A contingency fund should be set up to ensure sub-contractors are paid what they are owed after massive delays and liquidations of two main firms involved in a school building public-private partnership (PPP), some TDs and senators believe.
Oireachtas Finance Committee chairman John McGuinness said €14m, which a group of more than 60 creditors of the collapsed Sammon group estimates they were owed, is a very small fraction of the Government’s €5.5bn five-year capital budget.
The main building companies in the Sammon group went into liquidation last month, five months after the collapse of British construction firm Carillion, one of two partners in a joint venture that entered the PPP project with the Department of Education two years ago.
The committee heard yesterday from businesses that worked on some of the sites in the PPP scheme to build five schools and also a further education college.
Work resumed on some school sites this week after Carillion’s PPP company partners, Dutch Infrastructure Fund, appointed a new firm to replace Sammon as main building contractor on the project. However, TDs and senators agreed with witnesses that it would be wrong to allow children to start classes in September at new schools fitted out and equipped with supplies that have not been paid for.
Tina Walsh, financial director of Kilkenny-based school furniture makers Peter Walsh & Sons, said her firm is owed €250,000 for goods but they will be prosecuted for trespassing if they try to access the site and retrieve them, while sub-contractors are told the State will get first preference on any money from Sammon’s liquidators.
In correspondence received by the committee yesterday, National Development Finance Agency (NDFA) deputy director Gerard Cahillane outlined the legal position as the agency understands it, following queries from committee members at an earlier hearing on Tuesday. The NDFA is managing the project on behalf of the Department of Education, as the State’s main adviser on PPP projects.
Mr Cahillane said that the assigned certifier, whose sign-off on completion and standards compliance is required before the NDFA sanctions payments to the PPP company, will rely on several ancillary certificates from others involved in the works. In relation to the minority of elements of the building works where such certificates are not available, the NDFA said the PPP company’s replacement main contractor will take on new third-party sub-contractors to finish works and provide the ancillary certificates for that and the work done by previous sub-contractors.
Mr McGuinness said would be totally unacceptable as an earlier meeting, this week, was about ensuring the previous sub-contractors could not be bypassed.
John Hennebry of Belfast-based flooring company JJ Hennebry & Sons said the approach by the NDFA was completely wrong.
“How on earth is a third-party contractor, even if he knows the trade, going to know... that my guys have mixed and applied products correctly?” he asked.
The group of at least 60 Sammon sub-contractors, which he chairs, is considering seeking a judicial review in relation to sign-off on the buildings without self- certification by the original sub-contractors.
The damaging knock-on effects of the Sammon group collapse on business and family life were outlined by the operator of one business who thought a Government project would be safe and secure.
Donegal-based Glenbrack Decor’s Mark Kelly said one of the reasons the company got involved with the public-private partnership project in which Sammon was the main contractor was that it wasa flagged as a Government job. The second-generation business started by his father in 1977 had managed to keep trading through the recent recession.
But, owed money for work done on the school building scheme, his suppliers have cut normal credit limits from as high as €40,000 to €5,000.
“We can do that [€5,000] in five working days, so that leaves us trying to finance ourselves for the rest of the month,” he said.
Having to shoulder the administration and other work of three staff he was forced to let go while taking no salary from the company since December, Mark told the Oireachtas Finance Committee it is very hard not to take the work home at night.
His wife Sinéad said home life is extremely stressful as she sees the worry in his face in the evenings about where the money will come from for the next bill or wage round.
With three children and schools now closed, she described having to respond to requests about day trips and summer camps with: “Sorry kids, it can’t be done.”
“It just has basically brought us down to rock bottom this last couple of months to the point that we’ve even fought, and argued, and cried,” she said. “And trying to block that away from your children every day of the week is hard... It has been so difficult.”
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