NEW ANTI-BRIBERY & CORRUPTION GUIDELINES FOR NI - IMPACT ON ECONOMIC APPRAISALS

NEW NI Audit Office Report

On Tuesday 14th November, the Northern Ireland Audit Office (NIAO) launched the "Managing the Risk of Bribery and Corruption - A Good Practice Guide for the Northern Ireland Public Sector". This will no doubt be a required recommendation in all future economic appraisals, as well as additional compliance for departments. And most likely contractors too.

Interestingly the report mentioned several case studies, including one referred to in its earlier 2013 report, "Report on DCAL: Management of Major Capital Projects" as follows:

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The 2013 NIAO report examined seven capital projects. In addition to overspend (for which some valid reasons were noted) they found the projects also took much longer than expected (the Crescent Arts Centre was over 31 months delayed). This has important implications for revenue generating and staff employing organisations. Will these extra compliance requirements save time and reduce risks? How will Optimism Bias on capital projects be affected in NI?

BRIBERY & CORRUPTION WITH GRANT FUNDING

The NIAO also mentioned two case studies (not in NI) related to grant funding. One was of an employee seeking a bribe to ensure a grant was successful and another was for an elected official seeking to win electoral favour in return for grants. NI is a small place, and people often have multiple hats. It will be important for all people to ensure that there is no inference of impropriety in respect of grants. How can an independent economic appraisal ensure this? is it the appraisers job?

INCREASING EXPECTATIONS OF ECONOMIC APPRAISERS

The largest capital funding pot in NI (and border region), was the recent Peace IV Shared Space Capital Funding. Total value €52.9m. This was thought to originally be for larger iconic projects (e.g. £8m+). However, post Brexit, this was considered to be more open to a wider range of projects. 13 projects made it through to stage 2, and the SEUPB tendered for economic appraisals. The projects were split into two lots, of 6 and 7 projects respectively. Total project costs (not just grant sought) ranged from £3.2m to £12.3m, with a mean of £7.1m. 

The Terms of Reference and subsequent clarifications, issued in August 2017, set out that the consultants must bid for one or both lots, and have them complete within 6 weeks. They were to only look at one option  and use the existing costs & drawings. In addition they would have to create a marking scheme and score the project applications* (see bottom of page). In these circumstances, it made it difficult for a consultant to comply with the Green Book, NI Practical Guide to Economic Appraisals and Evaluations (NIGEAE), NIAO guidance and recognised best practice. 

WHAT NEXT FOR ECONOMIC APPRAISERS IN NI?

Moving forward, economic appraisers will have to tread carefully. It will be interesting to see if the impact of the new NIAO guidance. Will it make public sector officials even more wary of grants and placing more pressure on consultants. On that note, the above NIAO reports noted:

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Will this mean private sector consultants will be used more or less in the future when deciding on major grants and tenders? Will they be any better or more independent than public sector (or possibly community/voluntary sector) officials? Where will influences come from? Hopefully at least whatever happens the records of the decision making process are retained, so at least there will be clarity and any lessons can be learned if required. 

IN THE END

But as the NIAO report makes clear, the final decision must be the public sectors, as it is public money after all. So where will that leave the independent economic appraiser, who is paid from that same public purse?

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*SEUPB required the consultants to undertake:

"An independent analysis and critique of each application against the selection criteria and in accordance with recognised best practice and guidance."

This raised several queries. SEUPB then clarified that the consultant’s assessment would then be used to inform SEUPB's actual scoring/ranking of projects. The tenderer was asked to:

'detail the key tests and questions and a matrix to evidence how the assessment against the selection criteria will be completed'. 

Furthermore:

'Each report as a minimum was expected to include a narrative, critique and score against each of the 7 selection criteria identified above, together with an introduction, summary, conclusion and recommendation'

All the projects had to be assessed, scored and appraised within 6 weeks. Peace IV was subject to significant preparation (and followed Peace I, II & III) and was under the 2014-2020 programme period. SEUPB was set up in 1999 and has 57 FTE staff (2015 Annual Report).