The Department of Public Expenditure strongly warned the Government against going ahead with the National Broadband Plan.
Documents published this afternoon show that public spending officials said it represents an "unprecedented risk" to the State.
The correspondence shows the Department strongly warned against appointing the preferred bidder yesterday for the almost €3 billion project.
Officials were significantly concerned about cost and affordability.
DPER documents on the Broadband Plan are pretty stark.
- Warns state taking an "unprecedented" risk.
- Concerns over value for money
- Other projects potentially cancelled to pay for it https://t.co/TgagTfek8d
— Seán Defoe (@SeanDefoe) May 8, 2019
The department warned about the impact on the National Development Plan and that some other capital projects may have to be shelved to afford the broadband plan.
Officials called it an unprecedented risk to the exchequer - and recommended an alternative approach of incremental improvements in broadband.
One document complied by officials states: "Poor take up of the service or emerging new technological solutions in this fast moving market could leave the State having funded a stranded, or potentially obsolete asset - an asset that the State will not even own, despite investing up to €3 billion in it.
"We believe that significant progress can be made with an alternative affordable approach, with strong deliverables possible in the short-medium term within the context of a more realistic and affordable budget (of, say, €1bn), prioritising completing critical investments in the short term."
Speaking after the release of the documents, Finance Minister Paschal Donohoe conceded that the project is a risk.
However, he added: "I believe the protections that are available in the contract that has been negotiated offers a way of the State managing that risk.
"I think it will be increasing important for healthcare [and] education. I believe the way we have of managing the risk offers enough protection to the taxypayer to go ahead with this process."
The documents released today also show that Robert Watt, Secretary General of the Department of Public Expenditure and Reform, expressed his concerns in a letter to Mark Griffin, his counterpart in the Department of Communications.
The letter warns committing to the plan would be a major "leap of faith" by the Government.
Mr Watt highlighted the "unprecedented risk that the State is being asked to bear in the event that the current NBP contract is recommended for approval by Government".
In response, Mr Griffin defended the plan, insisting that his department had carried out "rigorous analysis over the past three years to show that the project is complaint with the Public Spending Code."
He insisted the broadband project is "very different" from the National Children's Hospital - which has experienced major cost overruns - and that a "robust budget model" had been developed to reflect construction and revenue risks.
Meanwhile, Mr Watt also told Finance and Public Expenditure Minister Paschal Donohoe that officials "strongly recommended against the plan on grounds of cost, affordability, value for money and risk".
He further suggested that the procurement process should be cancelled.
Minister Donohoe ultimately overruled the concerns and recommended Cabinet approve the plan.
He said he believes on balance that the benefits outweigh the concerns of spending officials.
Under the plan approved yesterday, there will be €3bn of State subvention for a private consortium led by Granahan McCourt - the sole remaining bidder - to roll out broadband to 540,000 homes and businesses in rural areas.
The first new homes will be connected in 2020 - but thousands of others may have to wait years to be on the grid.
Opposition leaders react
This afternoon's leaders' questions was delayed for almost two hours, allowing the opposition time to read the newly-released documents about the broadband plan.
Fianna Fáil leader Micheál Martin questioned whether it is the right plan.
He accused the Government of attempting to "spin its way out of any serious questions or accountability around the project".
Sinn Féin's Mary Lou McDonald suggested that in a worst case scenario billions of taxpayers' money will be "poured down a black hole".
Communications Minister Richard Bruton, however, defended the decision to go ahead with the plan.
He insisted: "This is a major decision to ensure that rural Ireland - including 1.1 million people - get equal access to a technology that is going to transform our lives.
"It's already transforming our lives, and it's going to make a huge impact on rural communities."
Reporting by Sean Defoe and Stephen McNeice