Seamus Duggan, Chair of CIF’s Procurement, Tendering and Contractual Matters Subcommittee and joint managing director of Duggan Brothers, says that while progress has been made, there’s more to do when it comes to fair and balanced reform of public procurement in Ireland
CIF believes there is a better way to deliver public infrastructure through more balanced and fairer procurement. The federation says there is a need for urgent reform and increasing the attractiveness of public procurement projects.
Over the past 18 years, it has been calling for reform of the Construction Works Management Framework (CWMF) and Public Works Contract (PWC).
Seamus Duggan is chair of the Procurement, Tendering and Contractual Matters (PTCM) Subcommittee and joint managing director of Duggan Brothers.
With proven industry experience as a general building contractor on large-scale projects in both the public and private sectors, he is well-placed to offer insight into what needs to change.
The industry needs an equitable and attractive contract, he says, commenting on the release of a new publication by CIF – Strategy for the Improved Delivery of Public Infrastructure.
Reform of the CWMF and PWC revolves around several key pillars. At the heart lies a desire for greater collaboration and more effective risk management.
There is work to be done too around prequalification and tendering, quality in award, liability, insurance, indemnity and dispute resolution.
Continuing to build goodwill between the industry and government is a priority.
“It has long been a strongly held view within the CIF that a fair and workable contract for public works is essential for the efficient and economic delivery of much needed State projects,” Seamus says.
“The State is the largest employer in Ireland hence the relationship between it and the industry is critically important. Never was that relationship so important as today to meet the requirements of the country such as delivering the NDP (National Development Plan), providing critical infrastructure to support Housing for All and meeting our climate action plan.”
For almost two decades there has been significant engagement and activity both by CIF and the Office of Government Procurement (OGP) in the reform of public procurement.
Among them a publication from CIF titled the Medium Term Strategy, released in 2016, aimed at rebalancing the risk levels transferred, and allowing for greater visibility of construction project price makeups.
“Good work and progress has been done with the OGP,” Seamus adds. “They have engaged but there is more to do. We must work diligently to get to a point where an enticing contract exists for contractors to engage with.”
Seamus Duggan is chair of the Procurement, Tendering and Contractual Matters (PTCM) Subcommittee and joint managing director of Duggan Brothers
There have also been some welcome reforms to date, and CIF is energised to highlight other significant opportunities for further amendments to the PWC.
These would support development while also benefitting the State and taxpayers as well as helping to create a more sustainable construction industry.
At present, over half of contractors are not engaging meaningfully with the PWC, which has a knock-on effect on development, including housing.
“The Irish construction industry requires a fair and balanced contract for use on public projects to be able to meet the country’s need for critical public infrastructure,” says Seamus.
“We had this previously in the form of the GDLA Contract which was replaced by the Public Works Contract (PWC) in 2007. This was a seismic development that created a contract that was weighted against the contractor, was unfair and unnecessarily adversarial.
“This contract transferred an unreasonable risk burden onto the industry and has been very harmful to the delivery of public projects.”
He adds: “Since then the CIF largely through the PTCM committee has been working closely with the OGP to try to reform the PWC to make it a more balanced contract where the risks lie with those best placed to manage them. Good progress has been made on that journey to date but there is still a distance to go.”
As part of its new strategy, CIF has illustrated the main challenges contractors experience when undertaking public work contracts.
“To support the industry’s demands for further reform of the PWC CIF surveyed its members in 2024 to collect real-time data to ascertain how the PWC is viewed,” says Seamus.
“This survey provided some alarming facts such as that 39 per cent of respondents had carried out no public works within the past two years and furthermore that 69 per cent reported none or little involvement in such contracts.”
The rationale for further reforms is based on CIF member data, as well as the OGP’s work programme and recently published reports by the Housing Commission and European Union.
The 2023 European Court of Auditors’ Special Report: Public Procurement in the EU, for example, recognised that public procurement is not as commercially attractive for contractors as other sources of construction work.
“Our strategy sets out a roadmap for reform,” says Seamus. “It represents an updated position from the Medium Term Strategy document issued by the PTCM committee in 2016. Within this document, the PTCM has acknowledged the areas where acceptable reform has been achieved but more importantly identifies the next priorities.”
He adds: “There are a myriad of complex reasons for this shift away from public contracts but a lot of it leads back to how the PWC is viewed.
“There is a sense that the cost of tendering is high and there is too much focus on the lowest price. There should be a greater focus on proper and effective qualitative award criteria whereby companies are rewarded for their investment in safety, quality, sustainability and other such systems and procedures.
“These are valued by the private sector but often largely ignored by the public sector, which is wrong.”
A lack of engagement means that contractors are looking abroad to pharma, hi-tech and data centre work on the continent where they can secure better and fairer contracts.
It is disappointing to see some of the industry’s “capacity to build” being diverted to the private sector or indeed the continent at a time when the national need is so high.
However, companies need to make commercial decisions, and the equity of the contract is a factor in those decisions.
“We must make sure it’s not a race to the bottom,” says Seamus. “We’ve moved on from bargain basement tender pricing. We have contractors and a skillset in this country that is very progressive and valuable.
“There’s a major focus on quality, safety and ESG and how we deliver our projects. Other sectors, for example private and international, would hold those factors in very high regard and reward those systems and practices. This must also be applied for public projects.”
The newly-released CIF strategy sets out a table of further reforms that have been raised by CIF members as being essential in restoring confidence and thereby increasing engagement with the PWC.
“For instance, the risk for background information that is provided by the employer and the treatment of arbitration costs are examples of how the PWC needs to be reformed to become a more workable and fairer contract that the industry will want to engage with,” says Seamus.
A greater emphasis on quality in the award of projects based on objective quantitative criteria, supported by the use of LCC and BIM, will also be essential in achieving the OGP’s objectives.
“It is important to stress that the PWC has come a long way from when it was first published and also it should be acknowledged that the OGP reacted meaningfully during the covid pandemic and later in dealing with the unprecedented cost inflation arising in 2022,” Seamus says.
“However, there is still a journey to go and the PTCM believes that the Strategy for the Improved Delivery of Public Infrastructure will provide a roadmap to get there.”
