Office of the Comptroller and Auditor General - Press release VFM examination report on The Central Bank

Press Release

The Comptroller and Auditor General, Mr John Purcell, has today published a report on his examination of the operations of the Building Maintenance Service (BMS), which is part of the Office of Public Works (OPW).

Background

Under Department of Finance guidelines, primary responsibility for the maintenance of the State property portfolio rests with the OPW. The portfolio contains almost 2,000 separate properties, valued collectively at ?2 billion to ?2.5 billion.

The BMS carries out general maintenance work and specialised restoration and repair work on State property, mainly in Dublin. Maintenance work on State property outside Dublin is generally carried out by private sector contractors.

The OPW published a summary financial statement on the operation of the BMS in 2000 in its annual report for that year. This statement indicated that the BMS had incurred a loss of ?4.3 million on its activities in Dublin. The reported loss was very significant in the context of total expenditure that year, estimated at ?11.3 million. An examination of the management and operation of the BMS in the period 1998-2001 was carried out to establish the reasons for the reported loss.

Main Findings

  • The reported loss for 2000 was, in fact, overstated
  • The financial statement for the BMS published in the OPW's annual report for 2000 did not properly reflect the BMS's business results, because it included notional income in relation to non-chargeable work.
  • Revised accounts for the BMS (drawn up by the Comptroller and Auditor General's staff) revealed that there were losses in each of the four years 1998 to 2001 on the work it carried out for government departments on a payment basis. Some of these losses arose because the rates the BMS charged for the work did not keep pace with its cost base. However, the bulk of the loss was due to errors by the BMS in invoicing and a failure to collect debts. The cumulative losses on payment-based work were estimated at ?3.5 million for the four years.
  • Since all of the BMS's charged clients are public sector bodies, the trading losses represent, in the first instance, a failure to charge other central government agencies the full cost of work carried out.
  • There has been a long-standing aim within both the OPW and the Department of Finance that the BMS should be operated on a commercial basis, competing with private sector contractors. The examination found that competitive forces were operating between the BMS and private sector providers only to a very limited extent in the period 1998-2001. In addition to the failure to charge the full cost for work undertaken, the BMS has not adopted standard commercial practices (such as competitive bidding for jobs and providing fixed price quotations for work) and there appears to be scope to improve efficiency levels in the BMS.
  • In 1994, the Department of Finance assigned the OPW an overall inspection/advisory role in relation to the maintenance of all government property. However, the Office only started to conduct the necessary surveys and draw up prioritised maintenance schedules in 2000. As a result, preventive maintenance on properties has not been carried out, with the likelihood that avoidable future repair costs have been incurred.
  • The OPW has recently drawn up revised proposals for the future role and operation of the BMS. It proposes to cease carrying out work for departments on a payment basis, concentrating instead on the maintenance of buildings exempted from BMS charges.

Mr Purcell stated today

?The portfolio of State property is an extremely valuable public asset, which must be carefully protected. Good maintenance is an important element of this protection but is itself a significant expense. Any revised arrangements must be designed and implemented in a way that ensures the delivery of an effective maintenance function at the lowest possible cost.?

Note for Editors

The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil ?reann.

The full text of the report is available on the website of the Office of the Comptroller and Auditor General (go to www.gov.ie/audgen/)

For further information about the report, please contact: Seamus McCarthy at (01) 603 1035 or at Seamus_McCarthy@audgen.irlgov.ie


The contents of this page were last updated on 26/09/03