National Broadband Plan failing to hit soft targets – Matt Carthy TD
Cavan Monaghan TD and member of the Oireachtas Public Accounts Committee, Matt Carthy, has said that he has huge concerns about the ability of the National Broadband Plan to deliver upon the terms of their €3Billion government contract.
Speaking following an engagement with the Department of Climate, Communications and Environment at the Public Accounts Committee Deputy Carthy said that there appears to be very little recourse within that contract for the state to recover costs in the event that ultimate connection targets have not been met.
Following the engagement, Deputy Carthy said:
“The National Broadband Plan has missed widely its targets for 2021 and those targets have been drastically revised downwards for both 2021 and 2022.
“It’s hard to see how, in this context, the NBP will be able to make up the difference over the latter years of the contract.
“In launching their strategy for rural Ireland, government relied heavily on people being able to work from home, which is in of itself reliant on the National Broadband Plan.
“At the time I described that plan as leaving rural Ireland with ‘the crumbs from the table of Dublin’ – at this point I am not certain even that meagre offering will even come to fruition.
“It’s very telling that Minister Ryan recently spoke of at least 130,000 connections by the end of next year on budget day, while department officials referenced at least 150,000 while before the Committee.
“There seems to be a lack of confidence in hitting even these softer targets.
“The fears that this creates is very real – in my own county of Monaghan there are thousands of households and businesses that are in desperate need of broadband coverage. They cannot be expected to sit back and watch deadlines being missed and public money squandered.
“This is the primary infrastructure deficiency in rural communities. It must not become the latest victim of Fine Gael incompetency. Our interaction with the department failed to convince me that it won’t”.
Full PAC exchange between Matt Carthy with the Department of Communications:
Deputy Matt Carthy: “I want to touch on the national broadband plan. The €3 billion contract is for the delivery of high-speed broadband to 542,000 rural homes and businesses. On what date does the Department expect the 542,000 home to be connected?”
Mr. Mark Griffin: “It is still a seven-year contract, Deputy. So, as we mentioned this morning, the work now is focused on achieving the revised target for 2021 settling on a target for 2022 with NBI. They have said to us a minimum of 130,000 cumulative but aiming for more than that and they have that in the JLC.”
Matt Carthy: “I will discuss this year and next year but what is the final target?”
Mark Griffin: “It remains seven years. We have already had conversations with National Broadband Ireland with a view to developing an acceleration plan and bringing forward the premises that are in years 6 and 7, and into the first five years.”
Matt Carthy: “I will come to that. So the original target for this year was 115,000 connections.”
Mark Griffin: “Correct.”
Matt Carthy: “That was revised—–”
Mark Griffin: “Yes.”
Matt Carthy: “—–to 60,000?
Mark Griffin: “Yes.”
Matt Carthy: “To date, what is the number of connections that have been made this year?”
Mark Griffin: “There are 27,000 available for order or pre-order.”
Matt Carthy: “This work was deemed essential throughout Covid. I gather from earlier statements by the Secretary General that close contacts within the workforce carrying out this work were actually responsible for the Covid-related delays with the roll-out. Is that correct?”
Mark Griffin: “No. I mentioned that as an example of the challenges that the company face but there were supply chain and logistic delays both nationally and internationally. One of the contractors that had intended coming over from the UK to start work on the project postponed establishing its Irish operation; recruitment and the onboarding of key staff was delayed; as was travel and availability of accommodation for contractors across islands, and access to islands in some schools for the installation of BCPs. So there was a whole swathe of problems, Deputy, that led to a situation.”
Matt Carthy: “Does the Secretary General know how many outbreaks there were among NBI crews?”
Mark Griffin: “No, I do not. In fact, in fairness, that is not the sort of information, even if I knew it, that I would share but I do not know it. That is a matter for NBI. It is a matter for NBI contractors and it is a matter for the individuals concerned.”
Matt Carthy: “It is also a matter for the tens of thousands of people who thought that they were going to be connected to the plan this year but who are not.”
Mark Griffin: “I appreciate that, Deputy, but that sort of information is not the sort of thing that I would be willing to share even if I knew it.”
Matt Carthy: “The Secretary General mentioned that a British company outsourced. Do we know what percentage of the works have been outsourced to the company that was not in a position to travel over?”
Mark Griffin: “I do not. The intention had been to bring them in to scale up the build operations and the make-ready operations. As I understand it, Mr. Mulligan, that did not happen.”
Mr. Fergal Mulligan: “Yes.”
Matt Carthy: “Is it because the company is not now being used?”
Fergal Mulligan: “The initial plan in 2020 was that NBI would have three main contractors on board – KN networks, Kelly from the UK and Actavo. Kelly did not come in so one-third of the work was going to go to them for the first year or two if they won certain tenders that NBI issued but that did not come to pass. For the other contractors, they currently have four big contractors on board since then. So they have ramped up the number of contractors to make up for the lost ground of Kelly not coming into Ireland.”
