Kathleen Lynch
Ceist:59 Ms Lynch asked the Minister for Finance the main changes to public sector procurement procedures announced by him on 12 May 2004; and if he will make a statement on the matter. [18587/04]
Amharc ar fhreagraWednesday, 23 June 2004
Ceisteanna (67)
Freagraí scríofa
My recent announcement follows what I said in the 2004 Budget Statement about my intention to introduce significant changes in the areas of public sector contracts for construction and construction-related services. These changes are intended to complement the new rolling multi-annual investment envelopes, which amount to over €30 billion in the period to 2008, and to provide better value for money for the State. The changes will involve the amendment and introduction of new standard forms of construction contracts which will transfer appropriate risks to contractors where they are best placed to manage them. The purpose of this initiative is to help reduce the scale and scope of cost overruns on construction projects and enable public sector bodies to control construction projects more effectively. While there are many causes of cost overruns, this initiative seeks to address an important component which can help improve cost control and facilitate improved budget planning going forward.
Under current arrangements, in many parts of the public sector the bulk of risks are borne and paid for by the public sector body at the end of the contract which can result in a significant difference between the price set for the project at tender award stage and the final price paid by the public body. Under the new approach, contractors will be required to submit competitive tenders where the price — including a cost for the identified risks they intend to manage and control — is tendered for on a lump-sum, fixed-price basis. This contract price should remain firm and fixed for the duration of the project to the greatest extent possible. It is accepted that the risk transfer will carry a cost in terms of higher up-front tender prices but that the final cost of the project should be less than under current contract arrangements.
In the context of construction-related services such as those supplied by architects and engineers, I want to move away from a situation where fees rise as projects costs rise. Some areas of the public service are already making progress in that regard and I would like to see the practice become the norm. It is proposed to introduce greater competition into the procurement process without compromising on quality.
Question No. 60 answered with QuestionNo. 8.