That leave be granted to introduce a Bill entitled an Act to provide that abnormally low tender bids for construction works with a contract equal to or above the EU threshold for public works are regulated, and disqualified, if their low level is not adequately explained to the relevant authority, and that performance in prior public contracts be grounds for exclusion from participation in a procurement procedure.
Beidh mé ag roinnt mo chuid ama le mo chomhghleacaí, an Teachta Patricia Ryan. I am very pleased to introduce the Regulation of Tenderers Bill 2021 with my colleague, Deputy Patricia Ryan.
The Bill will provide for greater regulation with regard to publicly procured capital works. Annual spending on public procurement here is massive, coming in at approximately €12 billion. This is approximately the same amount spent on some of the pandemic income and business supports. According to the Office of Government Procurement's most recent spending and tendering analysis for 2018, capital works are the largest component of public procurement spend, coming in at more than €5 billion.
We know that for years Ireland has lagged behind our European peers in terms of capital expenditure and this has left us with a major infrastructural deficit, which the International Monetary Fund, IMF, the Economic and Social Research Institute, ESRI, and the Irish Fiscal Advisory Council, IFAC, have called for us to close. This infrastructural deficit is most acute in regional and rural areas. The recent stability programme update outlines that capital expenditure is set to increase over the coming years and I welcome this although there is certainly room to go further. The national development plan has identified numerous capital projects set for commencement and it is important these are rolled out quickly. However, it is essential that taxpayers get value for money for these projects. We do not want to face more scandalous cost overruns, such as have been witnessed in the national broadband plan, the children's hospital and, closer to home, the renovations in Leinster House.
Our Bill is designed to tackle one potential contributor to cost overruns, namely, abnormally low bids. These abnormally low bids are sometimes referred to as lowball offers. The Regulation of Tenderers Bill 2021 would establish that abnormally low tender bids for construction works that have a contract equal or above the EU threshold for public works are regulated and would be disqualified if their low level is not adequately explained to the contracting authority. It would also ensure that performance in prior public contracts would be grounds for exclusion from participation in procurement procedure. In other words, if a tenderer makes an abnormally low bid for a contract, and if the tenderer is claiming it can complete the project at a significantly lower cost than its competitors, that tenderer must explain to the contracting authority how this is achievable. If the contracting authority does not received a reasonable explanation for the abnormally low price submitted, the tender price should be rejected and the tenderer disqualified from the procurement process. The contracting authority should record the reason for rejection and submit it to the Office of Government Procurement.