Official Report (Hansard)
Date: Thursday, 06 February 2014
Committee for Culture, Arts and Leisure
NIAO Report on St Colman's Project: Sport NI
The Chairperson: I welcome Ms Antoinette McKeown, chief executive, and Mr Nick Harkness, director of participation and facilities. I ask you to make an opening statement, and we will follow up with some questions.
Ms Antoinette McKeown (Sport Northern Ireland): Thank you, Chair. On behalf of Sport Northern Ireland, I would like to thank you for your interest in this matter and for giving us an opportunity to present our response to the issues raised by the Northern Ireland Audit Office about the St Colman's College, Newry project and give you assurances about the changes that we have made as a result of the lessons learned from that.
At the outset, I want to say that Sport Northern Ireland fully recognises that this project was not managed in a manner consistent with Sport Northern Ireland's policies, procedures and systems. Since taking up the role of chief executive of Sport Northern Ireland last September, I have worked really hard with senior staff to gain a better understanding of the areas in which we did not meet our own standards. I have taken personal responsibility for ensuring that the lessons-learned process, which was already in train when I came into the organisation — is widely shared throughout the organisation and that we are embedding the learning, not just in the management of capital projects but right across the organisation. We have had many discussions and made many changes as a result.
Sport Northern Ireland has a very clear system, policies, procedures and processes for the normal cycle of project management. As a result of the St Colman's project, we have strengthened our project management systems so that we can continue to learn and improve.
You will know, as we do, that no two capital projects are the same. The variables include the sports and facility mix; the partnership organisations and funders around the table; the capacity of applicants to manage the capital project themselves; the ability to generate revenue; and the financial capacity of all the partner organisations around the table. We know this very well from the multitude of projects that we have funded. However, we know that there is a standard set of project management principles and disciplines that lead to good management, and, on this occasion, Sport Northern Ireland could have applied them much better.
We know that project management is not risk-free, and that is why we have the systems in place. We have taken the Northern Ireland Audit Office report as a useful reminder of the level of risk involved in the range of projects, whether capital or revenue projects, for which Sport Northern Ireland has responsibility and oversight.
I will ask Nick Harkness to take you through the findings of the Northern Ireland Audit Office report and our responses — the changes that we have made as a result of the lessons learned.
Mr Nick Harkness (Sport Northern Ireland): The Northern Ireland Audit Office report confirms some findings, which we accept. I will take some of those in turn and update members on what we have put in place to make sure that these issues do not arise again.
The first was the underestimate of costs in the business case. I accept that the cost details in the business case were not as accurate as they could have been. The practice in Sport NI at the time was that broad-based estimates were used at business case stage prior to full design and site investigations. When it comes to lessons learned, the Central Procurement Directorate (CPD) has acknowledged this shortcoming across the public sector and has sought to provide advice to us and others on a more accurate approach to cost forecasting at business case stage through the earlier and more expansive involvement of design teams and cost consultants. Sport NI is implementing this approach through the design of our new capital programmes. Where cost variations occur, as they will, Sport Northern Ireland has implemented a more stringent approach for the preparation and approval of addendums to the business case.
The second issue was that an important element of the project was removed and later reinstated at a greatly increased cost and that the business case was not updated. The removal of the high-jump fan happened as part of a value engineering exercise that was designed to bring the project within the available budget. With the benefit of hindsight, the design team's proposal to remove the synthetic D was clearly wrong, as was the fact that Sport NI did not detect this.
The lessons learned include that we will avoid similar mistakes by putting in place enhanced project change controls. These have been improved and now provide for independent review and sign-off by two independent teams in Sport Northern Ireland. Our investment assurance team will ensure that the changes are compliant with business case methodology, and our technical team will ensure that any technical changes to a project are compliant with governing body-approved standards.
Another finding was that the business case contained some erroneous information. The updated business case was submitted to Sport Northern Ireland's investment assurance team, Department of Culture Arts and Leisure (DCAL) economists in the statistics department and the other funders for review. Sport Northern Ireland relied on the work of the chartered accounts commissioned to complete the business case, our own reviews and the reviews by other funders. With hindsight, however, that clearly did not produce the accuracy that we would have liked, and we did not detect that. Lessons learned include that Sport Northern Ireland now undertakes most of its business cases in-house. As a result, we can have greater management control over and direct responsibility for the quality and accuracy of business cases.
There was a lack of communication between the funders. Communication was not what it could or should have been. This was not indicative of a reticence on the part of Sport Northern Ireland to engage with key stakeholders. Rather, the constraints on spend and delivery targets within a really tight timescale necessitated a speed of reaction that, with hindsight, was counterproductive to the maintenance of effective communication between the partners. Lessons were learned to improve future practices for Sport NI as a lead funder. The business cases are being prepared in-house, and the final document will be shared and signed off by the applicant and other parties as well as going through a formal quality assurance process.
A critical factor in the future of Sport Northern Ireland in leading multi-funder projects will be the engagement of all funders as early as possible in the development of the business case to ensure that key assumptions are agreed and the terms of reference reflect the needs and priorities of all funders as far as practically possible. That includes multi-funder agreements being signed off and the final business case being signed off by other funders before the project begins. Those controls have been augmented by staff training and the further development and implementation of project-tracking and risk-management systems that monitor time, cost, quality and adherence to risk-management practices.
Project roles were not formally agreed until after the project began. The project execution plan (PEP) had set out the roles and responsibilities and had been in development since 2010. However, we accept that the memorandum of understanding between the funders was not formally adopted until March 2011. Unfortunately, once again, the constraints on spend and delivery targets within tight time frames necessitated a speedy reaction that, with hindsight, was counterproductive to implementing all of the measures that could have positively impacted on the effective delivery of the project.
On lessons learned, Sport Northern Ireland recognises the importance of effective partnership working and the need for clear articulation of roles and responsibilities through funders' agreements and project execution plans. Sport NI has reinforced its policy of agreements being in place and formally adopted prior to projects commencing on site. Again, that has been supported by staff training.
Finally, the report finds that Sport Northern Ireland's investigations of the journalist's allegations could have been handled better. I regret that Sport NI did not deal with the matter as quickly and/or appropriately as it should have. Further steps should have been taken to understand better the nature of the concerns raised by the journalist in the first instance. Nonetheless, our interaction with the journalist has served to improve how we manage projects and deal with such queries in the future. Those improvements include fraud training for all staff, and, in particular, how to discern potential allegations of fraud from normal business or media queries. Our anti-fraud and corruption policy and procedures have also been updated, and protocols are much more conservative in flagging up any fraud-related concern or claim to both DCAL and the Northern Ireland Audit Office immediately upon notification, followed by implementation of appropriate investigation work.
