Lack of competition for Derry rail contract partly responsible for £26.4m overrun: NIAO

Huge overruns that saw the cost of Phase 2 of the Derry to Coleraine rail upgrade rise from £20m to £46.4m have been partly blamed by the Northern Ireland Audit Office (NIAO) on a lack of contract competition.

In a report published by the office this morning, Kieran Donnelly, the Comptroller and Auditor General, noted how the former Rail Minister Danny Kennedy had to give special ministerial approval for the contract to be signed off: his departmental accountant could not approve it as a value for money project.

In his report to the Assembly on the financial auditing and reporting of the public accounts for 2015/16, which was published today, Mr Donnelly stated: “The Coleraine to Londonderry line is planned to be upgraded in 3 phases at a total cost of £75 million.

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“Phase 1 was delivered in 2013 on time and within budget. Phase 2, originally estimated to cost £20million, is due to be completed in December 2016 at a cost of £46.4 million, more than twice the value of the original estimate and nearly a year later than planned.

“Acceptance of the contract required a Ministerial Direction as the Accounting Officer could not sign off the bid as representing value for money.”

The auditor noted that two competitions for Phase 2 each produced a single bidder only.

He said that this limited market interest brings with it the potential for departments having to pay a premium for the work.