Dáil debates

Thursday, 7 July 2011

Priority Questions

Schools Building Projects

2:00 pm

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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Question 2: To ask the Minister for Education and Skills the funding he intends to make available to complete the construction of new school builds and upgrades to existing buildings including snag lists that were the responsibility of builders who went out of business during the economic downturn resulting in many schools being left unfinished and unfit for use. [19503/11]

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Each main contractor that is engaged in a major school building project is required to produce a performance bond before it commences works. The bond provides security for the State if the contractor becomes insolvent and is no longer in a position to complete a contract. If such a scenario arises before the building is completed, a completion contractor can be appointed to complete the works. The performance bond covers any additional expenses incurred, up to the value of the bond. For smaller works, where grants are devolved to schools and the value of the works is less than €500,000, if a bond is not in place, the Department considers providing funding for outstanding defects on receipt of notification and appropriate supporting evidence from the school authority. In addition to the performance bond, moneys held as retention are also available to complete outstanding works within the defects period.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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We touched on this when we discussed the Estimates. I do not know the extent of the problem. I am aware of previous problems with subcontractors and with delays in payments to contractors. The only such evidence I have that schools have encountered such difficulties is anecdotal. Apparently, the process of accessing the bond mentioned by the Minister can be quite slow because the legal liabilities and so on have to be examined. The schools I know of are probably caught in that process. That is what is causing their difficulties. It was on that basis that I asked whether departmental support can be made available in these circumstances. Does the Minister know how frequently this problem is being encountered? I understand a new arrangement for public contracts has been drawn up. I accept that the problem of builders going bust does not relate directly to the school issues we are dealing with, but I am trying to get some feedback from the Minister on how schools are being affected by it.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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A number of contractors that were undertaking schools building projects have gone into receivership. They are in suspended animation, in effect, because they are not performing. The sites in question will have to be taken back. The contractual procedures in the building industry can be quite elaborate. If the Deputy wishes to inquire about specific projects, I invite him to table a parliamentary question or to write a letter to me in relation to them. I will try to get the up-to-date information.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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I raised with the previous Minister the fact that many contractors are submitting bids that are too low. That is causing difficulty for legitimate contractors. The University of Limerick had a problem with a contractor recently. This issue arises with big and small jobs. It would be useful if a mechanism could be found to give us a sense of the extent to which this is having an impact. It is certainly affecting Joe Public out there. If it is having an effect on local government and hospital contracts, it must be having some effect on school contracts. I would appreciate it if some sort of review could be done.

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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I know from my previous background as an architect that in recessionary times, contractors sometimes undercut other tenders or bids when a project goes out to tender. They are hoping to buy work, in effect, and subsequently claim extras to recoup the margin and bring the project into profit. I understand that under contract law, the client - the building section of the Department in this instance - is not obliged to take the lowest tender or the lowest price. There is a mechanism for evaluating the capacity of a contractor to deliver the product to the quality, within the timeframe and at the price outlined in the bid. There are safeguards in place. It is a complex area. The construction industry has faced a horrendous time over the past couple of years, as the Deputy will be well aware.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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Would the Minister agree to the review?

Photo of Ruairi QuinnRuairi Quinn (Dublin South East, Labour)
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Yes. It is something that concerns me already because there have been bankruptcies in a number of projects. One must put the completion of the contract out for re-tender and that process is cumbersome, slow and, as a result, costly. It also delays the delivery of the final product for the students and teachers.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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As Deputy Luke Flanagan is not present, we will go on to Question No. 4 in the name of Deputy Brendan Smith.