Ms McKeown: I will give a very brief conclusion. I think it critical that we clarify that Sport Northern Ireland's internal auditor, the Northern Ireland Audit Office and DARD's central investigation service found no grounds to pursue the matter as fraud. However, as chief executive, I fully accept the report's findings and that the project could and should have been managed better. I want to take the opportunity personally to assure the Committee and the accounting officer in DCAL that we are taking the learning points very seriously and have done everything that we possibly can to tighten and reiterate our procedures throughout the organisation.
Finally, I want to be fair to St Colman's College in Belfast and to the Newry community. Despite some of the failings on our part, we have a successful project. There are a lot of local people using the facility, and the Northern Ireland Audit Office report states that the project is widely regarded as "unique and innovative" and one resulting in:
"a school opening up its sporting facilities for the benefit of the wider community."
That is not in any way to move away from the responsibility that we had. To be fair to the college, it has opened up the school gates and doors to a community that is receiving it and using the facilities really well. Thank you.
The Chairperson: Thank you. There are issues with how you deal with whistle-blowing. Given your previous dealings with the same journalist on the issue of Ulster Camogie and fraud, why did you not contact him when he first raised concerns about the project back in 2011 or when he produced a substantive list of allegations in the email of early March 2012?
Mr Harkness: With hindsight, we regret that. We should have engaged earlier with the journalist and sought further information from him.
The Chairperson: Was it normal practice in Sport NI, up to this point, to seek legal advice when questions, such as those being posed by the journalist, were asked? Would that action have been taken had it been a member of the public?
Ms McKeown: My understanding from reading the files is that we took this as a media enquiry as opposed to whistle-blowing. We take very different approaches to a media enquiry and whistle-blowing. We are bringing in additional training on whistle-blowing so that staff can make a judgement much more readily on what is whistle-blowing and what is a concern being raised.
The Chairperson: It strikes me that it was a sledgehammer to crack a nut. Had you taken that type of action before on media enquiries or allegations made by members of the public, or was this a one-off?
Mr Harkness: Do you mean legal advice?
The Chairperson: Yes.
Mr Harkness: I think that that was a one-off.
The Chairperson: My reading of the report suggests that the questions asked by the journalist were totally appropriate and that he was accurate in his assessment of the mismanagement of the project at St Colman's. You have accepted the report's findings. It is unfortunate that we had to go to the lengths of going to the Audit Office to find that out. Has Sport NI formally apologised to the journalist?
Ms McKeown: I have written to the journalist acknowledging that we accept the findings of the report and that a lot of the issues that he raised were accurate.
The Chairperson: Have you apologised for the way in which he was treated, given the fact that there is an acceptance that going to a solicitor was a one-off in this instance?
Ms McKeown: We have not apologised.
The Chairperson: Is it your intention to do so?
Ms McKeown: I cannot say on behalf of Sport Northern Ireland, but I can certainly reflect on that.
The Chairperson: Members have detailed questions on some of the specifics of the project. You have detailed at length, and I accept, the changes that you are putting in place to ensure that this does not happen again. Are you satisfied that this belt-and-braces approach will be effective?
Ms McKeown: There will always be risks attached to the funding that we give out. We apply a risk management framework, for example, if we have a local community group that is in desperate need of funding and has met the criteria but may not have the capacity to manage that money. We attach a higher level of risk to that. We are in the business of managing risk when we give out grants for sports development. That said, we have put in place a robust level of system, procedures and processes to make sure that, when we get an indication that something may not be as it should be, we can intervene very, very quickly.
The Chairperson: The concern that I have is that this is a relatively small project compared with many others and that it went so wrong. Given that you are a grant-giving body and have checks and balances in place for other organisations, it is a case of, "Do what I say rather than what I do". That is a worry, and I think that it is a worry for the Committee moving forward.
Ms McKeown: I fully accept the Committee's concerns about that. I agree that it was a small project. We have managed much larger projects than that and have done so very successfully. We did not apply our standards, policies, procedures and systems to this project. Believe me, the organisation has learnt from that.
The Chairperson: OK. All members have indicated that they wish to ask questions, so you may be here for a while.
Ms McKeown: That is fine.
Mr D Bradley: Looking at the report, I have no difficulty finding questions to ask about it. The difficulty is focusing on one particular question given the time available.
This is an example of how not to go about things in public service. If I were training people from your body or another public body, I would hold this up as how not to do things. It seems that, on this occasion, Sport NI drove a coach and horses through good practice, established processes and acceptable standards. There seemed to be a culture of arrogance in Sport NI at that time, which led some people to believe that they could brush off any questions that arose or cover them up. That is a very dangerous mindset in a public body. You outlined how you were changing the processes, but what have you done to change the mindsets that led people to believe that they could act in that way, especially towards the whistle-blower, who was fobbed off on three occasions? There were three investigations, none of which were conclusive. What have you done to change those attitudes and mindsets? Are your efforts meeting with success?
Ms McKeown: On the day that the Northern Ireland Audit Office report was published, it was disseminated to every member of the management team in Sport Northern Ireland. I personally advised that we had accepted the findings of the report and that we had much to learn from it. The management team had already been engaged in a lessons-learned exercise. The full management team had a discussion on where we went wrong and how important it is, when we get things wrong, that we are able to say that that is what has happened, learn from it and put in place the changes required. The management team were encouraged to have discussions with their staff so that they understood that we had not got it right and had made mistakes. That has been received well. I have also personally met the journalist, visited the St Colman's College site and met the consultants who undertook the work to find out whether there is anything else that we should know or any feedback that I need to take on board as the chief executive of the organisation. We have written to the Department setting out all of the changes that have been put in place. There has been a widespread discussion on this throughout the entire organisation. When we make failings such as the ones that we made on this project, "arrogance" is certainly not a word that comes to my mind.
Mr D Bradley: OK. Thank you. In the year in which the project was initiated, Sport NI had an underspend. Am I right in saying that? There was a projected underspend.
Mr Harkness: I do not know the details of that. I would need to confirm that.
Mr D Bradley: You do not know.
