Construction Industry Federation (CIF) director general Tom Parlon has defended his lobbying relating to local authority projects that were awarded under old-style costing contracts.
Mr Parlon, the former minister of state at the Office of Public Works, secured approval for €150m of building contracts that do not contain new conditions aimed at securing better value for money, it was reported today.
It is understood Mr Parlon secured an agreement from Minister for Finance Brian Lenihan to go ahead with 50 key projects under old-style “costs plus” contracts, which allow builders to factor in additional costs incurred during construction work, rather than under new, fixed-price contracts.
The Government introduced fixed-price contracts, in which construction companies have have to shoulder any cost increases, last year in a bid to better control costs.
Speaking on RTÉ's Morning Irelandthis morning, Mr Parlon said that local authorities were directed to implement the fixed-priced contracts but continued: "Obviously, they [the local authorities] didn't have the expertise, or they didn't put them in place, and it takes a long time for some of these contracts . . . in terms of the bureaucracy and the technical issues that arise from them."
The contracts were drafted up by the local authorities and were tendered for by CIF members “exactly as they should do".
"Obviously this had been an overrun by the local authorities,” he said.
Mr Parlon, who became CIF director general “five or six months” after leaving Government, said he wrote to the Minister saying these contracts had been awarded by local authorities but were now going to be withdrawn.
Mr Lenihan wrote again to the local authorities and told them to go ahead with the old form of contract due to the "massive delays" that would be involved and because projects are “absolutely crucial”, Mr Parlon added.
The Minister also told the local authorities that "as of now, every contract is the new form".
The CIF head said he was not involved in any contract negotiations while in Government and that he was on record that he not agree that fixed-price contracts were the best way forward when he was with the OPW. He added that, with the downturn, he expected several contractors would go broke because they have encountered risk they would not be able to cope with.
Moreover, according to the former minister, when the construction industry lobbied the Office of Public Works, the OPW didn’t agree with fixed-price contracts.
Mr Parlon denied the inferences that he had several meetings recently with Mr Lenihan, or that that there was an uneasy relationship between the building industry and the Minister - which was “absolutely not the case”.
He said his meeting with the Minister in “normal industry lobbying” before the budget, was the one time the men had met officially.
Mr Parlon continued: “Why wouldn’t the Minister listen to a representative of an industry that is the single biggest employer in the country? . . . the main reason the Minister would be cosy with construction is that because they are the single biggest payer of taxes.”
“Of course I would lobby Government, as we do lobby everybody else”
