Public sector procurement policy, Ireland
This case on public sector procurement policy focuses on the reduction of undeclared work in Ireland. More generally, it is seen as a mechanism to maintain employment standards in the public sector and uphold statutory norms, notably in relation to construction companies tendering for and engaging in public works contracts. The parties involved are hopeful that such procurement policy measures will deter practices such as undeclared work in private sector companies reliant on winning public sector contracts.
Under Ireland’s 10-year social partnership agreement Towards 2016 (2.86Mb PDF) – which has since been reviewed in the new Transitional Agreement 2008–2009 (2.8Mb PDF) – recent national agreements between the Irish government and the social partners have established protocols regulating public procurement. The latter refers to arrangements under which the private sector supplies public infrastructure and public services on behalf of the state for a contracted period. These protocols in national agreements set out the employment standards that private sector contractors are expected to adhere to – partly to prevent unscrupulous practices associated with the ‘hidden’ economy or undeclared work.
The main actors involved in the public sector procurement policy are the Irish government, public sector employers, public sector trade unions and the Construction Industry Federation (CIF).
The main objective of the public sector procurement policy is to maintain employment standards in the public sector by establishing regulations relating to the standards expected for private sector contractors – for instance, in relation to reducing practices associated with the hidden economy or undeclared work, particularly in the construction sector.
The public procurement measures in the new Transitional Agreement concluded in September 2008 build on existing guarantees in a previous national social partnership agreement Sustaining Progress (513Kb PDF). The wording of the public procurement clause in Sustaining Progress read as follows:
- ‘8.1 The Government recognises the importance of having clear and consistent guidelines which provide the basis by which goods and services are procured on behalf of public authorities. The Government recognises the importance of a balanced approach to public procurement and will seek to obtain value for money while having regard to standards of employment.
- 8.2 The Framework for Public Private Partnerships (PPPs) agreed by IBEC, CIF and ICTU in 2001 states that all parties to a PPP arrangement should have regard to appropriate industry norms in terms of pay and conditions and to prevailing national and/or industry-wide agreements including health and safety regulations. It goes on to say that such an approach should be consistent with protections provided for under the Transfer of Undertakings (Protection of Employees) Regulations and the Acquired Rights Directive and that PPPs should be approached on the basis that no less favourable terms than those set out in the Transfer of Undertakings Regulations apply.
- 8.4 The Government when transposing the EU Procurement Directives will consider, in consultation with IBEC, CIF and ICTU, measures having regard to standards of employment and value for money for the Exchequer.
- 8.5 A Liaison Group, comprised of ICTU, IBEC, CIF and relevant Government Departments, will be established to monitor developments in this area. The EU requires that the Directives be transposed into Irish law by 2006.’
Ireland’s new national agreement, the Transitional Agreement, contains a section entitled ‘Supporting employment standards through public procurement’ (Section 13). This measure is designed to ensure that private contractors tendering for and engaging in public sector contracts adhere to employment regulations and standards. It is intended to prevent private sector contractors from adopting practices associated with the informal economy.
Accordingly, in the new agreement, the government and social partners reiterate their agreement on the importance of public procurement policy as a mechanism for contributing to the maintenance of employment standards and statutory norms, including in respect of wage levels, while also ensuring competitive tendering and value for money. The parties have noted that, in the construction sector, new ‘Forms of Construction Contracts for Public Works’ now apply.
Under revised procurement guidelines to be issued by the Department of Finance, service contract conditions will contain a similar approach in relation to compliance with the existing legal requirements. The Departments of Finance, Environment, Heritage and Local Government and Transport, in particular through the Government Contracts Committee, will actively promote compliance by highlighting and maintaining awareness of the new provisions, through guidance in the practical operation of the provisions. In this context, in the interest of promoting good industrial relations practice, contracting authorities will issue advice to contractors in the performance of a public contract to avail of access to the Labour Relations Commission Conciliation Service, Labour Court and the Rights Commissioner Service (for example, in the event of an industrial dispute), as appropriate, in accordance with industrial relations legislation. The Department of Finance will establish a liaison mechanism at which issues arising from the implementation of the foregoing commitments can be monitored and discussed by the parties to the Transitional Agreement.
The government will hold discussions with the social partners with a view to exploring the possibilities for further development of all-island cooperation on public procurement consistent with best practice. In the light of those discussions, the possibility of establishing a joint North-South taskforce on public procurement, to include representatives of the social partners, will be explored with the Northern Ireland Executive.
Furthermore, the Public-Private Informal Advisory Group (IAG), which includes representatives of IBEC, ICTU and CIF, will continue to meet on a quarterly basis to discuss joint public-private sector issues. The group plays an important role in helping to develop partnership arrangements with the private sector by reflecting the interests of the social partners in the area and facilitating the parties involved to exchange views and information on issues arising in relation to PPPs.
Evaluations and outcome
Achievement of objectives
There is no definitive evaluation or evidence yet of the impact of the public sector procurement policy in reducing practices associated with undeclared work. It is perhaps too early to fully judge the impact of public procurement policy measures. However, the presence of the national protocols on public procurement appears to have had some influence at local level, in relation to collective agreements between companies and trade unions on contractual arrangements for private companies engaging in public sector work.
To date, the most innovative collective agreement in this area was concluded in 2006 between private sector environmental waste management company Oxigen and Ireland’s largest trade union, the Services, Industrial, Professional and Technical Union (SIPTU). Oxigen, which has a contract with Dublin City Council for environmental waste management, and SIPTU concluded a new five-year collective agreement that involves recognition of SIPTU on a ‘single point’ basis, and provides for novel dispute resolution options. Helpers and operators at the company also received pay rises of around €80 a week. There are also protocols for upskilling workers, and enhancing training and development, given that it is stated in the agreement that ‘the company’s success in delivering a quality service is entirely dependent on the skill, commitment and behaviours of employees at all levels’.
The Oxigen agreement should be of considerable interest to any private company tendering for public contracts, as well as companies and trade unions that are involved in union recognition disputes. The Oxigen deal is particularly noteworthy because it establishes a template for the employment standards that private contractors have to abide by if they are to win public sector contracts. For example, the Oxigen agreement may provide a template for private sector companies that currently do not recognise trade unions, but who may need to do so in the future if they are to secure public sector contracts.
Under the wider 2005 Dublin City Council agreement, all employees working for the council’s contractors are expected to enjoy the same access to the state dispute resolution agencies and machinery as that available to directly employed council staff. The Dublin City Council agreement does not imply full trade union recognition. However, it suggests that where recognition is in place, securing a contract may be easier. Accordingly, the outcome is that private companies engaging in dubious undeclared work practices would be unlikely to win public sector contracts.
Obstacles and problems
One general obstacle or problem that has arisen in terms of how undeclared work in Ireland relates to employment status is the classification by some companies of workers as ‘self-employed contractors’ in circumstances where they would normally be regarded as paid employees. This has arisen mainly in the construction industries – which is obviously an issue that might arise in relation to public procurement. This has become a source of tension between the social partners. While for the worker there may be disadvantages in the form of job insecurity and insufficient social insurance cover in the long term, basically, subject to certain rules, the choice of declaring oneself as ‘self-employed’ lies with the individual. There have been accusations of undue ‘persuasion’ applied by employers, who are likely to benefit –because of lower employment costs – if the self-employment option is taken up by workers. It is believed that immigrant workers (who are frequently found in the construction sector) are more vulnerable to these activities, particularly on construction sites.
This initiative potentially applies to any private sector company tendering for public sector contracts.
Dublin City Council, Website: http://www.dublincity.ie/Pages/Homepage.aspx
Tony Dobbins, IRN Publishing