Mr Harkness: I do not know the details of that year, no. You are talking about —
Mr D Bradley: I thought that I read in the Audit Office report that there was a projected underspend and that Sport NI did not, at the end of that year, want to return money to the Department.
Mr Harkness: Certainly, there was pressure to initiate the project and undertake spend on it. Failing to do that would have resulted in an underspend. That is correct.
Mr D Bradley: So there was a projected underspend and the project was seen as a good means of using up the capital surplus that you had.
Mr Harkness: In our financial plans, this project was to be completed within the year. Not incurring that planned expenditure would have resulted in an underspend. It is not the case that the underspend existed and we were using this project to soak it up. The project was already in our financial plans.
Mr D Bradley: It was in the financial plans.
Mr Harkness: Yes, that is correct.
Mr D Bradley: Was it delayed? Why did so much pressure come to bear to get this project over the line? That obviously led to processes, practice and so on being set aside.
Mr Harkness: Undoubtedly, there were time constraints. I accept that time constraints are no excuse for bad project management, but, as with the very nature of Exchequer funding, it is year-end sensitive. If the money is unspent, securing replacement funds for the project to go ahead in the next financial year is not always assured, so there undoubtedly was pressure to achieve the spend we had anticipated on this project within the year. It was the end of October before the approvals to initiate the spend came through.
Mr D Bradley: Did that pressure influence the fact that, as I said, established processes were set aside and, in some cases, good practice was ignored and so on and so forth?
Mr Harkness: It certainly is not an excuse, but I think that it is a contributing factor.
Mr D Bradley: OK. Section 3.14 of the Audit Office report states:
"Sport NI told us that it has identified the following lessons from its review of the St Colman's project:
the requirement to provide appropriate responses to whistleblowers/complaints in line with its Anti-Fraud and Corruption Policy;".
The complaints made by the journalist should really have been weighed against the anti-fraud policy.
Mr Harkness: That was accepted in the internal audit report.
Mr D Bradley: I did not quite hear what you said at the beginning, Antoinette. You said that you referred the matter to the Audit Office and several other bodies, who made a judgement that there was no case of fraud to answer. Is that correct?
Ms McKeown: Yes.
Mr D Bradley: It was the Audit Office and what other bodies?
Ms McKeown: The Northern Ireland Audit Office, DARD's central investigation service and our internal auditor. They all reached the same conclusion, which was that there was no evidence of fraud.
Mr D Bradley: How, in this context, is fraud defined?
Ms McKeown: We have a very clear policy for identifying where there might be a risk of fraud. That procedure includes advising the Department, but we take a judgement call on the basis of the criteria set out in our policy and procedures. Where we feel that there are some allegations that, according to the evidence that we have, could be substantiated and need further investigation, we automatically advise DCAL. We have strengthened the policy and procedures to the point that, where we are alerted of any whistle-blowing or allegations of fraud, we will automatically advise the Department and take it from there. We have also trained our staff on the fraud and anti-corruption policy and procedures, and we are doing further work on enabling staff to identify much more quickly an incident of whistle-blowing as opposed to just a general concern or enquiry being raised.
Mr D Bradley: How did you classify information given to you via the business plan?
Mr Harkness: We accept that there were some inaccuracies in the business plan. Some of those related to the names of football clubs and the names of leagues. I suppose the definition of fraud is, were those erroneous facts or were those facts wilfully put in to advantage a grant application? On one occasion, if I recall correctly, a team was given the same name as a league. If you were trying to enhance the application, it would be better to refer to a league, because a league consists of a number of teams. Undoubtedly, there were faults in the business case that were not as accurate as they could have been.
Mr D Bradley: Is Sport NI now happy that there was no fraud involved?
Ms McKeown: We are content on the basis that three independent assessments by the Northern Ireland Audit Office, DARD CIS team and our internal auditor are telling us that there was no fraud. We have accepted that. We have also accepted that there were inaccuracies in the facts of the report and that they were not wilfully put in to unfairly advantage the project.
Mr D Bradley: How do you make that judgement?
Ms McKeown: The information provided has been assessed by the Northern Ireland Audit Office, the internal auditor and DARD's CIS team, all of whom have reached that conclusion. Also, the scoring for the project was very high. If those facts were taken out, it still would have scored sufficiently to get over the line. It would still have passed the threshold criteria for funding.
Mr Hilditch: Obviously, this is not a PAC hearing, so you are probably thankful that you are not here for three or four hours getting grilled.
Mr Harkness: I am not sure if you could say that we are thankful.
Mr Hilditch: This is a scrutiny Committee obviously, and we take the recommendations and try to move on and make sure that we scrutinise the Department appropriately on these matters. The bit that concerned me last week was in relation to the role of the consultants. There are a number of consultants involved. Who were the design consultants?
Mr Harkness: There were two sets. There was a set initially employed by the school at early design stage. At the time that it became a grant-fundable project, we were required to appoint a set of consultants through a public sector compliant process, because we would contribute to their costs but not to the earlier costs. I have a document that will give you those names. Costs were originally done by O'Hagan & Associates. They were appointed by the school independently of any grant process. Subsequently, Faithful and Gould was appointed through a public sector-compliant procurement process.
Mr Hilditch: Is that the name of the consultants — Faithful and Good? [Laughter.]
Mr Harkness: Gould.
Mr Hilditch: I thought that you said "Good". I have been involved in a few project teams through the years, and sometimes I look at the relationship between some of those organisations. Copius is involved, and it appears on a lot of applications from the outset.
Mr Harkness: It was not the design team.
Mr Hilditch: No, it was not, but I am just saying that, in the overall picture of the consultancy, you have named about three or four who were all involved at some stage throughout this. I am a bit concerned about the overall relationship and what procedures are in place to ensure scrutiny of consultants that are appointed to projects. It states quite clearly in the report that there was an indication that there were issues in previous business cases prepared by some of those people.
Mr Harkness: That is interesting. One of the things that we are doing at the minute with CPD is looking at ways to do what is called vendor assurance so that, where people sell products or services to you and fail to perform, you can use that in the future. We are exploring that with CPD at the minute, and it is very clear that if you are going to do that with people who provide services you need to declare that right up front in the procurement exercise. So, in our new programmes we are designing in a vendor assurance process that will pre-warn consultants or other service providers to a project that their performance could affect their appointment to other processes. Obviously, then, you need a performance management process that gives them early warning of our belief of any underperformance. The complexity in that, however, is that we do not appoint or employ them; they are employed by the project promoters, who are the people who own the project. As Antoinette said earlier, some project promoters have various levels of ability and skills in this regard, but that is certainly something that we are designing into future processes — that quality assurance and vendor assurance.
