Dáil debates
Wednesday, 1 February 2012
Topical Issue Debate
Local Authority Contracts
10:30 am
Arthur Spring (Kerry North-West Limerick, Labour)
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I thank the Ceann Comhairle for choosing this topic because although we are creating work, we are not necessarily creating jobs. I will elaborate on that.
The Road Safety Marking Contractors Association, RSMCA, was established within the Construction Industry Federation in 1998. It comprises the leading road marking contractors in Ireland. They provide direct employment to an estimated 400 people. The association's members are typically family-owned companies carrying out their work as main contractors for all the local authorities and the National Roads Authority and as subcontractors to civil engineering and road-surfacing contractors. These companies make a valuable contribution to the safety of roads in some very hazardous environments and the quality of their work is only to be commended. This work is paramount on many fronts and it is contributing to the decrease in the number of deaths on the roads.
During recent years, the association has noted a marked increase in the number of non-resident contractors being awarded work by local authorities for both road marking and road surfacing and a lack of effort by all public procurement bodies to ensure that all contractors or subcontractors, irrespective of where they are based, are fully compliant in respect of working in the Republic.
I am concerned about non-compliant contractors tendering and carrying out work on behalf of local authorities. They are competing with Irish-owned companies but have a lower cost base than those companies. Under the public procurement procedures of the Department of Finance, all contractors, including subcontractors, carrying out work on behalf of all local authorities must comply with the registered employment agreements. This ensures there is a level playing field for all competing tenderers in public procurement in regard to rates of pay and compliance with construction workers' pension schemes and revenue regulations. Employers are contributing â¬28 per week for each employee to the CWPS, while employees are contributing â¬24.50 per week. Foreign-owned companies have a distinct advantage as they may not be obliged to meet such pension requirements.
Failure to comply with the requirements is an offence under section 32 of the Industrial Relations Act 1946 and section 10 of the Industrial Relations Act 1969. Therefore, there is an obligation on all procurement authorities to ensure there is in place a robust and transparent administrative procedure when awarding contracts. The policing of these procedures falls upon the NERA, the CIMA and the local authorities but this is either not being done or being done through self-certification. Self-certification means a company signs a document stating it is compliant but it does not have too furnish any proof of this. It is the burden of proof that ensures non-compliant contractors must comply with relevant legislation. In certain instances, the local authority checks only that the main contractor is compliant and dismisses any requirement to check that all subcontractors on site are compliant. Compliance with the arrangements imposes a considerable cost on companies tendering for public procurement contracts, and the lack of enforcement of the legislation gives an unfair advantage to non-complying contractors coming in from abroad.
The association met Mr. Deering of the NERA last year to discuss this issue. The NERA has no powers to act against out-of-State contractors. This means non-compliant contractors can work without fear of prosecution. An integral part of the procurement process is the use of framework contracts, whereby a number of contractors who are pre-qualified participate in a framework agreement. Framework agreements typically last two years. It can cost considerable time and effort to pre-qualify for a framework agreement but it is the experience of the association's members that an integral part of the pre-qualification process is an interview with each tenderer to ascertain that the information submitted on the pre-qualification document is factually correct. However, I have been informed that no member of the RSMCA has ever attended such an interview, yet some of its members are pre-qualified in respect of a number of framework agreements.
Brian Hayes (Dublin South West, Fine Gael)
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I thank Deputy Spring for raising this important matter.
It is a condition of the public works contracts that contractors must comply with the relevant regulations governing employment conditions. The most recent legislation in this area includes the Registered Employment Agreement (Construction Industry Wages and Conditions of Employment) Variation Order, 2011, and the Registered Employment Agreement (Construction Industry Pensions Assurance and Sick Pay) Variation Order (No. 2), 2006. The one exception, as referred to by the Deputy, is in regard to the registered agreement for pensions where a firm registered in another member state and working in this country has employees temporarily posted from that other jurisdiction and who subscribe to a national pension scheme in their own country. In such circumstances, the firm, or its employees, does not have to subscribe to the Irish pension scheme.
The National Employment Rights Authority, NERA, which has responsibility for monitoring employment conditions through its inspection services and which can enforce employment rights compliance and seek redress, comes under the aegis of my colleague the Minister for Jobs, Enterprise and Innovation, who has responsibility therefor. Where there is evidence that firms may not be complying with regard to relevant statutory pay and conditions of employment, the matter can be referred to the NERA for investigation.
There are a number of provisions set out in the public works contracts to ensure compliance with the registered employment agreements and they are covered by a clause entitled "Pay and Conditions of Employment". The main contractor is obliged to display a copy of the relevant clause from the public works contract covering the pay and conditions of employment in a prominent place on the site for the benefit of all those employed on the project. The main contractor is also required to provide a certificate of compliance, entitled "Rates of Pay and Conditions of Employment Certificate", with each interim statement submitted, normally on a monthly basis. Failure to provide this compliance certificate will result in payment not being made by the contracting authority.
