Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to continue my contribution to this debate. All speakers have referred to the background to the Bill and why it is necessary. The only difficulty is that it has taken a long time for it to reach this stage. We must ensure it completes its passage through the Oireachtas before the summer recess.

Before the debate adjourned I was discussing the issue of planning, payment and performance bonds. As it stands, no consideration whatsoever is given to the ability or track record of a contractor with regard to payment of suppliers in the awarding of either public or private contracts. In this situation having a requirement for the provision of security for payment, as applies in other countries, is by far the most effective means of protecting suppliers. That is the view set out by the Irish Concrete Federation and we all appreciate from where it is coming.

During the regulatory impact assessment process which I mentioned and in which many others and I were involved I referred to the US Miller Act. The payment of bonds to protect suppliers of labour and materials must be made a requirement for contractors who tender for projects, as is the case under the Miller Act which requires that a performance bond to protect the client be put in place and a payment bond to protect suppliers be lodged by the contractor before the contract is awarded for the construction of any federal government funded project. There is a value in that requirement.

There may be other ways to deal with this aspect, but this is an issue on which we will have to come to a firm conclusion. I have an open mind, but that is one possibility. However, there would be a cost to the contractor in obtaining a payment bond. Many contractors are being offered projects, but they are having difficulty in obtaining bonds from their banks to secure the contracts. It would be an extra imposition on contractors to have to produce a payment bond in addition to the current bond arrangement and it would be an additional cost which, ultimately, would have to be borne by whoever was paying for the contract and would have to be built into the tendering process. That is one possibility, but I am not saying it is the best way to go.

I have a different view. During the regulatory impact assessment process I said that at the tendering stage the previous payment record should be taken into account. There should be some provision in the tendering process whereby people must confirm that they have complied with previous Labour Court adjudications. A parliamentary question was tabled recently to the Minister for Public Expenditure and Reform about people against whom there were outstanding Labour Court judgments. The people concerned can still be granted new contracts and the Minister did not give a satisfactory reply. He said there was not an equivalent mechanism to the tax clearance certificate in place whereby one could obtain a certificate from the Labour Court to say one was compliant. Nobody was suggesting this because it would be enormously cumbersome. The vast majority of people never have to go near the Labour Court, whereas everyone has to go to the Revenue Commissioners. People must comply and if it is found they have not, they will be in breach of their tendering and contract notice.

When a local authority grants planning permission, it writes to the person concerned stating its intention to grant planning permission in 28 days. During those 28 days others have an opportunity to appeal the decision to An Bord Pleanála. If there is no appeal, permission is granted. We see notices in the newspapers of the Environmental Protection Agency's intention to grant a licence for a waste facility and people have 28 days during which to come forward. In the case of publicly funded contracts, a public notice should be published in whatever medium is deemed appropriate stating it is intended to grant a contract to a company in 28 days. This would give anybody who had not been paid for a job done for the contractor time to come forward. Some 20 people could arrive at the contracting authority's head office to say they had been not paid for the last job done.

The importance of this provision is that it would not only apply to direct subcontractors. There could be a chain of subcontractors and suppliers down the line. It would put the onus on the main contractor to ensure his or her subcontractors behaved themselves because it is not always the case that the main contractor is not paying the subcontractor. The problem could be further down the line in that the subcontractors have not paid those whom they engage. This mechanism would ensure the main contractor only employed reputable subcontractors whom he or she knew would not interfere with his or her ability to be given future jobs. If people were to come out of the woodwork after 28 days and one was to find out that a company had a bad track record, it should not be given any further work. It is as simple as that. If it does something once, shame on it, but if it does it twice, shame on us. If that does not happen, I will have to be convinced on Committee Stage that something better is being done.

The big issue about which we will talk on Committee Stage is the supply of materials and bespoke products. The retention of title does not count in these situations. One cannot grab concrete from the ground as it is not a moveable fixture or fitting. The Irish Concrete Federation, those involved in quarries and who provide tarmacadam are very involved in this issue. It also applies to people who provide bespoke products, whether they be customised windows, doors, electrical fittings, heating installation equipment, etc. which cannot be removed. A provision must be included to facilitate them.

There should not be a differentiation between public and private contracts. The same rules should apply to every category of business. A different set of rules should not be introduced in this legislation. There are arrangements in place for publicly funded contracts, but they are not working because we would not be speaking about this issue if they were. INobody should talk about the current arrangements in place.

The Construction Industry Federation stated in one of its magazines recently that 90% of all disputes were settled on the steps of the court after proceedings had taken place and all legal costs had been incurred. We want to reach a situation where a adjudication would be binding. I understand there is always a legal right not to abide by it, but if it is undermined by not having strong legal force behind it, people will not pay attention to the adjudication process. The regulatory impact assessment process will remind us to take into account the views of the Chartered Institute of Arbitrators which has gone through the issue. Most of us who will be involved on Committee Stage have received correspondence from it. It makes a few excellent points, but time does not permit me to read them.

The most important point on contracts, whether public or private, concerns the ability of small and medium-sized businesses to receive them, but the threshold is too high. One must have had a high level of turnover in the past three years. Many companies which have built housing schemes would not qualify to complete two further houses for the local authority because of the reduction in their turnover in the past couple of years, even though they built hundreds perhaps one decade ago. There must be some mechanism to rebalance the position. Some 99% of contracts of awarded by the State should be given to Irish companies, as happens in every other EU country. They are able to do so under the same EU arrangements, but we have been soft on the issue. We must be as tough as other countries and construct our tendering process to suit Irish businesses, as they do for theirs. We should look after own.

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