Tony McLoughlin (Sligo-North Leitrim, Fine Gael)
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283. To ask the Minister for Public Expenditure and Reform if the proposed new European Communities (Public Authorities’ Contracts) (Review Procedures) (Amendment) Regulations 2015 Bill and the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) (Amendment) Regulations 2015 Bill, will enable mechanical and electrical contractors here to return to having nominated status, as was the case before 2007, as the current situation has made it very difficult for Irish registered contractors to remain sustainable while engaging in Government contracts; if his attention has been drawn to the fact that there has been huge quality issues in the industry due to below cost tendering. [24886/15]

Brendan Howlin (Wexford, Labour)
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The Remedies Regulations: European Communities (Public Authorities' Contracts) (Review Procedures) Regulations 2010 and European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (SI 130 and 131) allow tenderers or candidates who feel that a procurement process was not carried out in an open, fair and transparent manner the option of seeking recourse from the courts.  The Regulations referred to by the Deputy amended those Regulations to give leave to contracting authorities to apply to the courts to lift the 'automatic suspension' and to give the High Court jurisdiction to rule on such issues.

The appointment of specialist sub-contractors by means of nomination was a feature of the public works contracts that were in use up until 2007.  This practice was discontinued with the introduction of the new form of lump sum fixed price public works contract which was developed to ensure greater cost certainty in the delivery of public works.  The rules governing public procurement, which include the Remedies Regulations, do not specifically describe the practice of nomination but the engagement of specialists must be undertaken in a transparent and non-discriminatory manner.

A review of the performance of the public works contracts which were introduced in 2007 has been carried out by the Office of Government Procurement (OGP). A report on the review was published in December 2014 which sets out a series of interim recommendations to amend the current conditions of contract used to deliver public works projects.  The second of the four interim amendments includes a provision for the direct tendering of specialist works contractors.

Under the current arrangements there is an option for contracting authorities to award contracts to specialists whose contract is then novated to a main contractor. However this is really only suitable where those specialists are engaged to carry out specific tasks in advance of the main contractor's appointment.

The new arrangements are intended to permit much greater oversight of the prices being tendered on projects to deal with the unsustainable pricing arising from the competitive tendering environment which followed the economic crisis. The provision for direct tendering to specialists will also allow much greater control of quality by the contracting authority for those projects with a significant requirement for specialist works.

The interim amendments being introduced will;

- Rebalance the risk currently transferred in recognition of the changed economic circumstances that pertain in the industry;

- Reduce the potential for costly disputes; and,

- Provide greater detail on the tendered price.

Under the new arrangements, the tendered price for the specialist works package(s) will be included in the Pricing Document in advance of the Main Contract tender where the specialist works tender(s) is concluded prior to the Main Contract tender.  Alternatively, if the specialist tender is not concluded in advance of the main contract tender, the Main Contractor's Tender Sum will be adjusted in advance of finalising the Contract Sum by means of substituting the specialist works tender sum(s) in place of the pre-determined estimated sums for specialist works.  The main contractor will then be required to appoint that specialist subject to certain conditions being met by the specialist.  Whilst the procedure is similar in many respects, it does not represent a reintroduction of the nominated sub-contractor.

As part of the implementation of the interim measures, the OGP and members of the Government Contracts Committee for Construction (GCCC) are currently hosting a series of information sessions for public bodies, contractors and consultants on the amended forms of public works contracts as part of the implementation process.

Further details on the amendments may be found on the Construction Procurement Reform website under the news item dated 15 April 2015.