Mr Hilditch: Consultancy is a big business in Northern Ireland.
Mr Harkness: It is, absolutely.
Mr Hilditch: You are in the hands of what you would deem to be professional people at times. You take on board these projects as a voluntary body, a community group or a sports club, and you are dependent on the professional adequacies of consultants. A number of consultants were involved in this project and I just want to make sure that, as we move forward, there is proper scrutiny of the competencies of these people who are dealing with them. That is something to look at in the future.
Mr Harkness: And we are, absolutely.
Mr Hilditch: Of all the consultants that were involved, who was on the project team?
Mr Harkness: Obviously, there was a design consultant from McAdam Design who was involved in project management and sat on the project board.
Mr Hilditch: McAdam was there as well. OK. As far as Sport NI was concerned, are the project officers who dealt with this case still in situ?
Ms McKeown: In Sport NI? No.
Mr McMullan: Do you think that the project was given a reasonable amount of time? It seems to me that there was a big rush to get it started, given the time frame of the grant money, etc. Is there a lesson in there that, perhaps, a bit more time is needed to build up a case if we are going to announce a time frame for funding?
Mr Harkness: We cannot always predict when a project will get to the start line. There are a number of factors, such as planning, the procurement exercise, possible procurement challenges or planning challenges, which are unpredictable. Some projects go like clockwork, and in some others those factors come up. The balancing of Exchequer-funded capital projects against those uncertainties is undoubtedly a challenge to any organisation that commissions or funds capital projects. That is not an excuse; I have to say that again and again. However, there is no doubt that the time constraints that were introduced by the timing of the approval of the funding for this project — in late October, I believe — contributed significantly to the failings in the project.
Ms McKeown: I have read through the files and talked to the relevant staff. When you are faced with a decision to press the green button to approve a project, and if you do not press that button it may not happen in the next year because the funding is not there, and your focus is on sports development and on getting community facilities on the ground, there is a judgement call to be made at that particular moment.
As Nick said, it is not an excuse, but this was a project that enabled us to showcase what is really good about opening up schools for community use. It is an issue that we have been working hard on with our education colleagues, and we have just released guidance on it. This was a perfect opportunity to get something working well in practice. It might not have happened if we had not hit the green button. There are no excuses, but, as Nick said, time was absolutely a key factor.
Mr McMullan: Out of this whole debacle, is there room now for this case to be used as a template to improve other cases, in so far as the lessons we are going to learn, or have learnt, out of it?
Mr Harkness: Even before this report was finalised, we had used the emerging findings as a training exercise for staff and an opportunity to enhance our procedures and reinforce the importance of adherence to those. That process had started even before the finalisation of the report.
Mr McMullan: Lastly on that, the one thing that jumps out at me is that there seems to have been a lot of decisions taken that were not written down. There is no paper trail here at all. Organisations' names were used, but they were never asked. They said that they had been asked, but it ended up that they had not been asked.
Mr Harkness: That goes down to accuracy statements in the business case. Some organisations were referred to as partners. It is clear that they would have been users, or that constituent clubs would have been users. I think that a better word than "partners" would have been applicable. I think that that would be fair to say.
Mr McMullan: Even with that, there were other groups that it was stated were approached, which were never approached. Even a community group that is doing a project has to have a paper trail, and it is really put through the hoops. That did not happen here. I think that there were people within management and further up the chain who knew what was going on here. They turned a blind eye and carried on with the project. That is wrong, and there is a lesson to be learned there, because if we are going to make the community group and the man on the street adhere to the principles and the policy of a grant, the same should apply further up the chain. There should be no exceptions.
Mr Harkness: I accept the fact that we should lead by the standard that we accept of others.
Mr McMullan: Other than that, I think we should learn from this, put a line under it and carry on. There is nothing we can do about it. I commend you for being so forthright and honest today. It is not an easy thing for you.
Mr Harkness: Thank you.
Ms McKeown: Thank you.
Mr Humphrey: Thank you both very much for your presentation. Antoinette, you made clear in your presentation that independent folk, including the Audit Office, said that there was no fraud in relation to this debacle. Do you accept that there was clear incompetence?
Ms McKeown: This is not our finest day and not our finest project. I think we fully accept that. With the benefit of hindsight, I can say that we accepted a business case that contained inaccuracies, and, when those inaccuracies were highlighted to us, we did not respond to the journalist as we should have done. There were decisions taken that were not documented, and there was not good communication with other partners and funders. We accept, absolutely, all of that.
Mr Humphrey: Sport NI is an arm's-length body of the Department. Do you have an audit committee?
Ms McKeown: We do.
Mr Humphrey: Where was it when this was going on?
Ms McKeown: The audit committee had been fully appraised, and indeed the chair of the audit and risk management committee took a personal interest in St Colman's.
Mr Humphrey: What do you mean when you say that it had been appraised? What did it do?
Ms McKeown: It was advised and updated throughout the process, and the chair of audit undertook an investigation into the allegations raised in relation to St Colman's.
Mr Humphrey: In my view, Departments seem to be hamstrung by CPD. In my experience, having served on the board of an arm's-length body, I am not sure that that is always the best way to do business. What is your view? Clearly, central procurement did not work in this case; it could not have done. Do you think it would be better if Sport NI was run like a business and it went out and got tenders or worked with the final project deliverer to get tenders in the marketplace?
Mr Harkness: I do not believe the procurement of the consultants or the contractor were the main areas of criticism in this report. Undoubtedly, CPD worked with us and the applicant and advised us on those procurement exercises. I would not like to give the impression that we were blaming CPD for our failures on this, because that is not what we are doing.
Ms McKeown: However, there are lessons to be learned. Where consultants may not have met standards, there should be a procedure in place to enable that to be flagged up and taken into account. There is no such procedure currently, and, as Nick said earlier, that is one of the lessons that we have learned. We are working with CPD to build that in because we think that it is an absolute necessity in managing risk.
More generally, we are working with CPD so that we can apply a proportionate and flexible approach to how we procure in the future. For example, we might have a programme that has 50 projects. Are going to use our procurement processes for each one of those 50 projects, rather than procuring them as a programme? That is the type of discussion we are having with CPD.