If a main contractor provides a certificate of compliance and it is subsequently found to be untrue or partly untrue, the contracting authority has the right to deduct the money relating to the work or part of the work covered by the certificate from any sums due to the main contractor. This money can be withheld until the pay and conditions of employment issue is made right. The ultimate sanction if a main contractor continues to be non-compliant is for the main contract to be terminated.
The public works contracts also oblige a contractor to maintain records of pay, timesheets and any deductions made for all those employed on the site. These records are subject to inspections by representatives of the contracting authority, as required. The conditions of the public works contracts, therefore, place an obligation on the main contractor to ensure compliance with the registered employment agreements for all those employed on the construction site, and this is not limited to their own employees but also applies to all sub-contractors who provide labour to the site. Contracting authorities are required to ensure that the "Rates of Pay and Conditions of Employment Certificate" is received with each payment application and, in the event of non-compliance, to withhold payment until the matter is rectified.
If there is evidence that contractors employed on public works contracts are not complying with the payment requirements of the registered employment agreements, this should, in the first instance, be brought to the attention of the contracting authority, which can investigate the matter fully under the mechanisms set out in the contract and outlined previously. Where members of the Road Safety Marking Contractors Association are making these claims, they should in the first instance make their complaints to the contracting authority, whether the roads authority, a local authority, or a group of local authorities, as in this case. I will take a close interest in the outcome of any resulting investigation. However, a complaint must be made in the first instance as, otherwise, there is no procedure through which we can investigate the matter and come to some determination. Where there is a case to be answered, the contracting authority may then take the remedies set out in the contract for a breach of the clause on pay and conditions of employment and refer the matter to the National Employments Rights Authority.
The Deputy has put very important information on the record of the House. The responsibility now rests on the Road Safety Marking Contractors Association to make complaints to the authorities. I will investigate those complaints closely.
Arthur Spring (Kerry North-West Limerick, Labour)
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I do not consider it is an issue of the association actually having evidence but, nonetheless, the rules under which its members are applying are not the same for non-Irish resident companies. The examples are the construction workers pension scheme, to which the Minister of State referred, the compliance with Revenue regulations and so on. The fact this is not auditable, is self-regulated and is written off without being examined means the level of integrity is just an assumption. It is more difficult for Irish firms to do business here at present than for non-Irish businesses.
I am asking for a level playing field. As I pointed out, enough work is being created and businesses are doing a good job on what is often hazardous work, for example, on motorways. However, we are creating work without benefitting from the jobs. Some of the evidence with which I have been provided - the Department can ascertain this - demonstrates that 70% of the larger construction contracts have been won by non-Irish companies in the past two years. That is a frightening statistic. We are looking for our workforce to go out and do the work. While I accept we have compliance issues, tendering processes and all the rest, I would point to the Spanish model where contracts have been broken down into smaller parts, with 25% for SMEs. These people fit that bill. I would like to see the subcontractors as well as the main contractors under the same level of scrutiny as Irish companies.
Brian Hayes (Dublin South West, Fine Gael)
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I have gained some experience in the area of procurement in the past eight months and these issues have been raised with me as the Minister of State with responsibility for procurement. Evidence is the key issue, however. Without evidence, we have no means of checking the facts and bringing these matters to a conclusion.
Of course, Irish businesses win contracts abroad as well as at home. International businesses domiciled in other countries win business in this country on a continuous basis. I recently pointed out at a conference at which I spoke that close to 70% of SMEs in this country are not even registered on eTenders. How can they possibly know about the contracts if they are not even registered to tender for contracts?
Procedurally, there are very clear international European guidelines as to how companies contract and win this business. It is a key objective of the Government to make sure Irish SMEs can pitch for and win this business. Under circular 10/10, issued by the Department of Finance two years ago, we encourage SMEs to come together to pitch for business. Any contract over â¬25,000 is now up on eTenders. I use this opportunity on the floor of the House to encourage those Irish businesses, first, to register for eTenders, second, to pitch for the business and, third, to work with other SMEs as a means of getting this business.
I pointed out that we have national framework agreements in place. This is to protect the taxpayer and to get the best possible price and quality. Nonetheless, I take the Deputy's point. Some of these cases involve international businesses which win contracts but actually have Irish sub-contractors in place. It is much more complicated than some associations like to present.
I take very seriously the Deputy's remark that 70% of the road marking business is going to businesses outside the country. I will investigate that matter thoroughly and come back to the Deputy on it. If the veracity of that stands up and it is a fact, as he suggests, and I do not doubt him for a moment, there is a huge question mark over why Irish businesses are not winning these contracts or pitching for these contracts in a manner which ensures they offer the best and most efficient price for the taxpayer. I thank the Deputy for raising the matter.