John Cregan (Limerick West, Fianna Fail)

I am pleased to have an opportunity to raise on the Adjournment my request that the Government afford some form of protection in law for suppliers and sub-contractors to main contractors which are awarded local authority contracts. Unfortunately, some main contractors go into liquidation during the course of contracts. I have observed too many of these cases in my county and local authority area in recent years. In a number of contracts, the main contractor has been unable to complete the works he has been contracted to carry out, leaving a trail of disaster and many suppliers and sub-contractors facing financial ruin.

I had hoped this matter would be discussed by a Minister from the Department of the Environment, Heritage and Local Government because it is an issue for local authorities and the Department. I do not cast aspersions on the Department of Enterprise, Trade and Employment and thank my good friend, the Minister of State, Deputy Michael Ahern, for coming to the House to respond. Nevertheless, I do not believe the issue I raise is a company law raise. That is, however, a matter for another day.

In each of the cases to which I refer, I understand the main contractor was awarded a contract based on submitting the lowest tender. I am not sure it is always appropriate for local authorities to accept the lowest tender. In the case of the most recent incident involving the provision of a sewerage scheme for Feenagh, I understand a six-figure sum separated the selected contract from the second lowest tender. This should have set alarm bells ringing, although I accept public officials do not have a crystal ball and cannot foresee such eventualities. Ultimately, in such cases, the losers are suppliers and subcontractors.

In the case of the sewerage scheme in Feenagh, the community has shown tremendous spirit and a local voluntary group is now responsible for the provision of local housing units. I understand this group has entered into a partnership with Limerick County Council to provide a sewerage scheme for the new houses and the village generally. This will benefit the village in the future. However, we now have a half completed job. Landowners and householders who were prepared to give right of way and access through their back gardens or land to a contractor on the assumption that normality would resume in the spring, with fences mended and farmers able to leave their cattle outside, have been disappointed. The county council will now be required to re-advertise to have the works completed.

I have a simple solution to this problem. When a local authority awards a contract to a main contractor it demands a list of his or her suppliers and subcontractors. Before each stage payment is made to the main contractor, a simple telephone call is made to each supplier or subcontractor asking whether he or she is paid up to date. If not, questions must be asked of the main contractor.

Human nature being what it is, if a subcontractor feels that the main contractor is under financial pressure he or she will wonder whether to pull back or stop supplying the product. A subcontractor who pulls back may get nothing so he or she may continue, making a bad situation worse and involving more money. When the main contractor goes into liquidation and returns to wherever he or she came from, the county council has the benefit of the bond that was put in place on the first day, but the supplier, subcontractor, landowner and, in this case, household, have no come-back. It is high time we afford some protection to these people, many of whom work on a very small scale and could face financial ruin because a main contractor took on a commitment when, from the beginning, he or she was unable and did not have the proper resources to do.

I question the lowest tender bid rule. Is there undercutting? Are people offering a very low price to get the contract and then high-tailing it half way through? I appeal to the Government to take this on board. Company law is fine where we have protection for late payments, but this is not about late payment, it is no payment. When a company goes into liquidation no payment is made so there is no compensation. People on all sides of this House have stood for the rights of workers, immigrant workers and everybody else, and that is correct. I commend them on it, but tonight I call for rights for suppliers to main contractors. There is an obligation on the State though our local authorities to put some protection in place to prevent what has happened a number of times in my county. I appeal to the Department of the Environment, Heritage and Local Government to do so. My county is not unique; I am sure this has happened on a number of occasions all over the country. I will proceed by way of a parliamentary question to the Minister asking him to ask each local authority how many main contractors have gone to the wall during construction of various projects and how many of those had made the lowest tender.

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