Government defends 8% cut in contract costs

THE Government has defended its decision to seek up to an 8% reduction on the cost of contracts it has secured from suppliers across the country.

ISME yesterday accused Government departments of ‘abusing their dominant position’ by putting undue pressure on small and medium firms to reduce their prices on existing state contracts. It said it was specifically concerned government agencies were writing to their smaller suppliers demanding 8%-plus reductions on existing contracts.

“The inference in the letters is that any company that refuses to comply will be blacklisted and no longer allowed to supply,” ISME said. “The association has seen a letter from Junior Minister Martin Mansergh to Government departments, including a template letter to suppliers, requesting an immediate reduction (in which it says) “should a reduction not be secured, then consider other options, such as “notice of termination, or to reducing the level of purchases”.”