Margaret Murphy O'Mahony (Cork South West, Fianna Fail)
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198. To ask the Minister for Public Expenditure and Reform the annual turnover a construction company needs to have in order to tender via the e-tender system; and if he will make a statement on the matter. [35731/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Public procurement in Ireland is governed by legal requirements, rules and guidelines set both at national and EU level. The aim of European and national rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money.  The general requirements for works and works-related contracts are set out in the Capital Works Management Framework (CWMF). This guidance incorporates key elements of EU legislation that have been transposed into Irish law and is complemented by circulars and guidance issued by this Department and the Office of Government Procurement.

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.

Under the EU Directives governing public procurement, contracts above certain thresholds must be advertised on the Official Journal of the EU and awarded on the basis of objective and non-restrictive criteria. For works contracts the threshold is €5.548 million; for supplies and service contracts awarded by Government Departments the threshold is €144,000 and for local authorities and non-central bodies the threshold is €221,000. In the case of contracts below the threshold levels, the Treaty principles of proportionality, transparency, non-discrimination etc. apply where there is the potential for cross-border interest.  Under national rules, all contracts for works and works-related services over €50,000 and over €25,000 for supplies and general services must be advertised on the national public procurement website www.etenders.gov.ie.  Contracts below these thresholds, should be awarded on the basis of a competitive process of direct invitation to an adequate number of suitable suppliers.

The eTenders website is for use by the wider public sector including semi-state bodies, both commercial and non-commercial.  Voluntary and community groups which are publicly funded are also entitled to use the site for their procurement activity.  Registration on eTenders is free and there is no charge to submit a tender. Contractors can register as a ‘Supplier’ on the eTenders system. As part of the registration process a contractor should select the Common Procurement Vocabulary (CPV) codes that describe the type of works that they are interested in tendering for. This will ensure that they receive an automatic notification email alert when contracting authorities publish contract notices on eTenders for public works of a type that they select.  The form for eTenders supplier registration can be found at .

Where tenders are invited in this manner it is incumbent on contracting authorities to ensure that those who are awarded public contracts have the financial standing and technical capacity to complete the works in a safe and timely manner.  

Bodies procuring public works projects must comply with the provisions of the CWMF which contains extensive guidance covering all aspects of the procurement and contract administration stages.  Specific guidance and templates are also published to manage the pre-qualification stage of a procurement process.  It is important, when assessing the financial standing and technical capacity of a contractor to undertake a particular project, that the contracting authority should set standards that are proportionate to the project and its associated risks.

To provide targeted assistance to contracting authorities on this important stage of the procurement process guidance note GN 2.3.1.3 - Minimum Standards for Suitability Works Contractor Criteria (Open, Restricted Procedure) was first published on 6 October 2010.

This guidance note sets out standards under each of the criteria that may be used to assess a contractor’s financial standing and technical ability.  The guidance was developed in consultation with industry at a point where the recession had commenced and took into account reduced capacity generally. The guidance was revised in May 2013, primarily to reflect changes in the requirements for performance bonds on public works projects.

Turnover represents a reasonable indicator of the capacity of a contractor to deliver projects of a particular scale.  Construction projects require main contractors to manage a significant supply chain and where turnover is lower than recommended levels contracting authorities are entitled to have legitimate concerns over the capacity of a contractor to deliver the project in question.

Guidance note GN 2.3.1.3 (page 11) states that, for building projects, turnover should be set within a range of 75 – 150% of the annualised turnover of the capital value of the contract which is the capital value of the project divided by the number of years over which the expenditure will occur. For a straightforward building project of 2 years duration with a capital value of €4m the turnover sought can be as low as €1.5m. For general civil engineering projects this is reduced to 30 – 60% but rises to 200 – 300% of the annualised turnover of the capital value for complex civil engineering rail projects.

The 2014 procurement directives set a cap on the level of turnover at a maximum of two times the estimated contract value except in duly justified cases. The ranges set out above result in turnover levels that are well below this cap with the exception of the range specified for complex rail projects which, because of their exceptionally high risk, is justified.