Lenihan under fire over construction contracts

FINANCE Minister Brian Lenihan has been accused of “leaping back into bed with the construction industry” after it emerged his department’s rules on payment for leading projects were broken.

At least 50 projects worth €150 million were signed between builders and local authorities last year under the old “costs plus” contract system, where builders could increase what they charged after the contracts were agreed. This is despite the Government introducing a new “fixed price” system last year aimed at securing better value for money for the taxpayer.

The contracts, which were mainly for water and sewage schemes, were awarded after lobbying by the head of the Construction Industry Federation (CIF), Tom Parlon, a former junior minister.

According to documents recently released through Freedom of Information (FoI) Mr Parlon wrote to Mr Lenihan last May warning of the “expense and disruption” of the new contract scheme.

Fine Gael’s Leo Varadkar said: “It shows Fianna Fáil is still in bed with the construction industry and has no intention of abandoning its old friends, in spite of the economic crisis”.

He said Mr Lenihan “abandoned a key government commitment to secure value for money in major construction projects by exempting €150m worth of contracts from value-for-money requirements.”

Mr Parlon said the contracts were put up for public notice and “our members tendered for themexactly as they should do”.

He said that, by the time Mr Lenihan wrote to local authorities to tell them contracts should be fixed term, “these were already awarded to our members”.

“We tendered exactly as we were required to by the local authorities,” he said.

Mr Parlon rejected reports that he held a series of private meetings with Mr Lenihan at Government Buildings last week to lobby in favour of more state aid for the construction sector in the forthcoming budget. He told RTÉ he has only met Mr Lenihan once in recent weeks: “We went in on our normal pre-budget submission. It was just part of the normal industry lobbying.”

Mr Parlon said: “Why wouldn’t the Government listen to the representative of an industry that is the single biggest employer in the country. The main reason the minister would be cosy with construction is because they are the biggest single payer of taxes,” he said.