Rose Conway Walsh (Sinn Fein) | Oireachtas source

There is much to commend in this Bill, including the effort to improve the public procurement process. It aims to improve the quality of procurement, as well as protect the construction sector from a system that at times focuses predominantly on price at the expense of the construction sector, particularly subcontractors. The Bill focuses primarily on improving the weighting of price and quality and on enhancing the guidelines on social considerations.

I will offer some observations on the Bill. It gives further effect to the 2014 EU directives on public contracts and utility contracts. Its primary purpose is to mitigate the use of pricing as the exclusive grounds for contract award criteria.

Section 2 relates to public authority contracts, while section 3 deals with utility undertakings but it deals with them in much the same way. The Bill details the most economically advantageous tender, MEAT, criteria under which contracts may be awarded, noting that these criteria include elements such as price, quality, social and environmental considerations and so on. However, the way these elements are weighted is not specified in law and is for the contracting authority to decide.

Section 2(4) specifies that contracting authorities shall not use price as the sole award criterion and that contracting authorities shall not weigh price above 50% in the contract award criteria. This applies unless, as per section 4, the contracting authority does not believe quality would make a material difference to the public work or undertaking and issues a declaration to that effect to the Office of Government Procurement. Such a declaration should then be published on its website.

Identical provisions are given for utility undertakings in section 3. A number of comments could be made in this regard. There are times when price being given a predominant weighting in the awarding of a public contract makes sense. One example is when there is little scope for differing quality among the bidding economic operators. At other times, such as in the restoration of a heritage building such as Leinster House, it is advised that quality be given the predominant weighting. It is universally acknowledged by industry that the use of price as the determining criterion in the awarding of public contracts has a number of negative effects. Lowest price tendering leads to lowballing in the tender bids which inevitably leads to cost escalations. We saw this with the national children's hospital. The lowest price can compromise quality and lowest price favours large companies over small and medium-sized enterprises, since they possess large enough cashflows in their business to adjust for low bids. For this reason, the Bill's attempt to restrict the use of price only in contract award criteria or in its weighting at over 50% is welcome. However, there are some deficiencies. In particular, the declaration that must be given to the Office of Government Procurement by the contracting authority, as per section 4(1)(b) is not fleshed out. What must the declaration include? On what grounds can it be rejected?

Section 6 provides for the issuing of guidelines on social considerations concerning qualitative, environmental, social, human rights and equality considerations. Contracting authorities would be obliged to compile a record of compliance with any of these obligations. The Minister would then issue a revised set of guidelines or a report justifying why compliance is not required. Any consideration of these social clauses is welcome, and, while we support it, we would also welcome legislation that hardwires principles of social justice and equality within the procurement process. One example of this is the Social Clauses in Public Procurement Bill 2013, initiated by Deputy McDonald. That Bill provided, among other things, that one long-term unemployed person should be employed for each €1 million comprising the value of a public contract. We would like to see such principles hardwired within the procurement process. My party colleague, Deputy Jonathan O'Brien, is currently working on this.

We are keen to see greater transparency and accountability in procurement practice. Deputy Jonathan O’Brien recently initiated the Regulation of Tenderers Bill in the Dáil, which provided for the disqualification of abnormally low tenders and the disqualification of badly performing contractors from the tendering process. Any Bill that seeks to improve the Government's lacklustre and costly procurement strategy should be welcomed.

I thank Senators Higgins, Ruane and Black and the others involved in bringing forward this Bill. We look forward to the Bill going to Committee Stage.