Deputy Anthony Lawlor: I thank the Minister of State for attending. I compliment the Minister, Deputy Quinn, on the provision of six new schools in north Kildare, in Naas, Celbridge and Maynooth where new schools will be built, and in Clane, Celbridge and Kilcock where major extensions will take place.

I wish to highlight a problem in my parish in Kill, where two new primary schools were built in the past three years. One of them is incomplete and one was completed a year and a half ago. Following a tendering process a contractor was allocated. However, the dogs in the street knew this contractor would be in trouble within a few months of commencing the building and this was proven to be true. He only completed the rising walls of the building and then went into liquidation. This resulted in a number of subcontractors and building supply merchants not being paid.

The question I had to ask at the time was whether due diligence had been given during the tendering process to the company that had been awarded the contract. I thought lessons might have been learned. However, I recently discovered issues have arisen in regard to the tendering process in respect of a project at a second school in my parish of Ardclough.

It is worrying to note that the tendering process is not being properly adhered to. In my view this problem arises because the Department only considers low tenders, as a result of which many contractors submit tenders which are below cost. The awarded contractor then discovers half way through the process that he cannot afford to continue with the contract, leaving subcontractors, many of whom are from the locality in which the school is being built and those who supply materials to them out of pocket. There is a Bill before the Oireachtas dealing with subcontractors and the issues facing them.

Having undertaken some research I discovered that under EU rules the Department of Education and Skills can only deal with the lowest tender. As far as I am aware, most European countries do not award to the lowest tender, rather they give the job to whomever they believe will be able to complete the project. However, the Department of Education and Skills is rigidly following the rules laid down by the EU procurement section.

I hope the Minister of State will take on board the following points. The cheapest tender is not always the best value or best option. In my experience, this results in the Department having to re-tender to have the project completed. Below cost does not mean we get value for money. It may lead to poor quality building materials and to the non-payment of subcontractors. I ask the Minister of State to ensure the procurement section of his Department, when undertaking an analysis at prequalification stage, ensures all risks associated with a contractor are taken into consideration and the Department is not constrained by EU rules. It is important that common sense is allowed to prevail. We cannot allow a situation to arise again whereby the hopes of parents, pupils and teachers are dashed when their school is not completed on schedule.

I ask that the Minister of State, when reviewing the procurement process in his Department, would take on board these issues to ensure we do not end up with half-built schools around the country and no contractors on site owing to their having gone into receivership.

Deputy Ciarán Cannon: I thank Deputy Lawlor for raising this matter which provides me with an opportunity to outline to the House the Government’s strategy for capital investment in education projects over the next five years and specifically the procedures for tendering public works contracts to meet the projected demographic need during this period.

The Deputy will be aware of the context within which decisions relating to meeting the accommodation needs of schools must be considered over the coming years. Total enrolment is expected to grow by approximately 70,000 students between now and 2018 – more than 45,000 at primary level and 25,000 at post primary level. Second level enrolment is expected to continue to rise until at least 2024.

To meet the needs of our growing population of school-going children, the Department must establish new schools as well as extend or replace a number of existing schools in areas where demographic growth has been identified. The delivery of these new schools, together with extension projects to meet future demand, will be the main focus of the Department’s budget for the coming years. The five year programme which the Minister announced last spring will provide more than 100,000 permanent school places, of which more than 80,000 will be new school places. The remainder will be the replacement of temporary or unsatisfactory accommodation.

Schools building projects are tendered in line with public procurement procedures. There are two methods of tendering, namely, the open procedure and the restricted procedure. In both procedures, there are minimum standards for participation, including previous experience, turnover, insurances, capacity to obtain a bond, and so on. The minimum standards for participation are stated in the contract notice-eTenders advertisement. Previous experience of education work is not a prerequisite. However, previous experience of work of a similar scale and complexity is needed. For less complex projects of a small to medium scale, the open procedure is generally used and all contractors meeting the minimum standards are entitled to submit a tender, thus facilitating the inclusion of small to medium-sized enterprises and those with no experience in educational projects.

For larger or more complex projects like the project in the Kildare North area, where it is considered that prequalification of contractors is warranted, the restricted procedure is normally used. In the restricted procedure, there is an intermediary qualification stage during which the number of applicants is reduced or restricted to a specified amount – normally ten. The criteria for suitability assessment, which are taken from the Department of Finance capital management works framework, include company turnover, insurances, capacity to obtain a bond, personnel for the project, previous experience and health and safety competence.

The project referred to by the Deputy should have reached substantial completion late last year. In other words, the building should have been available for occupation by the school late last year. Up to the time of the Department’s decision to terminate the contractor’s obligation to complete the works, the project had not reached substantial completion.

I again thank the Deputy for allowing me the opportunity to outline the position with regard to the five year plan and the procedures for tendering and appointing contractors for school building projects which form part of this plan.

Deputy Anthony Lawlor: I thank the Minister of State for his comprehensive reply. However, I remain concerned about the level of below cost tendering for many projects. As I stated, below cost tenders are not always the best option. Just because under EU regulations we are obliged to take the lowest tender does not mean we are getting the best value.

I ask the Minister of State to ensure, in particular in respect of the two schools in Kildare North, that the Department can, where it believes tenders cannot be justified, use its common sense and select a contractor whom it knows will complete the project on budget and on time.

Deputy Ciarán Cannon: I will briefly outline for the Deputy the process by which this particular contractor was appointed. Initially, nine contractors submitted tenders. The contractor appointed at the end of the process was deemed to have submitted the most economically advantageous tender. The design team engaged by the Department then undertook a serious due diligence of the tender before submitting their report to the Department. Further checks, by way of the submission of particular documentation, were also undertaken before appointment of the contractor. The contractor concerned met all the criteria required at each stage of the tender process and was duly appointed.

I take on board the concerns expressed by the Deputy and will pass them on to the Minister, Deputy Quinn. We have a major capital programme under way for the next five years and will be endeavouring to avoid the type of situation that has arisen in Kildare happening again.