Dáil Éireann Debate, Thursday - 28 April 2022
129. Deputy Paul Murphy asked the Minister for Public Expenditure and Reform his views on recent reports that he is considering increasing payments to building contractors on fixed-price public works contracts; if he will provide assurances that he will not agree to increase prices payable on building contracts beyond what has already been agreed; and if he will make a statement on the matter. [20849/22]
Amharc ar fhreagraThere have been significant and sustained increases in the prices of a broad range of commonly used materials in the construction sector throughout 2021 in the aftermath of the pandemic. Energy prices also showed marked increases in 2021 and have further escalated in response to the Russian invasion of Ukraine.
I introduced a series of measures in January in response to these events.
- The Office of Government Procurement (OGP) issued procurement guidance in November 2021 to assist public bodies in managing the challenges they face concluding ‘live’ tenders.
- With reference to future tenders, the OGP published interim amendments to the provisions in the public works contracts on 7 January 2022. Within certain parameters, these amendments will reduce the level of risk of extraordinary price inflation that contractors will have to bear, while also enabling the Exchequer to obtain cost reductions should exceptional price reductions occur during the course of the works. The measures are designed to encourage confidence in the tender process and to mitigate against the over-provision for price inflation in tender prices. However, they do not cater for fuel/energy price increases or supply chain disruption.
The pre-existing provisions for inflation contained in the public works contracts published prior to 7 January 2022 continue to apply as these were the terms entered into by the parties.
My Department has been monitoring the inflation pressures faced by contractors, particularly with respect to the recent sharp increase in energy prices, and is engaging with stakeholders, which include industry and public sector contracting authorities.
In considering their issues, I will have to consider the available evidence, and the potential impacts they will have on costs and the ability to deliver the wider NDP whilst maximising value for money for the taxpayer. It is vital that public works contracts remain a viable proposition for contractors with whom we partner in the delivery of the NDP. I am also engaging with the key capital spending departments and bodies on their issues.
