Dáil debates

Thursday, 17 May 2018

Other Questions

Public Procurement Contracts

11:40 am

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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11. To ask the Minister for Public Expenditure and Reform if he is considering measures to deal with companies that are found to have been negligent, fraudulent or substandard in the work on public contracts; and if he will preclude the companies from bidding for public contracts in the future. [21724/18]

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I am asking whether the Minister of State will consider bringing in more serious penalties and excluding contractors who do work paid for out of the public purse through public procurement or contracts where those companies are found to have been substandard, negligent in their work or engaged in fraudulent behaviour. I am thinking of issues like schools that were built in a substandard fashion without proper fire safety measures, bogus self-employment on public contracts and, we may discover, the outsourcing of cervical smears.

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Thank you, Deputy.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I ask whether companies found to be guilty of those sort of failings should be excluded from further public contracts.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick County, Fine Gael)
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I thank Deputy Boyd Barrett. Public procurement is governed by EU legislation and national rules and guidelines. The aim of these rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money.

When carrying out procurement procedures, contracting authorities have discretion to exclude tenderers from competing in a public procurement competition for reasons set out in Regulation 57 of SI 284 of 2016 – European Union (Award of Public Authority Contracts) Regulations 2016. This includes poor past performance where the tenderer has shown significant or persistent deficiencies in a prior public contract which led to termination, damages or other comparable sanctions.

The public procurement system operates at its optimum where the evidence presented to demonstrate compliance is independently verified. Otherwise, the contracting authority must rely on its own expertise and, in some cases, investigative powers to establish a tenderer’s bona fides. This can lead to inconsistencies in the administration of tender competitions.

The tax clearance system operated by the Revenue Commissioners is an example of the type of independently verified compliance mechanism that has operated successfully in ensuring that those who do not meet their tax obligations are excluded from the award of public contracts. Determining compliance with certain other legal requirements may require the input of the relevant enforcement body such as the Health and Safety Authority, the Workplace Relations Commission and Building Control, to name but three.

When making a submission a tenderer must consider whether any of the exclusion grounds listed in the procurement documents apply to them. Should any of the grounds apply, they must advise the contracting authority accordingly. Before a tenderer is excluded regarding certain breaches, they may make a case and provide supporting evidence as to why it should not be excluded. The contracting authority must arrive at a decision based on evidence rather than hearsay or dissatisfaction and should take the principle of proportionality into account in its deliberations.

The monitoring of public works contracts is also important to ensure that contractors continue to meet their legal and contractual obligations during the performance of the contract. A consistent contract management regime is critical and clearly defined milestones should be set down for evaluation purposes.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That looks good on paper, but is it happening? For example, I remind the Minister of State about Western Building Systems and the company that built 31 schools. A report into fire safety issues resulting from substandard building in an audit of five schools initially, which we were supposed to have had by now, revealed they were found to be fire safety defective. A report was to be prepared on all the other schools built by Western Building Systems, but I do not believe it has been produced, even though it was promised we would have it by now. I do not know if this has come into the public domain yet but Western Building Systems built a college of further education in Whitehall as long as ten years ago that is lying empty as we speak while homeless families are being accommodated in police stations.

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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Thank you, Deputy.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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It is extraordinary that such companies are still being awarded public contracts. All firms that were found to have been involved in bogus self-employment arrangements, such as the JJ Rhatigan dispute----

Photo of Seán Ó FearghaílSeán Ó Fearghaíl (Kildare South, Ceann Comhairle)
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I will come back to the Deputy. I call Deputy Burton.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Has the Minister had an opportunity to read the UK Parliament report on Carillion, which is a major provider of educational construction and building services to the Irish State? Is he aware that the Loreto school in Wexford is fully completed? The teachers have moved in their equipment and materials but they have been forced to leave again because the Minister of State's Department does not seem to have any mechanism for allowing the schools to enter the premises, for which the State is paying, but where the company, which is the contractor, has collapsed. We are given to understand that the four schools and one education centre involved in that contract in Wicklow, Carlow, Wexford and Meath will face delays of at least another year.

This is when the State has been paying top dollar. I would like the Minister of State to comment on that.

11:50 am

Photo of Eamon ScanlonEamon Scanlon (Sligo-Leitrim, Fianna Fail)
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This is an issue I have raised with the Minister of State already. It is outrageous to think that a company that was involved in windmill construction - I am sure there was a Government subsidy there somewhere along the line - is back in business. I know of four small companies affected and the amount involved ranges from €60,000 to €37,000. These are small operators and the loss of this amount of money will put them out of business. I am sure this company has got much Government financing. It is paying about 3% of the euro. I think €20 million is owed nationally and we now discover it is back in business. It is outrageous that these people can put a company into liquidation, grab as many payments as possible from State subsidies and put small companies out of business. This is not just one company but this is happening on a regular basis. It is wrong and there should be a law to stop it.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick County, Fine Gael)
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I do not think it is appropriate for me to comment on an individual case but I have engaged with Deputy Scanlon on particular issues before, as has the Office of Government Procurement. To make a general point on school buildings and similar matters, the Minister, Deputy Donohoe, and the Minister for Education and Skills, Deputy Bruton, have answered questions here before on a recent collapse. The National Development Finance Agency, NDFA, and the Department of Education and Skills are working on this. It affects my constituency as well. They are trying to work through this with agencies like education and training bodies across the country. It is not something that can be unravelled easily.

To get back to Deputy Boyd Barrett's point, I already referenced the EU rules that are there. There are mandatory exclusion rules and I can provide a copy of them to the Deputy. There are also discretionary rules where previous performance can be used. As I said earlier, it has to be proven. That has to be worked out by the contracting authority. In this case, the contracting authority who be whoever commissioned the development of the school. The Office of Government Procurement does not run and operate individual contracts, as Deputy Boyd Barrett will appreciate. We set out the policies in which each of the contracting authorities have to operate within and their Accounting Officers are then held accountable to the Oireachtas via the Comptroller and Auditor General. There are procedures within the statutory instruments that are in place for those exclusions and if people believe that unsatisfactory work has been done, then the contracting authority can move to have those people excluded from future rounds.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I do not think this is happening and that there is proper enforcement of this. The Office of Government Procurement and the Minister of State should be putting pressure on the relevant Departments to ensure this happens. I mention Western Building Systems, which built a school in Whitehall that I understand has been sitting empty for perhaps a decade because it is structurally unsound. We then discovered that five of the schools it built were fire defective. We are then told there will be a report into the other 30 schools it built. That report was promised in September to be out in six months but it is not out. All of this suggests to me that there is not a seriousness about getting to the bottom of why companies in receipt of public money are doing substandard work. We are not bothered to look into it and we are not excluding them from further public contracts.

I mentioned bogus self employment. We hear the advertisements at the moment, and it is good the Government is raising the issue, but there have been widespread examples of contractors doing work for the State where they were found to have been, as in the case of Rhatigans, engaged in bogus self employment.

Photo of Patrick O'DonovanPatrick O'Donovan (Limerick County, Fine Gael)
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To repeat, there is a bonding system in place with all of these contracts that are undertaken on behalf of the State, where a percentage of the bond is retained by the contracting authority. In the case Deputy Boyd Barrett referred to, and without getting into the detail, it may well be an education and training body or the Department of Education and Skills. There is a procedure available but as well as that, we have to go through a process. That process can often involve court action being taken against the contracting authority and-or the State. It is not something we can enter into lightly. We have to have proof and we have to follow a process, and I think the Deputy would appreciate and respect that. There are safeguards already in place. Maybe there is a problem of awareness around the processes and safeguards that are there and if so, we can do more about making sure people are aware of them.