Wednesday, 27 February 2013

Questions (28)

Patrick O'Donovan

Question:

28. Deputy Patrick O'Donovan asked the Minister for Public Expenditure and Reform if he will consider, as part of the Construction Contracts Bill, a project bank account system, which was previously proposed by this Deputy and which has recently been progressed in Northern Ireland to ensure that only payments owing to subcontractors and individuals relating to particular projects can be made from specific bank accounts; and if he will make a statement on the matter. [10194/13]

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Written answers (Question to Public)

I would refer the Deputy to my reply to his previous written PQ (PQ 9199/13 – answered 20 February 2013) in which I noted that the key objective of the Construction Contracts Bill is to ensure that cash flows down the supply chain on all construction contracts.

This is achieved by providing a statutory schedule of payments, prohibiting the use of ‘pay when paid’ clauses in construction contracts and, most importantly, it provides the means for subcontractors to enforce these rights; by suspending their labour and the provision of statutory adjudication. Given these provisions the requirement for security of payment reduces since the exposure of a subcontractor to non-payment is greatly reduced.

A range of security of payment options, including Project Bank Accounts were considered in the initial drafts of the Construction Contracts Bill and provision was made for devices such as bonds as part of the first draft of the Bill that was introduced to the Seanad by Senator Feargal Quinn. However such mechanisms were omitted from the current draft of the Bill in order to reduce the administrative and cost burden to the small businesses that make up a large proportion of our construction industry.

Policy in relation to public works contracts is reviewed on a regular basis by the Government Contracts Committee for Construction and the introduction of Project Bank Accounts is under consideration at present.