Committee Reports > List of Committees > Dáil > 1984 > Committee on Public Expenditure > Report - Office of Public Works

APPENDIX 6

Mr. P.M. Judge,

Committee on Public Expenditure,

Leinster House,

Dublin 2.

I refer to Mr. O Griofa’s minute of 15 May, 1984. We have now got particulars about civil service accommodation in the Netherlands and Denmark.

In the Netherlands a central body, the Government Building Agency is charged, inter alia, with providing accommodation for Government Departments and their subordinate agencies. The Agency (Rijksgebouwendienst - RGD) is part of the Ministry of Housing and Physical Planning.

The accommodation activities of RGD comprise building projects such as regional employment exchanges, inland revenue offices and functional buildings for the national police force. Although ownership is the preferred option for accommodating government departments this has not always been found possible and it is often necessary to rent buildings. Throughout the country some 1400 buildings, large and small, have been rented. These takes covered a gross area of 930,000 m² of which 660,000 m² is office accommodation.

RGD maintains a permanent survey of the property market situation and when the need to rent arises it uses its expertise to negotiate to the best possible advantage e.g. no system of tendering etc. is used. Most rental contracts run, apparently, for 5 to 10 years with 1 or 2 five year renewal options; rent is adjusted annually in line with the consumer price index but reviewed at the end of every 5 years to open market rental value. In normal circumstances grant of a rent free period would appear to be available only in the context of the overall deal and is considered as a price item. In the present slack state of the real estate market inducements such as rent free periods are on offer.

Initially the RGD selects premises on the basis of a programme of spatial needs. If a certain building is chosen a programme of technological requirements on which to base the adaptation process is prepared. While RGD try to get the latter before rent becomes payable it appears that this is not always possible leading to the building being unoccupied while rent is payable.

Over the last five years in some 90% of rented buildings the owners have provided partitions, light fittings and floor coverings or funds therefor - this being part of the “terms of trade”. In case where the owner does not provide these facilities RGD designs the layouts and the work is done by a contractor who is selected by competitive tendering. Depending on the scale of the building the state of maintenance and the complexity of technological requirements periods, mostly between 3 and 6 months, can occur between the date rent becomes payable and occupation by staff.

In Denmark there is an agency of the Government under the direction of the Ministry of Housing - the Ejendomsdirectorate-EDD - to provide for the accommodation needs of the central offices of Government Departments, to maintain national parks and royal castles. On the accommodation side therefore EDD acts mainly in Copenhagen.

At present EDD controls some 400,000 sq. m. of office space of which 50% is state owned and 50% rented from private landlords. The overall policy is to own rather than rent but in the current financial situation no purchases are being undertaken. When renting EDD examines properties on the market at the particular time with a view to obtaining suitable premises at the best advantage; there is no advertising of needs.

EDD has no hard and fast rules about agreements on commencement of rent on a property. If a very suitable property came on the market EDD might rent before it had detailed plans drawn up for its conversion into Government offices but given the current state of the market such occurrences would be rare. EDD had no record of a renting arrangement where the owner offered a rent free period while EDD had physical control of the building.

Generally EDD policy in regard to extra or alternative accommodation is that a Department must submit a detailed brief before EDD enters the market rather than after a property is acquired despite the fact that the physical limitations of buildings may make changes in Departments’ plans necessary. The Architects design a scheme while negotiations are underway for a particular building. EDD accept that this work is a risk worth taking even if the deal falls through and a particular property is not taken.

The owner does not hand over the property to EDD ready for use. EDD is responsible for the final design and fitting out of rented offices. It often invites tenders from a closed group of proven contractors to avoid delays in small jobs, any collusion leading to blacklisting. For larger jobs open competitive tendering is used. Open tendering takes longer, of course, than closed tendering but EDD considers that overall the system works well. EDD does not normally experience staff problems over transfers. This is attributed to the efficiency of the public transport system in Copenhagen which enables transfer to a different part of the city to be made without adding excessively to the travelling-to-work time. It has never been the practice in Denmark to pay disturbance allowances.

As in the case of the Property Services Agency in Britain the procedures adopted by RGD and EDD in providing accommodation for government departments have many similarities to those of the O.P.W. and these bodies also regard ownership as being preferable to renting. The practice adopted in recent years by RGD of having the lessor carry out fitting out in most cases or providing funds therefor differs from the EDD the P.S.A. and O.P.W. One possible drawback could be that if the cost of the fitting out is reflected in the rent one could be paying rent, enhanced by rent reviews, for at lease some renewable items. In addition on the general principle that providing ones own requirements is on the whole more economic than leasing, it would seem to make better sense to do whatever work such as fitting out as can be done - by competitive tendering - and pay for it at the outset then have the cost incorporated in the rent. It is not clear if RGD get fitting out free in any cases.

The EDD practice in regard to “closed” tendering is comparable to the practice of restricted tendering adoptedby O.P.W. in certain cases. As regards obtaining briefs of requirements from client departments, the EDD approachis close to that notified to Departments by the Dept. of Finance in March, 1983.

The response of the three agencies to our enquires have been most helpful. The many similarities and occasional points of variance are, of course, of great interest. Also we feel that some very valuable contacts have emerged from the exercise.

Yours sincerely,

(P. C. KENNY)

29 June, 1984.