Mr Humphrey: Nick, I think — well, as a matter of fact, I think both of you, during your evidence, said that procedures were not in place in your organisation when this happened.
Mr Harkness: We are saying that the procedures that we had in place were not as strictly adhered to as they should have been. We have enhanced them since that.
Mr Humphrey: Why were they not adhered to?
Mr Harkness: Again, I am not saying that it is an excuse, but undoubtedly the time constraints that we talked about earlier were a contributing factor.
Mr Humphrey: What does that mean? Were there not enough staff?
Mr Harkness: We were trying to get the project on the ground, incur the spend and meet the targets that we had. That is not an excuse — if we are doing it, we have to do it right. However, undoubtedly that was a factor.
Mr Humphrey: This is public money: it is taxpayers' money and it is ratepayers' money. Given the evidence that we received last week, the project was either going to be over budget hugely, or it was going to under-deliver in terms of the facilities that were there. So, the whole thing really was a debacle. Was there proper communication between Sport NI, Newry and Mourne Council, which had to come in at the end and pay for the high jump, and the Department?
Mr Harkness: That communication should have been better. absolutely. It was not what it should have been.
Mr Humphrey: Who was to blame for that?
Mr Harkness: We, as an organisation, did not manage that as well as we should have.
Ms McKeown: As the main funder.
Mr Humphrey: I am involved in my constituency, and others will be the same, in cocktail funding — in trying to get money pulled together from council, government, arm's-length bodies and other funders. That is very difficult for groups. To be fair, some of the groups that you deal with, and that we deal with as elected representatives, are voluntary and do not have the capacity. There is no excuse in this case. I could imagine some community group being hammered for this, but here we have state organisations that clearly were not acting appropriately or professionally. There clearly has to be a lesson learned.
I hope that sports clubs that have money given to them for projects — I am not suggesting that they do not follow procedure — will not be made to meet unrealistic goals or targets when they do not have the capacity to do it. I suggest that when you are giving money to those types of organisations, you build some money in to allow them to have that capacity. In other words, I do not want sports clubs, many of which are run by amateurs and volunteers, to suffer because of this debacle.
Ms McKeown: I think that that is a really good point, and I think that we could be in danger of swinging the pendulum so close to an extreme risk aversion that we take a sledgehammer to crack a nut, to use a term that you used earlier, Chair. We are currently seeking to review our systems and procedures for grant scrutiny and monitoring so that we apply a proportionality test to make sure that we have now had a really good look at all of our policies, systems and procedures and are applying them stringently, but that we are also applying them proportionately. We are doing that piece of work at the minute. Clearly, as Nick said, we want to show the leadership in managing public money that we expect from the grant recipients that we work with. We have not in this case, but we also want to work with them, and not just by giving out grant aid but by providing that exact capacity, development and support that you are talking about and to use the resources that we have in-house to work with local communities. If we did take a programmatic approach to procurement, working with CPD, we would have the additional capacity to do that ourselves. That is the direction in which we want to take the organisation.
Mr B McCrea: On that issue of not wanting to swing the pendulum too far, I will tell you that you need to consider reputational risk for the organisation. If your organisation were to come back with a similarly damning report, there would be no organisation, because the actual outcome is appalling. I know that certain people were not there, but do not underestimate how appalling it is. I really think that you need to err on the side of caution until you can reassure people that you know what you are doing as an organisation. What will happen if the consultants who prepared the business case are involved in another project?
Mr Harkness: We are currently doing all of our business cases in-house. We have increased our staff team. We have an investment appraisal team that writes our business cases in-house.
Mr B McCrea: What is the acceptable level of attendance of a project manager at the project meetings?
Mr Harkness: We have representation on a risk-based approach, so, depending on the perceived risk at any time on a project, our representation will vary.
Mr B McCrea: So, what is an acceptable level? Is it 100%, or is it 10%?
Mr Harkness: We aspire to have representation at 100% of project board meetings on a project of this scale.
Mr B McCrea: The audit report suggested that the person responsible attended only one out of 10 meetings.
Mr Harkness: The project officer attended all.
Mr B McCrea: So who attended only one out of 10?
Mr Harkness: I attended only one, when I perceived that there was a risk to the project.
Mr B McCrea: Help me here. What is the one in 10 that the audit office report referred to? What were the other nine meetings where there was no representation?
Mr Harkness: There was representation. The representation was done by the project officer.
Mr B McCrea: I will have to have a look at the report on that, but there did seem —
Mr Harkness: It was delegated to the project officer.
Mr B McCrea: There seems to have been some issues on that. Do you accept that, as the lead organisation, you and not any of the other stakeholders or funders or whatever are entirely responsible for this project?
Ms McKeown: I hope that we have said clearly today that we have taken responsibility for the failings of this project. We are responsible for the funding that we have put into it. We are responsible for the communication with other partners. We all know that each partner has a responsibility to communicate as well and has a responsibility for its money.
Mr B McCrea: In your opening statements, you said that there was a failure of communication, yet the Audit Office told the Committee that it is normal practice that the lead organisation takes responsibility for all of these and that other organisations providing funding at a lesser level could rely on your expertise. Therefore, it found that you were at fault. Do you accept that you were entirely responsible and that there were no failings by the other stakeholders?
Ms McKeown: We accept full responsibility for the failings of this project. That goes without saying in everything that we have said today. If we were to join as a partner in another project where somebody had invested a higher level of funding, we would still want to take responsibility for the money that we were investing. We were the lead funder on the St Colman's project, and we took full responsibility for it.
Mr B McCrea: I accept that you should look at all projects, but I do not think that you should prevaricate on who is responsible for this, because, according to the Audit Office, it lies at your door.
Why did your audit procedures fail?
Ms McKeown: In what way?
Mr B McCrea: You had three reports.
Ms McKeown: I cannot say why they failed. We accept that they did. I accept that we probably compromised the independence of our audit and risk function, and I have taken steps to rectify that.
Mr B McCrea: Antoinette, as chief executive, you should surely be able to tell us why the audit procedures failed. There were three separate issues that, on paper, work pretty well, but in practice, they failed completely. What is your assessment of why those procedures failed? I am quite happy if Nick wants to answer the question himself; he can do that and you do not need to pass notes on it. Just tell me what the organisation here thinks about why the audit procedures failed.
