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

Two major changes have been made to counter the new problem of inflation that has arisen as a result of the Ukraine war. First, the contract template is meant to take inflation into account. That is not just the consumer price index, CPI, but the sub-indices of inflation that apply to that contract. If there is a particular material involved, such as concrete or wood, that sub-index will be taken into account. That is a risk transfer whereby some of the risk is being taken by the State rather than the contractor. If all the risk is transferred to the contractor, the bid would have to be very high and may result in people not being able to bid. Where somebody has taken on a contract, they may find they cannot feasibly complete it without their company folding or becoming insolvent. It is with that in mind that we changed the template. We also made retrospective changes whereby contracts taken out since the start of the year were compensated with a view to preventing those contractors from ceasing operation, where it could be shown that contract was suffering from material price inflation.

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