‘Quality in Public Procurement’ Bill passes Committee Stage in the Seanad

Pmb Green Graphic
Pmb Green Graphic

Yesterday, Senator Higgins’ ‘Quality in Public Procurement’ Bill passed Committee Stage in the Seanad. The Bill places quality at the heart of the public procurement process and moves public procurement on from the current approach of automatically awarding contracts on the basis of lowest price. The Bill will make price-quality ratio the default approach for awarding public contracts, either on its own or combined with life-cycle costing.

Speaking after the Committee debate, Senator Higgins said “the public has a right to expect that when money is spent on their behalf, it is spent in a way that delivers the best results. That requires a carefully thought-through approach to the quality of standards and performance in areas like sustainability, social impact, decent employment and design.”

“Ireland currently spends €17 billion on contracts for goods, services and construction. This figure is set to rise considerably in the coming years as €165 billion in major capital works projects are rolled out under the National Development Plan.”

“When the State, as one of the most powerful purchasers of goods and services, sends a signal that quality matters, that encourages and supports investment, ambition and innovation in areas like sustainability, environment, accessibility and design.”

The case for reform has been acknowledged in the 2014 ‘Review of the Performance of the Public Works Contract Report’ which recommended that all projects over €2 million should have a significant weighting for quality to obtain better results and deter unsustainable pricing.

When unrealistically ‘low-ball’ bids are allowed to win contracts, it is often the beginning of long-drawn-out difficulties and negotiations around supplementary claims and delivery dates.

The tender for the National Children’s Hospital had a weighting of 75% for price and 25% for quality and the project was awarded to the lowest bidder. It is now running over schedule, massively over budget with €542 million to date in additional ‘contractor claims’.

The practical measures in this Bill are largely based on legislation that has already been operating very successfully in the Netherlands since 2012. Evaluation of that law, by the Dutch Economic Institute of Construction, found that the use of price-quality ratio led to offers that better meet the needs of clients in an efficient way, often with little or no additional financial cost. Over 70% of contracts in the Netherlands were still won by contractors with a lower bid, but only if they had proven themselves on quality.

The Bill now moves to Report stage in the Seanad where it is expected a number of Government amendments to the Bill will be proposed and debated. 

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