Mr Harkness: My view is that we did not treat it as an audit issue in the first instance, and we should have. We said before that we treated it as a journalist's query. It started off not being treated as a whistle-blowing activity; it started off being treated in the organisation, and we accept that that was wrong.
Mr B McCrea: You had three investigations by people with "audit" in their title, the last of whom was a professionally qualified person. Yet, they all failed to pick up the difficulties that you now have to deal with. Those procedures did not work, and I would expect you to have alternative procedures in place to make sure that that does not happen again.
Ms McKeown: We have.
Mr B McCrea: What were the faults, and what have you put in place to deal with them?
Ms McKeown: We had three investigations, none of which found substance in the journalist's concerns about whistle-blowing. All that I can do is accept that that was not the right finding. The Northern Ireland Audit Office finding and the journalist's comments can be fully substantiated. As accounting officer, I would advise, and have advised, the board that the chair of audit and risk should not have got involved and should not have been involved in an investigation. I think that that compromised independence.
Mr B McCrea: In its evidence to us previously, the Northern Ireland Audit Office said on that point that it thought that the junior officer being asked to investigate a more senior person was likely to compromise the investigation and that that was a material issue. What steps have you taken to ensure that, if such a situation arises in the future, there is a procedure for it?
Ms McKeown: The internal audit function reports directly to me as the chief executive and accounting officer in the organisation.
Mr B McCrea: So, should a person who is asked to carry out an audit that they do not think is in their scope come and tell you that it is not appropriate?
Ms McKeown: The internal auditor has been advised that, if there are any concerns about any aspects of governance and risk in the organisation, such people should come to me as accounting officer.
Mr B McCrea: What will you do if somebody comes to you and says that something is a problem?
Ms McKeown: If it is an issue of investigation, I would appoint an independent investigator with the necessary skills to undertake the investigation, obviously.
Mr B McCrea: The Audit Office suggested that you might want to talk to the departmental accounting officer about the matter in the context of some recommendations that you might want to consider.
The final issue is that part of the problem with the project was the pressure to spend money before a particular timescale. Does that pressure still exist in your organisation for other projects?
Mr Harkness: Looking forward, I can tell you that our new capital programme is going to be funded out of our lottery funding, which is not year-end sensitive. One of the advantages of that is that such time pressures do not exist, and you have an opportunity to work with a project at the speed at which the various milestones are achievable.
Mr B McCrea: So, are you sure that 100% of projects that you will be asked to manage will not be subject to any year-end pressures?
Ms McKeown: We will always have projects that are subject to year-end pressures, but if we have a project where the start date has been delayed due to planning problems or procurement problems, we will automatically flag that up. If we have to release the money, we will do that, but we will manage it as we manage our budgets on an ongoing basis. We have absolutely learned that.
Mr B McCrea: Flag it up to who?
Ms McKeown: We will flag it up to the Department if it is at a time of year when we are advising it that we are under pressure to spend, and we will release the money back to the Department. Alternatively, if there is another worthwhile project, we can borrow the money to it, which is standard budget management practice.
Mr B McCrea: I will conclude by saying that you might want to talk to the Northern Ireland Audit Office about how you deal with this issue. However, as it stands at the moment, there is considerable concern about whether your organisation is fit for purpose to manage projects. As you know, there are other businesses cases for which the management of projects should be moved to the Department centrally. How do you respond to that suggestion?
Ms McKeown: As I said, it is not our finest project. We are very aware of what we have learned from the St Colman's project. As I said to the Chair, we have managed other projects of significantly higher budgets and managed them highly successfully, and we continue to manage capital projects successfully. That is not to detract from this one project where, clearly, we did not do that. We have taken responsibility, and we have acknowledged the failings. As a result of that, our systems, processes and the project management skills in the organisation have been strengthened. I think that we are in better shape now than we were because we have applied that learning.
Mrs McKevitt: Before I begin, I will declare an interest as a councillor and Deputy Mayor of Newry and Mourne District Council at the time of the St Colman's project. Thanks very much for coming this morning. I just want to go back to something that Basil mentioned, which was the attendance at project board meetings. I think that I heard you right when you said that you attended one of them and that you highlighted a risk to the project. Was that the first meeting or the last?
Mr Harkness: That meeting was in January 2011.
Mrs McKevitt: So, it was near the end.
Mr Harkness: That was the project initiation. It was early on. I also attended meetings outside the period of the review.
Mrs McKevitt: Is it normal practice with a project of this size to go to just one meeting?
Mr Harkness: I had a project officer who worked on a number of capital projects and attended regular meetings on those projects. There was not just one; a number of project officers did that. There were probably 80-plus projects on the go in the organisation at the one time.
Mrs McKevitt: We are talking about the project board meetings, not meetings with Newry and Mourne District Council.
Mr Harkness: Absolutely. We were overseeing maybe 80 projects at that time, so it would have been impossible for one officer to go to project board meetings for all those projects.
Mrs McKevitt: I appreciate that, when you are coming to the end of questions, a lot of the material has been covered. I am not going to regurgitate it. In a number of your replies, you talked about policies that have been put in place and lessons that have been learned. You said that it was not your finest day. Were policies ever promised previously after a different report, when it was said that lessons had been learned and that what happened should never happen again?
Ms McKeown: Our policies, procedures and systems were in place. I do not want to mislead the Committee by saying that they were not in place; they were, however, not as tight as they should have been and were not applied. I will ask Nick to comment.
Mr Harkness: It is fair to say that the organisation had received previous enquiries from the same journalist. On the previous occasion, in fairness, he probably did not handle them as well as he could have done. That was on revenue funding.
Mrs McKevitt: Sport NI has said that lessons were learned after the first report and that policies were put in place. Yet, here we are again with a different report. We are being given the same promise. Policies should have been tight when lessons were learned the first time around. I will agree that it is not Sport NI's finest day. There is a lot of talk about it, and the confidence is not there. I do not know how to follow it.
As I was a councillor at the time, I remember how the project happened. I agree with you that it is a good project. It is being well used. It is great when you come into Newry and see the lights. There is nothing better than seeing a developed community and something of that standard in place. As the council, we were sold it for eight lanes and were told that we would be able to attract international sport with the running track and high jump. For the council at the time to not even be told that it was being taken out by Sport NI, and then when it was questioned on it, for Sport NI to claim that it had not understood the significance of that change, where do you go from there?
