Senior officials may need to publish explanations for lowest bid only contracts

Senior officials may need to publish explanations for lowest bid only contracts

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Senior public servants would have to sign off on procurement contracts where lowest price only is chosen and be obliged to publish their rationale under new legislation going through the Oireachtas.

Authorities need to “think about quality or think about why they’re not thinking about quality”, according to Independent Senator Alice Mary Higgins who introduced the Bill.

Some €12 billion a year is spent by the State through the procurement process.

Ms Higgins pointed out that price only was the criterion in the procurement contract for laboratory facilities in the CervicalCheck cancer screening crisis.

“If the decision is made to go with the lowest price only approach, it becomes very difficult to try to introduce quality later on in the process.”

The legislation was “pressing” given controversies including the collapse of school projects under Carillion and Western Building Systems.

The Public Authorities and Utility Undertakings (Contract Preparation and Award Criteria) Bill seeks to make the price-quality ratio, where price and quality are considered, the norm.

The Bill passed the second stage or introductory debate this week in the Seanad as Minister of State Patrick O’Donovan said the Government was conducting a review of the procurement process policy introduced when country was “banjaxed”.

Procurement process

The Bill is based on the procurement process operating in the Netherlands where “73 per cent of contracts go to the lowest bidder but those bidders had to prove themselves in terms of quality”.

Benefits showed in cases such as buildings lasting longer and not requiring repair as soon as under lowest price contracts, with environmental and sustainability advantages as well.

The Bill sets a minimum 50 per cent quality target for national development plan projects which are “once in a generation or lifetime projects. We simply have to get them right.”

During the Seanad debate Fianna Fáil Senator Gerry Horkan said he had often seen cases where people were forced to select the lowest bidder knowing they had a history of low tenders, making many changes and “then charging enormous prices”.

But the Minister said “not every hospital is falling down and not every school project is over budget”. The vast majority “are totally within budget and of very good quality and we never hear about them”.

He raised concerns of unintended consequences that senior officers signing off on contracts could be “wide open to allegations of improper interference in the procurement process”, but the Government abstained on the Bill.

In the review of procurement the Government is looking at including social considerations such as environmental sustainability and disability access.

Mr O’Donovan warned the Bill would restrict the State’s ability to provide services that represent value for money.

But Ms Higgins said “quality is a part of value for money”.

She said the Comptroller and Auditor General’s definition includes spending less, but spending effectively and wisely are equally important.

Procurement officers, not accounting officers would decide on quality and the sign off would be before companies tendered, Ms Higgins said. She had spoken to procurement officers who “want to use quality measures, and sometimes feel nervous about whether they would be allowed to do that”.

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