Committee Reports > List of Committees > Dáil > 1939 > Committee of Public Accounts > Report - Appropriation Accounts 1936 - 1937

APPENDIX IX.

INDUSTRIAL ALCOHOL FACTORIES.

1. The contract placed by the Minister for the erection of the Industrial Alcohol Factories followed the lines normally adopted in placing orders for constructional works and was approved by the Law Officers before issue. The normal penalty clauses were inserted to cover several eventualities, including failure to complete the works within the specified time. The architect appointed by the Minister to supervise the works was granted the customary powers to extend the time limit to cover delays due to causes such as Acts of God, strikes and necessary variations in the plans and specifications during the progress of the building operations. To him also was entrusted the responsibility of deciding finally whether any of the penalty clauses could be invoked against the contractors. The contract gave discretionary power to the Minister to obtain a bond from the contractors for the full amount of the contract for the due performance of the work within the appointed time.

2. Delay did, in fact, occur in the completion of the work, but the architect certified that the contractors had not rendered themselves liable to penalties. He reported that the delay was due to causes outside the contractors’ control, the principal ones being bad weather, its effect on the sites, and strikes at home and abroad whence supplies of certain materials were necessarily obtained. Although the architect was the final arbiter, his certificate was accepted by the Minister only after consultation with the Office of Public Works.

3. The question whether the contractors should be required to enter into a bond received very full consideration. The financial standing and competency of the contractors were quite satisfactory; and the method of payment adopted by the contract left at all stages a sufficient balance due to the contractors to enable recovery to be made of any penalties that might accrue under the terms of the contract. The Managing Director waived the requirement as to the completion of a bond; and the Industrial Alcohol Advisory Board, and subsequently the Department, after careful consideration of all the circumstances, concurred in this action. The position of the Department was not in any way prejudiced in the course of subsequent developments by reason of the fact that a bond had not been obtained.

4. The payment of £6,500 to the Minister’s technical advisers arose out of the retention of their services beyond the period provided for in their agreement with the Minister. They were bound by the Agreement to render certain defined services over a given period in consideration for a fixed payment. The services included the preparation of plans and specifications for buildings and equipment capable of giving certain results guaranteed by them under penalty. This obligation compelled the unremitting attention of their organisation and the presence of their technicians at every stage of the formulation and execution of the plans. For reasons which will be subsequently explained, the building contract was not placed within the time contemplated when the Agreement was signed, and the Minister was thus obliged to retain the services of his technical advisers for a considerably longer period than had been anticipated. The company lodged an application for compensation for the extra demand made on their organisation, and, on advice tendered by the Attorney-General, following full consideration of all the relevant facts, a settlement was negotiated on the basis of a payment of £6,500, which represented a very substantial reduction on the original claim.

5. The original competition for the building contract evoked only three Irish tenders, one being a quotation for merely part of the work. None was acceptable on grounds of price. The Minister was naturally dissatisfied with this response. It was suggested to him as a possible explanation that the calculation of quantities in the metric system might have presented difficulties to Irish firms, and, although the argument was not a convincing one, the Minister was determined that any element of doubt should be removed by the issue of Bills of Quantities prepared in accordance with Irish practice.

6. The preparation of Irish Bills of Quantities, the readvertising of the contract, the issue of the fresh invitations to tender, and the comparison of the quotations in relation to the many intricate technical aspects which they presented were factors in the delay that took place in commencing the building of the factories.

7. In deciding to go out to tender a second time, the Minister was not unmindful of the effect on his Agreement with the technical advisers. He anticipated a delay of not more than eight or ten weeks in the placing of the contract and felt that any compensation falling to be paid for that period of additional service would be justified on grounds of policy if the contract were secured by an Irish contractor.

8. The second set of tenders realised in part the Minister’s expectations. A quotation, which was the lowest and gave the best terms for delivery, was received from an Irish contractor who tendered in association with a Continental firm long registered as an external company in this country. The time for delivery was, however, much longer than could have been secured had a Continental tender been accepted in the first instance. This development could not have been foreseen, and as there was no possibility at that point of securing better delivery terms, the joint tender was accepted. The net result of the effort to obtain an acceptable tender from an Irish contractor was that the completion of the distilleries was delayed for over eight months.

Secretary,

Department of Industry and Commerce.

10th January, 1939.