Mr Harkness: The business case always said "regional competition". It never said "international competition". It might have been an aspiration of Newry and Mourne District Council, but "international competition" was never articulated in the business case.
Mrs McKevitt: Sorry; an eight-lane track is for international competition. A six-lane track is not.
Mr Harkness: The outcomes — the aspirations — of the business case were to run regional competition, not international competition. So, that was the anticipated outcome of the project.
Mrs McKevitt: I will beg to differ on that one.
Mr Harkness: I accept that international competition happens on eight lanes. However, undoubtedly, over the years, international competition has also happened at the Mary Peters Track, which only recently has been upgraded to eight lanes. A better track has eight lanes. I fully accept that.
Mrs McKevitt: You also said that you take full responsibility for the report. Do you take responsibility on the behalf of the ratepayers of Newry and Mourne, who do not have an eight-lane track?
Mr Harkness: Athletics Northern Ireland has confirmed that the six-lane track that is there is entirely appropriate for the outcomes that were anticipated in the business case, which were for regional competition.
Mrs McKevitt: There were savings of £11,000 from taking out the high jump, only for it to be reinstated for £113,000. What are your views on that?
Mr Harkness: Certainly, we regret that. The costs that were incurred from the reinstatement are undoubtedly many times higher than the savings that were made from taking it out. However, putting it back in required the contractor to come back on site after he had finished and to bring on board specialist equipment and staff. The increased cost was tested through CPD and was deemed appropriate. So, the cost increase is so significant because they had to re-enter the site and re-establish themselves on site.
Mrs McKevitt: With regard to the way in which the enquiry was brought to Sport NI in the first instance, who made the decision that it was a media enquiry instead of information from a whistle-blower? You are saying that it was a mistake. The report highlights that it was a mistake. Who made that decision, and why was it taken? Was something written in black and white that made you think that it was from the media, rather than something else?
Ms McKeown: It was from the media — it was a journalist. However, it should not have been treated as a media enquiry; it should have been treated as whistle-blowing or certainly as a substantive concern that was being raised.
Mrs McKevitt: Has Sport NI made any changes to its whistle-blowing policies, and, if so, what are they?
Ms McKeown: There has not been a need to change the whistle-blowing policy. We have reviewed it. We are providing updated training to staff on whistle-blowing so that, when a concern such as this comes into the organisation, it is automatically recognised as a whistle-blowing issue, regardless of the source.
Mrs McKevitt: Finally, does Sport NI have any plans to regain the confidence of the public out there? Say Joe Bloggs has to fill in a form looking for their local community centre for sporting facilities or whatever, so are there any recommendations for change to gain the confidence of the public again after this damning report?
Ms McKeown: I think that that is a fair point. We have been working with governing bodies across Northern Ireland on governance issues. We have been honest with them in saying that we have not got it right and that we do not always get it right. We have also explained the changes that we are making in our organisation to make it better. We further explained that, where we are doing things right, we want to work and to share those practices with them. So, we have been honest and open about that.
At the local community level or the grass-roots level, as I said, we are reviewing our approach to take a proportionate approach to grant management, but we also want to provide capacity support to staff who have clearly learned from St Colman's and who will want to offer advice. Sometimes, your skill is in learning from your mistakes, and we are very clear with staff in enabling them to develop, learn and upskill from the mistakes that we have made.
Ms McCorley: Mrs McKevitt addressed most of my questions, but I will just ask one, because I do not wish to regurgitate what has been said. It is about confidence. I was just wondering how you would deal now with small football clubs that might apply to you for funding but that might not be up to speed in practices. How can you go to them if they do not have things right? Given the mistakes that you have made, would it not be difficult for you to criticise or to turn somebody down because they have not got things right?
Ms McKeown: Two wrongs will not make a right. We have got this wrong, we have put changes in place to rectify it, but if we see another club, community group or governing body not applying what is required in the management of public money, we are going to have to intervene and highlight that. I think that what we are looking to do in the future is to provide more capacity in local communities so that they have more support from us. Clearly, however, we would have to intervene. I understand what you are saying about there being a confidence issue, but we would have to intervene where we see that money is not being spent as it should be.
Ms McCorley: Would it make you sympathetic to the needs of small groups who are surviving on a shoestring?
Mr Harkness: One of the things that we are developing into a new capital programme that we are launching soon is a support mechanism through which we will run workshops so that applicants can come along. We can say, "OK, this is a challenging process, but here is some advice, guidance and support to help you get through it". It is not about catching people out; it is about supporting people to do things right. It is not about catching them out if they get things wrong. I think that that support mechanism is what we are —
Ms McCorley: So, can I encourage any local sports groups in my constituency to go to Sport NI, where they will definitely get a sympathetic and supportive ear?
Ms McKeown: Absolutely. When there are thousands upon thousands of community groups and clubs out there, we cannot meet on an individual basis, but what we can do and what we are looking to do, as Nick said, is to open new programmes for grant aid in which we will run local workshops etc. The other issue is that loads of community organisations that are in receipt of grant aid and that have difficulties come to see us, and we are sympathetic. Where we can be flexible, there is a range of options that we can give them on how they can manage and problem solve. That is a part of our daily work, and it is happening. We do not want people to feel that they cannot come to us and say that they have a problem, because I think that that is a very dangerous position to put either public money or local community groups in.
Mr Irwin: I apologise for being late. I am sure that most of the questions have been asked. Looking at this, I can see that there is a litany of failures. One can see through a failure, but there have been a number of failures right down the line. Were the members of your audit committee properly trained?
Ms McKeown: I do not know whether they were all trained in the Chartered Institute of Public Finance and Accountancy (CIPFA) board training. I cannot answer that question.
Mr Harkness: I believe that, in the most recent cycle, all our board members at the time of appointment were involved in training. I can confirm that, because I was in the organisation at the time.
Mr Irwin: OK. It just seems strange that there should be so many inaccuracies, mistakes and failures that were not caught. It just seems very strange.
Mr D Bradley: Chair, can I come back with one question? Antoinette, you said at the beginning that the erroneous information that was provided in the business case was not considered fraudulent because it had no bearing on whether the project was awarded funding. Are you happy with the implications of that statement?
