Thomas Pringle (Donegal South West, Independent)
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10. To ask the Minister for Public Expenditure and Reform the evidence successful tenderers for public contracts from outside the State have to provide to show that they are compliant with our employment and taxation law and are not operating in the black economy; and if he will make a statement on the matter. [29622/14]

Thomas Pringle (Donegal South West, Independent)
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The question concerns what proof successful tenderers for public contracts from outside the State have to show the awarding body to ensure they are compliant with our employment and taxation law and that they are not using workers who are operating in the black economy.

Brendan Howlin (Wexford, Labour)
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Again, this overlaps with a question I answered earlier. Public procurement procedures require all applicants to meet certain standards when applying for public contracts.  In this regard, applicants are required to make declarations in regard to their financial standing, their legal standing and payment of taxes and social contributions.  The criteria upon which contracting authorities may exclude applicants from the award procedure of public contracts are set out in public procurement regulations and directives. Before an applicant is excluded, the applicant may make a case in mitigation and, as I said earlier, this must be considered by the contracting authority.

It is a condition of award of all public contracts above €10,000 that the successful applicant provides to a contracting authority either a current tax clearance certificate or demonstrates a satisfactory level of subcontractor tax compliance in the case of the construction, forestry or meat processing sectors, which are subject to relevant contracts tax.  The same tax clearance requirement applies to all non-resident contractors being awarded a public contract. 

The management of the tendering process for a public contract is a matter for each contracting authority.  It is the responsibility of each contracting authority to ensure that tenderers comply with all the requirements of the process.

Thomas Pringle (Donegal South West, Independent)
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It is during the tendering application process that they are required to show these proofs. However, what steps are available to bodies after the contractor has been appointed in terms of monitoring ongoing work, particularly in regard to the subcontracting of elements of the contract? I believe that, to a certain extent, a blind eye is turned to this because the awarding of contracts is generally on the most competitive price. Given the costs of doing business are lower outside this jurisdiction, it is very difficult for tendering companies resident here to be successful on price alone.

Will the Minister expand on what role the public body can play after the tender has been awarded and while construction is ongoing in order to police this measure? I believe this needs to be stepped up.

Brendan Howlin (Wexford, Labour)
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As I indicated earlier to Deputy Fleming, it is the legal responsibility of the contracting authority - if it is a school, the Department of Education and Skills, if it is a road, the Department of Transport, Tourism and Sport and the NRA - to ensure that all legal requirements are complied with.

The Deputy raised the case of subcontractors. In any public contract valued at greater than €10,000, inclusive of VAT, which is not a huge contract, it would be a condition of the award of the main contract that all subcontractors employed on the projects must produce a tax reference number where a payment exceeds €650.

Records of tax reference numbers must be kept by the contractor and must be available for inspection by the Revenue Commissioners. Where payments exceed €2,600 in any 12-month period, the subcontractor is required to produce a current tax clearance certificate. Payments under a contract are at all times conditional on compliance with all the contract requirements set out.

The management of the tendering process is a matter for each contracting body. The Deputy has again instanced his concerns about some contracts. If he has concerns about non-compliance with normal legal requirements in respect of any contract awarded in this State, I would like to hear from him and I will ensure they are investigated.

Thomas Pringle (Donegal South West, Independent)
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I am generally concerned about how this is policed and enforced. For many years, contractors had to be compliant with the construction industry pension scheme. I do not know about national bodies, but local authorities turned a blind eye to it because they were getting the contractors at the most competitive price. I raised it with Donegal County Council a number of years ago. When it started forcing contractors to comply, companies registered one employee and got a letter of compliance from the Construction Industry Federation saying that they were part of a pension scheme, which got over the difficulty for them. It is an ongoing problem that needs to be looked at. For example, if an authority has had a difficulty with a contractor in the past, could it exclude the contractor from future contracts? Could it adopt that position and would it be defensible?

Brendan Howlin (Wexford, Labour)
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The Deputy raised a number of questions. I will deal with the last one first. There are set criteria for excluding somebody from the tendering process but, obviously, fair procedure must apply, because excluding somebody from being able to apply for a public contract is a significant penalty and the contractor would have recourse to the courts to vindicate its rights to do that. I can forward the criteria for preventing a contractor from applying to the Deputy. In the past two years I have established the Office of Government Procurement because much general procurement in the public service happened in an ad hocfashion. We now have a much clearer and more transparent procurement mechanism. I do not know which committee the Deputy is a member of, but if it is one that deals with procurement generally, it might be useful to have the new Government procurement officer explain the procedures and possibly answer questions about anything that needs to be tightened either in the contract documentation or in the contract monitoring that might be of use.