Mark Griffin: “The important thing to say, Deputy, here is that we do not accept what NBI says at face value. There is a very comprehensive governance arrangement in place overseeing the project. So when they look for a relief under the contract there is a process that is undertaken with great rigour by staff in the Department and by the external advisers to see, well, first of all, does this qualify for relief under the contract and does it qualify for relief to the extent that NBI have set out. We would scrutinise and contest every line of argument or every proposition that NBI have put forward which they deem to be an event which, under the contract, allows them to seek relief.”
Matt Carthy: “The Secretary General will appreciate that we, in turn, will scrutinise the Department’s scrutiny of them.”
Mark Griffin: “Of course. Yes, I accept that.”
Matt Carthy: “Next year’s target is quite concerning considering that we are way beyond the original target for 2021. Next year’s target has been revised down from 90,000 to 84,000 connections. It appears to me that Government statements are relying heavily on the figure of 130,000 homes and businesses across this year and next year as the overall target. What is the actual target for connections for next year? Is it 84,000 connections?”
Mark Griffin: “The cumulative is 130,000 and that would be based on a 70,000 figure for 2022 but NBI is saying that they are looking at a figure of 70,000 to 84,000 in 2022 so hitting a rate of 7,000 homes passed and connectible per month during the course of 2022. Again, that is something that is being scrutinised by the governance team in the Department.”
Matt Carthy: “Am I correct to say that the company has established 84,000 connections and the Department is establishing 70,000 connections as the target for next year?”
Mark Griffin: “No. What they have said is a range of 70,000 to 84,000. The due diligence is being done by the team of the Department in relation to the figures that they have mooted. Mr. Mulligan, are we still waiting for a final proposition from NBI in terms of the 2022 output?”
Fergal Mulligan: “No.”
Matt Carthy: “The original target for next year was 90,000.”
Fergal Mulligan: “Sorry, Deputy, the original cumulative target, in terms of how the contract works, was just north of 200,000 for 2022 under the original contract. Now they are saying they are hoping to get to at least 150,000 but aiming for a lot more. Obviously that is the ambition. There is a six-month delay, essentially, just maintained in their current plan. They have not made up lost ground so there is no change to that plan from the NBI.”
Mark Griffin: “And that 200,000 is a cumulative figure form the start of the contract.”
Fergal Mulligan: “Yes, exactly.”
Matt Carthy: “There has been a change. The new revised targets are about half of the original targets in terms of the homes and businesses that will be connected this time next year.”
Mark Griffin: “If one is looking at a cumulative 200,000, we are looking at minimum 130,000 in excess of that so it is not half. It reflects the requirement of the company to make good what it lost in the period so far in Covid, to build a momentum and then put us back in a trajectory in 2023 where we have certainty on the delivery of the project within the timeline specified and where real conversations can be had on the ability to accelerate to a shorter period of time.”
Matt Carthy: “What happens if the company does not deliver 130,000 by the end of next year? What is the penalty?”
Fergal Mulligan: “From 1 February next year, there will be penalties for every day a milestone is missed. What we are engaged in right now is nailing down the plan for 2022 with the company to make sure it can achieve the 130,000 and that there is a confidence factor in this regard. With the current situation with Covid we need to assess this. There will be a penalty next year for any milestone it missed going into next year.”
Matt Carthy: “I want to clarify this in my own head. The Department sits down with the company, it says what it can achieve and the Department sets this as a milestone?”
Fergal Mulligan: “No. The existing milestone is already in the contract that we signed in 2019. What the company needs to do is come to us and explain why it cannot achieve it. As Mr. Griffin said, we kick this up and down to make sure we understand whether something is down to Covid or caused by National Broadband Ireland itself or a subcontractor. We do all of this work to establish what it was supposed to achieve, which was the 200,000, versus what it can achieve. The contract is re-baselined based on this. This does not mean it gets a free pass because we change the numbers. It will still get hit with delayed payments based on the original contract.”
Matt Carthy: “Has it been hit with any delayed payment so far?”
Fergal Mulligan: “Sorry?”
Matt Carthy: “Has there been any penalty applied so far?”
Fergal Mulligan: “Not with regard to build because it does not start until 1 February next year. There are other key performance indicators with penalties that the company could be hit with this year if misses those performance indicators. This is something it could be hit with this year. Certain penalties could apply this year. We have not concluded on this yet.”
Matt Carthy: “Has there been any application for contingency funds to be drawn down? On what basis can contingency funds be drawn down? This is on the basis the original contract, as well as including the €3 billion of the contract itself, also included a €545 million contingency fund.”
Fergal Mulligan: “As the CEO of National Broadband Ireland said at a recent meeting, as far as the company is concerned it is coming in on budget and it expects to come in on time overall. This is a key statement from the CEO of the company. The Department has not received contingency funding requests for works completed to date. This is not to say it might not arise over the coming years. So far the company has not received extra funding from the contingency fund.”