Sub contractors want State to hasten law on contract reform

BUILDING SUB contractors want the Oireachtas to speed up the introduction of a new law that will help prevent them being left out of pocket when large construction companies go under.

Two of the biggest building and civil engineering companies have been placed in liquidation and receivership in recent weeks, leaving millions in unpaid debts to trade creditors such as sub contractors and suppliers.

Pierse Contracting owes €51.7 million to sub contractors, many of whom said that they had not been paid for long periods when the High Court placed the company in liquidation earlier this month.

State toxic assets agency, Nama, placed Michael McNamara and Company in receivership two weeks ago.

While the level of its debts to sub contractors is not known, it is thought to run into seven figures at least.

Tony O’Leary of tiling firm, DD O’Brien, who attended a meeting of sub contractors organised by the Construction Industry Federation (CIF) in Dublin’s Green Isle Hotel yesterday, said afterwards that it was vital for the industry that new legislation to reform building contracts be passed by the Oireachtas.

The law, promoted by Senator Feargal Quinn, requires prompt payment to sub contractors and provides for a quick adjudication mechanism in disputes.

Under the current system, sub contractors often have to wait for weeks or months after a job has been completed before being paid. Mr O’Leary said yesterday that the new legislation is going through committee stage in the Seanad and said that the Government is committed to supporting it.

Brendan O’Halloran of civil engineering and excavation specialists, Barnmore, who also wants the legislation passed quickly, said that sub contractors are exposed to high risks, that include the loss of money and potentially stock and materials, by the contracting system used by State agencies and public bodies.

Jim Curley of Jones Engineering agreed that the State system was flawed. State contracts require the contractors to carry much of the risk on a given project.

Mr Curley argued that this means that main contractors pass this on to their suppliers and sub contractors, who he said were “virtually invisible” in the process.

He also pointed out that many of the main contractors are unlimited companies, which means that they do not have to publish financial statements.

Thus, where sub contractors are agreeing to work on State-funded projects, they are relying on State agencies and employees to ensure that the main contractor is solvent. He suggested that recent evidence indicates that they have not done this work properly.