Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I thank Deputy Farrell for her question. I will give her the written answer and then she can ask questions to follow up. As Minister of State at the Department of Public Expenditure and Reform I have responsibility for the development of policy to ensure adequate expenditure oversight on capital projects and for public procurement. The public spending code is the set of rules, procedures and guidance developed to ensure value for money in public expenditure. It sets out the oversight and approval process for public expenditure proposals, including capital projects.

All public works projects that are delivered under the Exchequer-funded element of the national development plan must be procured in accordance with the provisions laid down in the capital works management framework. It comprises an integrated set of contractual provisions, procurement templates, procedures and guidance which cover all aspects of the delivery process of a public works project from inception to final project delivery and review to assist contracting authorities in meeting their ongoing procurement requirements.

The general requirement is that public works projects are to be comprehensively defined prior to tender. The standard form of public works contract is used on the vast majority of public works projects. It is a lump sum, fixed-price contract with tightly defined conditions governing price increases and time extensions. In limited circumstances, a derogation from the use of the standard forms of contract may be sought by means of an application to the Government contracts committee for construction. This process may be used for complex or large projects or for those which have specific requirements which do not naturally fit with the standard forms of contract.

Since the public works contracts were introduced in 2007, two projects utilising a two stage award process resulting in a guaranteed maximum price have been agreed through this derogation process. These are the new children's hospital and Dunkettle interchange upgrade works. Due to the scale of the national children's hospital and the complexity of the Dunkettle project, the early involvement of the contractor, facilitated by these types of contracts, formed part of the risk management strategy.

It is important to note that a derogation, if agreed, does not approve the approach or strategy of the contracting authority, but simply acknowledges that the circumstances are such as to warrant a different approach than the standard. It is a matter for the contracting authority and the approving authority to satisfy themselves as to the adequacy of the approach with regards to compliance with procurement rules and project appraisal in accordance with the public spending code. Accountability for the procurement strategy rests with the contracting authority.

Significant amendments were made to the public works contracts in 2016 and engagement is currently underway in the Office of Government Procurement on a more comprehensive review of construction procurement. The latest review of the public spending code was completed in 2019. The update to this code specifically strengthens the existing guidance to better reflect the realities of project delivery with a particular focus on financial appraisal, cost estimation and risk management. It will be supplemented by a new governance and assurance process for major projects with an estimated cost of more than €100 million. This new process will involve an independent, external review of major projects at key stages in the project lifecycle.

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