Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

When Deputy Thomas Byrne and I were Senators, a Bill introduced by the former Senator, Feargal Quinn, highlighted the disservice being done to subcontractors. There are also many subcontractors in the private sector who find themselves in difficulty because they are dealing with larger companies. An interaction of unequals is leading to such difficulties. Former Senator Quinn's legislation, which Deputy Byrne and I both discussed in the other House, has improved the sector in its totality. I want to show my appreciation for former Senator Quinn's legislation. There is a difference between a contract between two private companies and one that has been done with the State. There is an expectation that the State will ensure that people get paid, but the State cannot pay for a job twice.

I am pleased to have an opportunity to comment on the joint committee's report. As has been noted, the report is being circulated to relevant bodies to consider its recommendations in light of their respective remits.

As with all forms of public procurement, the prime focus of the PPP framework is to achieve value for money in delivering the required infrastructure. The PPP structure gives a strong incentive to the private sector to deliver the project. The State does not commence unitary charge payments until the works are delivered to the expected standard.

As explained previously, the PPP company must maintain the asset for the duration of the contract, which is over a lengthy period, such as will require substantial continuing investments to be made by the private sector project funders. These are significant benefits, which mean the PPP framework can offer very good value for money for the right project. However, the concerns expressed here do not primarily relate to the PPP framework. If schools bundle 5 had been a traditional procurement, the position would be substantially the same. The same protections apply to subcontractors here as would apply in any project, whether in the public or private sectors. The law still applies. I am sure everyone agrees that the State cannot pay twice for the same works.

A lessons learned exercise into schools bundle 5 has commenced, involving the Departments of Public Expenditure and Reform and Education and Skills and the National Development Finance Agency. It will conclude after the project has been fully delivered. It will chiefly focus on the effectiveness of the PPP framework as a procurement tool.

The issues raised here are probably best considered in the context of the safeguards for employees and unsecured creditors in company law. As pointed out, the Company Law Review Group recently reviewed those safeguards and found that, in general, the existing protections and remedies were comprehensive and fit for purpose. The Construction Contracts Act 2013 drew on international experience to frame a measure that could mitigate the exposure of subcontractors in these cases. Alternative approaches, such as mandatory performance bonds, were considered. That analysis can be found in the regulatory impact assessment completed by the Office of Government Procurement in the context of the development of the legislation. Those alternatives were found to have drawbacks, such as adding considerable administrative and financial overheads to small businesses.

The scope for construction sector bodies to take their own initiative has not been exhausted.

For example, the construction sector could give consideration to the establishment of a fund to guarantee payment to subcontractors, and not limited to public sector contracts, on the basis of a levy collected and managed by the industry, and this might have a positive impact on payment behaviour. There is only so much that can be achieved by legislation. Legislation on any topic typically needs to find a balance in complex matters. That said, I am sure the contents of this report will add to the ongoing policy deliberations in the various areas to which it relates.

The law of the land includes employment law and Deputy O'Reilly seemed to intimate that public private partnership, PPP, projects do not adhere to the law of the land but that is not the case. Whether the project is a public private partnership, a standard project that goes through procurement or is done by a private subcontractor, the law of the land applies. Rates of payment and employment protections apply. It is important to put this on the record as I do not want the idea to go out that PPPs contain a methodology with which companies can work their way around the law of the land. They cannot do it.

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