Ms McKeown: No; what I am saying is that there was no personal gain or unfair advantage on the part of those involved in the business case to warrant consideration of fraud. Nobody involved in the business case actually made deliberately inaccurate statements for personal or organisational gain. That is one issue. The Northern Ireland Audit Office confirmed that, the DARD CIS team confirmed it and our internal auditors confirmed it. What I am saying is that, separately, if the erroneous statements had not been made and the business case had not made some of the mistakes about whether it was a Carnbeg league or a Carnbeg football club, for example, it would not have had a material bearing on the scoring for the project.
Mr Harkness: Can I use another example? One of the examples in the business case is that a funded pitch at Newry Olympic Hockey Club would be exclusively for hockey, whereas it is evident that the club runs soccer there.
Mr D Bradley: It was funded in the beginning on the basis that it would not be exclusively for hockey, because it would not have been viable.
Mr Harkness: I accept that. In fairness, the main objectives are related to hockey, but the viability is undoubtedly enhanced by the fact that people pay for and play football. There is no doubt about that, and we absolutely support that. Making clubs viable is really important. It is all very well building a capital project, but it is no good if it folds.
However, one of our separate reports, 'Bridging the Gap', identified a range of facilities and the shortfall in Northern Ireland. I think it is about 800 grass pitches short, so you can divide that by about four for to get the number of synthetic pitches. The Newry and Mourne area has a significant shortfall of pitches. Although I fully accept that the statement that Newry Olympic Hockey Club is exclusively for hockey is not correct, there is still a need for pitches in the area. The point is about how we scored in the application. Irrespective of that statement, which is undoubtedly erroneous, the application would still have scored well on facility need in the area.
Mr D Bradley: That said, however, the first bullet point in the third paragraph of the executive summary of the Audit office report relates to the accuracy of the statements that were made in the business case for the project. What action will you take in future to warn applicants that the information that they provide must be authentic? Secondly, what checks will you introduce to ensure that the information that is provided to you is not erroneous but authentic?
Mr Harkness: I think that the major step that we have taken is that we are now doing our business cases in-house. That gives us complete control of the information that goes into the business cases, and it enables us to ensure that they comply with best business case practice. We are not outsourcing those, and we continue to —
Mr D Bradley: If I am involved in promoting a project, you will do the business case for me.
Mr Harkness: You will undoubtedly have to provide information.
Mr D Bradley: What do you do if I say to you, "The GAA in Croke Park, Dublin, has said that it will give me £80,000, so put that in the business case"?
Mr Harkness: We would seek an assurance that that is available.
Mr D Bradley: How would you go about doing that?
Mr Harkness: We would seek documentary evidence and confirmation that it is available.
Mr D Bradley: Would you talk to the GAA?
Mr Harkness: Yes, we would contact them by email, telephone, seeing them or whatever to seek from them the documentary evidence that the finance is available.
Mr D Bradley: In your application forms, do you underscore the need for applicants to provide authentic information? Do you warn them that you will seek authentication either from them or the funding source?
Mr Harkness: Absolutely. Part of the grant conditions is that the information that is provided to Sport Northern Ireland is accurate.
Mr D Bradley: Is that new?
Mr Harkness: No.
Mr D Bradley: So, that was in place when this application was made?
Mr Harkness: Yes, but we have now brought the creation of those business cases in-house.
Mr D Bradley: If I applied for a job and said that I worked for the secretary general of the UN for three years and the people who were advertising the job found out that that is erroneous information, I would be out of the running immediately. Is that also the case with grant applications?
Ms McKeown: If it were a wilful and deliberate attempt to provide inaccurate information, we would look at that very differently to an oversight. I think that that goes back to the judgement issue.
Mr D Bradley: Would it be unreasonable to make it a condition of application that anybody who deliberately provides erroneous information is immediately excluded from the grant process?
Mr Harkness: I think that there is a balance. One of the members referred to being supportive of applicants and not hammering them unduly if they make a mistake. That is not what we want to do. Deliberate fraud is a really important issue that we take very seriously. The application of the conditions that you refer to is really important. However, where an applicant makes a mistake, the last thing that we want to do is hammer a good project in a needy area that is producing good outcomes for that community.
Mr D Bradley: Can you strike that balance?
Mr Harkness: The important thing is to strike that balance.
Mr D Bradley: Very important.
Mrs McKevitt: Nick, at the start, you said that you went to one of the meetings, where you raised risks to the projects.
Mr Harkness: I said that risks had emerged.
Mrs McKevitt: OK. What were they?
Mr Harkness: It was obvious at that time that there was partner unease. It had become apparent that the eight-lane track was unaffordable, and Newry and Mourne District Council was discontent with that. In the main, the issues were around that. At that time, we could not give confirmation about the availability of revenue funding for the sports development officer. Later, we could. Those risks emerged, and that is why I attended the meeting.
Mrs McKevitt: At the beginning, Madam Chair asked whether an apology will be given to the journalist. Will you also reflect on whether an apology will be issued to DSD and Newry and Mourne District Council?
Ms McKeown: I am going to reflect on that.
The Chairperson: Members are quite rightly concerned. Despite your assurances, what has been highlighted in respect of the St Colman's project will probably mean that future projects will attract much greater scrutiny. It is fair to say, as other members have stated, that Sport NI has been damaged by this; that is unfortunate.
The next step for the Committee will be to write to the Minister to request that departmental officials come up to discuss not only your project but other capital projects. That is the right role for the Committee to play. We will reflect on the comments made by the officials and get in touch with you again. Thank you very much for your time and for answering our questions.
Ms McKeown: Sport NI takes full responsibility for this. Mr McCrea gave his view that I was prevaricating. I absolutely do not want the Committee to think that we are saying anything other than that we take full responsibility for this. I have met the Comptroller and Auditor General, Kieran Donnelly, and had lengthy, face-to-face discussion with him about what he wants us to do. I have had lengthy discussion with the DCAL accounting officer and followed up with a formal letter. I want you to be clear about that as well.
Mr B McCrea: Chair, I would like to say something since I was mentioned there. Antoinette, I am sympathetic to the position that you are in. However, I will tell you this: if it is really the case that your organisation has accepted its responsibility and that this was wrong, you should not have to reflect on whether you will issue an apology. You should have been aware of that before you came to this place. This is Sport NI's debacle. The people who have suffered injustice, whether it is the journalist, the funders or others involved, should receive an apology.
The Chairperson: If you have any further thoughts on this, I would appreciate if you could forward those to the Committee.