Committee Reports > List of Committees > Joint > 1980 > Committee on Commercial State-Sponsored Bodies > Report No. 12 - National Building Agency, Limited

APPENDIX 31

MEMORANDUM FROM CONSTRUCTION INDUSTRY FEDERATION

The National Building Agency was set up under the (then) Department of Local Government in the early 1960’s to provide houses for employees of State organisations and employees of new industries. The Federation had no basic objection to the concept of the Agency. Later, its function was extended to include provision of large housing estates as a supplement to local authority housing sections (e.g. Ballymun).

The Board of the Agency consisted of Civil Servants, mainly administrative and mainly from the (then) Department of Local Government. Similarly, the Chief Executive was seconded from the same Department and was again of an administrative background. These points are highly relevant with regard to the manner in which the Agency operated.

In 1974 the (then) Minister for Local Government, Mr. James Tully, T.D. made a welcome change by opening membership of the Board to other persons, some of whom have technical qualifications. However, the management (i.e. Chairmanship and Chief Executive) continued to be administrative Civil Servants.

Shortly after its inception, the Federation began to receive complaints from members and from trade unions that the NBA was accepting tenders, in many cases, from firms which had very little experience, which did not have the capacity to carry out the contracts to the requisite standard and which were not observing the agreed wage rates and conditions of employment. While complaints of this nature are sometimes received from “disappointed” competitors, the volume in this case was unusually high. On checking the matter, we ascertained that (a) the statements on conditions of employment were for the most part correct and the Agency apparently was not concerned with this aspect, despite the fact that it is a public body (in fairness, although it does not excuse its conduct, it should be noted that the Office of Public Works, for example, is just as guilty in this regard despite its lengthy “Fair Wages” Clause, (b) the statements regarding capacity to execute work were verified by the unusually high rate of bankruptcy and non-completion of contracts by NBA contractors as well as numerous complaints regarding quality of NBA work. As far as can be ascertained this was due to a philosophy of the NBA that the lowest tender was necessarily the best. In turn, this emanated from the lack of experience of the NBA management in dealing directly with the award of contracts. The lack of experience could be excused up to a point but not when the experience of many years should have shown the fallacy of its approach. By contrast the record of contractors employed directly by local authorities in completing their contracts, and in the quality of their work, has been very considerably better.

Presumably because of experience gained, in terms of contracts not completed or completed inadequately, there was an improvement in the early 1970’s with regard to the type of contractor employed. However, the basic philosophy still tends to remain, as for example in the case of Lakeglen Construction Co. Ltd. where a substantial contract (£900,000) was awarded in 1978 when it was known to the NBA that the firm was in serious financial difficulty. The firm then went into liquidation and its various NBA contracts (Dublin and Cork) had to be completed at a greater cost.

With regard to NBA involvement in large-scale contracts, supplemental to local authority programmes, the experience again has not been good, both from the industry’s point of view and that of the general public. In 1965, when the Ballymun contract was about to be placed, the (then) Minister for Local Government, Mr. Neil Blaney T.D., assured the Federation and the trade unions that its placing (estimated then at £10 million) would not affect the finances available for the rest of the local authority housing programme throughout the country. In 1966 and 1967, the ordinary local authority programme was in fact very severely curtailed due in part to the Ballymun commitment.

In 1967 tenders were invited for two extremely large housing contracts in Cork and in Limerick on the very unusual basis that the contractor would supply the finance, to be repaid on completion of the contract. After receipt of the tenders, this condition was withdrawn. The Federation protested to the Department of Local Government and the NBA, pointing out that other contractors would have tendered but for this unusual and onerous condition. Despite this, the award of the contracts was confined to the firms which had tendered on the original basis.

In fairness, many NBA contracts have been awarded and executed properly and it is the adverse cases which receive comment and publicity. However, it is obvious that radical changes should be made in the NBA and our suggestions are as follows:

1. The scope and objectives of the NBA should be more clearly defined. At present, these are vague and it does not have a clearly defined role.

2. Given the experience of local authority staff, the NBA might function more effectively by operating as an advisory body rather than one which places and supervises contracts i.e. where there is a particular shortage of houses due to demand on the time of local authority staff, the Agency could arrange for consultants to be appointed for particular contracts who would perform the work at present carried out by the Agency.

3. With regard to houses for State personnel, the Agency could act as a purchasing agent on behalf of the State, purchasing houses already built, rather than commissioning the construction of houses. In suitable cases, the purchase could be arranged by way of advance orders. This would be a more efficient system than the present system.

4. The Agency should, in its administration, be more technically oriented because it is dealing with technical matters i.e. its Chairman and Chief Executive (together with most of its Board) should be professionally qualified and have a background of experience in commissioning housing work. Selection of board members on a political basis should be avoided.

3rd January 1980