are moving in on a phased basis to ensure their own business continuity. It should be fully occupied by the end of the year.

It has been over three years from the start of the lease to occupying it.

Yes.

Yet the OPW is making the case that leasing is about moving swiftly.

It depends if you are leasing a building that is shell and core and needs to be fitted out, or a building that is fully fitted out. It can be different from case to case.

I think the Distillers building is the second most expensive building that we are leasing. We are spending €10 million a year, and we are committed to spending €220 million on leasing it up to July 2047. However, the assessment is that this is the best value for money we can get.

Again, to go back to the point I made on the lack of capital funding to buy, we do enter long-term leases. These are modern, purpose-built, effective buildings from a climate perspective. This is a very large building that will accommodate up to 1,500 Civil Service and Government employees. We are getting out of less effective leases, so it provides value on that basis. It meets all the requirements that we need to meet in terms of having modern, effective, climate-friendly, energy-efficient buildings.

If that is the approach, why did the OPW agree to lease Bishop’s Square with a base assessment of a B3 rating, when the basic position is that the State should not be renting buildings that are less than A3?

We sometimes have to accommodate civil servants in the Dublin 2 area in general. The lack of availability of A3 buildings is an issue. We sometimes have to make an assessment regarding buildings with a BER rating of less than A3, given the lack of availability of buildings that might have better energy efficiency. On that basis, we made the decision to occupy Bishop's Square.

Will we do work to bring that BER rating up, or will we just leave it as it is and pay the extra costs?

In State-owned buildings, we would try to bring it up. In leased buildings, we work with the landlord over time.

Does Mr. Conlon have an overall estimate of how much unoccupied space we are currently renting?

Occupied?

How many people could we have in buildings that we are paying for, that is, where we are renting buildings from private companies but not using them? Do we have any idea how big that is?

There is a distinction to be made between buildings that are vacant or part-vacant that we are renting, and buildings that we could put more people into from a desk space perspective. I think that is what the Deputy is getting at.

No, I am talking about vacant buildings, not buildings that are less occupied than they could be.

Our vacancy rate is very low. It is between 1% and 5%, which is very low. We sometimes need that vacancy for flexibility.

Therefore, 1% to 5% of buildings that the State leases are totally empty.

The effective vacancy rate in our overall portfolio is 1% for office accommodation, so it is very low. It is significantly lower than our European counterparts, for example.

I welcome the witnesses. Returning to the national science centre project, it is fair to say it has been an omnishambles from beginning to end, with a breathtaking lack of governance and financial scrutiny and being devoid of any oversight, all to the detriment of the taxpayer. With that in mind and with a view to learning lessons as we go forward, I note that the last time the estimated cost of the project was assessed was last year, and the estimate was to the tune of €70 million. Is the OPW monitoring that regularly? The cost of materials, construction and everything else is rising at the moment. It was stated earlier that no Department is willing to take the lead to fund the project. How can the OPW expect any Department to consider stepping up if the current cost is not being monitored to give a clear indication of the potential final cost if the project is ever achieved?

That 2024 cost is a fairly up-to-date cost. It has a built-in contingency.

There is contingency in it.

Yes, there is. Construction inflation is now running quite low vis-à-vis where it has been over the past number of years. I do not think we are going to reassess the cost of the project until we have more certainty as to what will happen to the building itself and the contract.

Okay. Considering the missteps by the OPW that have already cost the taxpayer €4.2 million to date, and with reference made earlier to there potentially being another €1 million of costs for previous arbitration and the most recent-----

There will not be another €1 million. In that conversation I had with Deputy McGrath, I indicated we have already paid about half of that. I do not know what the-----

Is the previous €500,000 in 2013 included in the €4.27 million?

That is correct.

Does that mean we are probably looking at another €500,000?

I do not yet know what the figure is yet.

Has consideration been given at any stage, considering the length of time this has gone on, to end the project once and for all? Is there a way to buy out the contract rather than keep on incurring costs and costs with no end in sight? I ask that because there is an existing science centre on the outskirts of Dublin and there could be potential to agree a PPP with it if the focus was not on this project, which is going nowhere and continues to incur costs. Has there been any consideration to date of ending this catastrophe, which has been ongoing for a long time, and looking at a potential new avenue and new dawn?

I need to be careful what I say here to be frank. There is a legal process ongoing with arbitration. Regarding the promoter of the project and what it may do in terms of exploring options, that is a matter for them rather than for me to move forward with. I cannot really comment on what the next steps might be because of the legal process. I do not want to be quoted as saying certain things will happen that may not happen.

I appreciate that. I appreciate that the witnesses were not involved in this project when it started 20 or 22 years ago. However, as they came into their positions and their predecessors moved on to other positions, I am sure there were hand-overs, conversations and background knowledge given to them as to how the OPW ended up in this mess, particularly as the witnesses are carrying the can for it as we go forward. What relationship is there with ICML at the moment? Do you know these people first hand, do you have a good working relationship with them, or is there no working relationship there?

I have had a number of conversations with the CEO of the company since I took over as chair in April 2024, as has my colleague Mr. Sreenan. As I said in the C and AG's report, I have been quite candid with her in relation to the position we are in. I cannot determine what they will do.

What I am trying to get at is how we ended up here in the first place. Answering questions at a previous meeting of this committee in 2018, the then Chairman, Maurice Buckley, said the OPW went into this in good faith because everybody on the board of ICML was a person of good standing - I think that was the term used. Questions have to be asked as to how a consortium like this extracted a commitment from the State without providing any shred of evidence for the project's feasibility or demonstrating its ability to deliver, fit out, manage and run such an enterprise. Was it that the then board of the OPW was particularly impressed by the consortium? Was there intimidation of their good standing and repercussions if they did not proceed? I am trying to tease out why the agreement was entered into in the first place.