Calls for law change to stop contractors with history of delays working on State projects

Dispute between contractors BAM and the National Paediatric Hospital Development Board surrounds €756m in additional claims being sought by the developer. Picture: Colin Keegan/Collins

The Government is being urged to update existing laws to prevent contractors with a history of delays and cost overruns from working on key infrastructure projects.

It comes as a war of words has broken out between the National Children’s Hospital development board and contractor BAM, with concerns the final cost of the project may top €2.2bn.

The dispute between BAM and the National Paediatric Hospital Development Board (NPHDB) surrounds €756m in additional claims being sought by the developer

There have been a total of 2,175 claims submitted, with 16 of them totalling €576m. This is over three-quarters of the total value of claims.

On Friday, Health Minister Stephen Donnelly declined to estimate the final cost of the hospital, saying that it would not be possible to accurately put a figure on it.

Calls to update procurement laws were first heard at Fianna Fáil’s parliamentary party meeting on Wednesday, with Dublin South-West TD John Lahart urging the Government to examine reforms.

In particular, Mr Lahart argued a change in legislation was needed to allow the Government to refuse to work with contractors who have consistent issues with project delivery.

Procurement laws

It is understood Tánaiste Micheál Martin agreed with Mr Lahart that procurement laws needed to be updated.

Mr Lahart said the existing procurement laws were “too strict”, with Government agencies forced to accept whichever contractor puts in a bid that is the cheapest.

According to procurement guidelines, contracts must be awarded to the tenderer that has submitted the most economically advantageous bid.

However, Mr Lahart argued this did not take into account companies that have previously worked on State projects that saw massive delays and cost overruns.

The Dublin South-West TD accepted delays were common and companies may need to put in claims for extra funding, but there needed to be “reasonable” explanations behind them.

“I think it needs to be looked at as a matter of urgency. Manners need to be put on the industry,” Mr Lahart said.

Mr Donnelly agreed with the proposal, saying the State should be permitted to examine the previous performance of contractors.

“It is important in the awarding of future contracts, in the awarding of any large infrastructure contracts by the State, that the State is allowed to fully incorporate previous performance,” Mr Donnelly said.

If any of us were asking someone to build us an extension or build us a conservatory or build us a wall, you would look to the reputation and the previous performance of that builder before you would hire him in.

“It should be no different for the State.”

He added he was not prejudicing any work currently being carried out by contractors, however.

Quality of work

Paul Sheridan, director of main contracting at the Construction Industry Federation argued contracts should be awarded based primarily on quality of work, rather than just price.

“The Construction Industry Federation continues to call for the award of construction projects to be based substantially, 70%, on quality over price,” Mr Sheridan said.

Clients who do place more emphasis on quality are likely to see greater collaboration, better risk management and more accurate and complete design and scopes, which ultimately reduces disputes, delays and costs on construction projects.”

A spokesperson for the Department of Public Expenditure said  procurement laws were governed by EU directives, particularly around “equal treatment, non-discrimination mutual recognition, proportionality, and transparency”.

The spokesperson added existing procurement legislation is updated continually to ensure there is alignment between Irish law and EU directives.