The procurement approach used for determining the preferred bidder for the National Broadband Plan has not satisfied the objective of achieving the value for money, the head of the economics department at the University of Limerick has told an Oireachtas Committee.

Professor Eoin Reeves of the Kemmy Business School in the University of Limerick was before the Oireachtas Communications Committee.

He said the "fundamental weakness" of the project has been the decision to continue the process with one remaining bidder.

Mr Reeves and his colleague Dr Dónal Palcic specialise in infrastructure-related research into aspects of public procurement and Public Private Partnerships.

In his opening statement to the committee he said: "we have formed the view that the procurement approach adopted has not satisfied the criteria necessary to ensure that the key objective of value for money will be achieved."

Mr Reeves also said the importance of competition for contracts "cannot be over-emphasised."

He said: "Competition creates incentives for bidders to reduce costs and delays and to develop proposals of higher quality.

"The recommendation in favour of the gap funding model was based on the assumption that the market for the contract would be competitive. However, once Siro and Eir withdrew from the process the principal justification for continuing the procurement no longer applied."
 

He was also critical of the choice of procurement model for the project. He said that he wanted to emphasise the point that "the financial appraisals underpinning the choice of the gap funding model are not publicly available."

He said it is not clear if these were subject to independent scrutiny and he recommended that they are published "in order to improve the accountability of key decision makers."

He highlighted the governance problems with the project and added: "In economic terms, the fundamental weakness has been the decision to continue the process with one remaining bidder."

Later, he said that there "are legitimate concerns about the overall justification for the project, the chosen procurement model, and the potential cost of the project and knock-on effects for other investment priorities. It is our considered view that the current procurement should be terminated and more affordable alternatives explored."

Highlighting the potential negative consequences of continuing with an uncompetitive procurement, he said they are "opportunistic behaviour by the bidder during contract negotiations and re-negotiations after the contract is signed."

Mr Reeves said that the international evidence shows that these problems frequently materialise when competition for contracts is absent.