1. The Department of Public Expenditure and Reform has today issued a circular reducing the level of construction performance bonds required on public works contracts. The construction sector has seen extremely high levels of insolvency in recent years which is reflected in the appetite of specialist insurance providers to provide cover at the levels previously sought. The tightening in the market is leading to tendering delays where it is proving increasingly difficult to award contracts should the performance bond level required in the tender exceed 12.5%.

The circular sets out new levels for performance bonds for projects and will take immediate effect.

In the context of the public capital programme this is the first of a number of steps that are being taken to reduce the risk posed by insolvency of a main contractor on a public works contract. In the event of insolvency there is a financial loss sustained both in the additional costs involved in retendering but also due to the delay in providing the project in question. Details of these further steps will be communicated shortly.

2. This Circular can be accessed through the link to Circulars on the navigation menu.

3. The following documents have been updated to reflect changes required in Circular 07/13:

a. Changes have been made to Schedule ‘Part 1 E – Performance Bond’ of the following (i) Forms of Tender and Schedules and (ii) Schedules for Public Works Contracts:

• FTS-1 (v1.5 01/06/2012) and PW-CF1 Schedule (28/07/2011);
• FTS-2 (v1.5 01/06/2012) and PW-CF2 Schedule (28/07/2011);
• FTS-3 (v1.6 01/06/2012) and PW-CF3 Schedule (07/10/2011);
• FTS-4 (v1.6 01/06/2012) and PW-CF4 Schedule (07/10/2011);
• FTS-5 (v1.5 01/06/2012) and PW-CF5 Schedule (08/08/2011); and
• FTS-7 (v1.2 01/06/2012) and PW-CF7 Schedule (03/10/2011)

b. GN 2.3.1.3 – Section 1.3 ‘Main Criteria (Economic and Financial Standing), Criterion 10 Performance Bond’.

c. GN 1.5 – Section 2.3.3 ‘Performance Bonds’

4. In addition to 3 c. above the following changes have also been made to GN 1.5 Public Works Contracts;

a. Pricing Documents – the inclusion of guidance on the use of a Bill of Quantity for use in conjunction with the Short Public Works Contract (PW-CF6).

b. A Supplement 2 to the Agreed Rules of Measurement version 4 (ARM 4) has been issued by the Society of Chartered Surveyors and is effective from 1 May 2013. Supplement 2 provides those preparing Bills of Quantities with the option to use a less onerous set of measurement rules than those included in ARM4 when measuring the mechanical and electrical elements of the Work Requirements. Supplement 2 defines which of the ARM4 Rules it replaces. An Introductory Note to Supplement is available at Appendix D4 of GN 1.5. See also separate News Item.

A Supplement 2 to the Agreed Rules of Measurement version 4 (ARM 4) has been issued by the Society of Chartered Surveyors and is effective from 1 May 2013. Supplement 2 provides those preparing Bills of Quantities with the option to use a less onerous set of measurement rules than those included in ARM4 when measuring the mechanical and electrical elements of the Work Requirements. The Rules of ARM4 Supplement 2 relate solely to how information is presented in the Bill of Quantities / Pricing Document. It does not relax the requirement for the level of information to be provided to tendering contractors to clearly represent the design and specification of the mechanical and electrical services such that they may be constructed by a competent Contractor. Supplement 2 defines which of the ARM4 Rules it replaces. An Introductory Note to Supplement is attached and is also available at Appendix D4 of Guidance Note 1.5 ‘Public Works Contracts’.

Link to: ARM4 and Supplement 2 Note 01-05-2013

1. A new ‘Instructions to Tenderers’ for use in a Restricted Procedure for Works Contractors using the Short Public Works Contract (ITT-W5); Invitation Letter; and Note for Employer have been developed.

2. An Invitation Letter and Note to Employer for use in an Open Procedure for Works Contractors using the Short Public Works Contract (ITT-W4) have also been developed.

3. Changes have been made to the instructions to Tenderers to reflect new arrangements for:

• The introduction of the new electronic Relevant Contracts tax (eRCT) system by the Revenue Commissioners in January 2012, which as a result the C2 certificate is no longer in use by subcontractors. This change will require to be reflected in the Department of Finance procedures for tax clearance in relation to public sector contracts and grants. Accordingly Circular 43/2006 is being revised and a replacement will issue shortly. In the interim, more details are available at http://www.revenue.ie/en/tax/rct/subcontractor.html. Note that the changes relate to use of the C2 only.

• A new suite of Notification letters, have been developed to replace the current model form letters 1.2 series and 1.3.

Note: These documents will be published on the website shortly and should be used in association with the revised ITTs published 23/04/2013. Current tender competitions, which are using the earlier versions of the ITTs, should use the model form letters 1.2 series and 1.3, which will continue to be available on the website under ‘Archives – Pillar 1’ when the new notification letters are published.

• Specialists – Section 5.10 (ITT-W2) and Section 5.11 (ITT-W1) – have been updated with separate instructions for (i) When a Candidate wishes to change a Specialist listed in the Works Requirements.(ITT-W1 and ITT-W2); and (ii) when a Candidate wishes to change a Specialist which it was initially pre-qualified with (ITT-W1).

4. The ITTW1 Invitation to Tender Letter to include the names of the Specialists who pre-qualified with the Candidates.

5. ITTW1 Note to Employer updated as a result of introduction of separate ITTW4 (Open Procedure) and ITTW5 (Restricted Procedure) for use with the Short Public Works Contract (PW-CF6).

The following documents have been updated to reflect the changes at 3. above:

ITTW1 v1.5 (dated 10 August 2011);
ITTW1 Invitation to Tender Letter (dated 18/07/2011);
ITTW1 Note to Employer (dated 01/03/2010)

ITTW2 v1.2 (dated 10 August 2011);
ITTW2 Note to Employer (dated 01/03/2010)

ITTW3 v1.2 (dated 10 August 2011);
ITTW3 Note to Employer (04/02/2010)

ITTW4 v1.0 (dated 7 October 2011);

ITTW6 v1.0 (dated 25 October 2011);
ITTW6 Invitation to Tender Letter (dated 25/10/2011);
ITTW6 Note to Employer (dated 25/10/2010)

Minor text changes have been made to Section 9.5 ‘Assessment Methodology’ to correct previous drafting errors.

15 March 2013

Additional form fields have been added to Schedule B.

A typo error has been identified in the clause reference in the header.  Clause 10.7 has been replaced with clause 9.7.

The footnote on the cover of the document FTS1 contained a typo and has been corrected

Clause 10.7.3 of the Public Works Contract for Building Works Designed by the Employer incorrectly referred to Part 2E of the Schedule instead of Part 2 D since version 1.7 was published on 28 July 2011. This has now been corrected to Schedule Part 2 D.

• The footnote regarding the rates of VAT has been amended in the Forms of Tender (FTS1-FTS8 and FTS11) and now has a link to the Revenue website www.revenue.ie for details of the current rates. 
• The Form of Tender and Schedule for the Short Public Works Contract (FTS6 v1.2 – 3 October 2011) has been amended to allow the Form of Tender to be witnessed.

The EU Commission has revised the Public Procurement Directive’s thresholds resulting in an increase in the thresholds for advertising in the Official Journal of the EU which comes into effect on 1 January 2012. The details are set out in the attached table. EU Thresholds for advertising in the Official Journal of the EU applicable from 1 January 2012.

References to EU thresholds have been updated in the following Guidance Notes to align with current EU thresholds which are effective from 1 January 2012 to 31 December 2013:

• GN 1.4 – Procurement Process for Works Contractors (v 1.0 – 10 May 2011)
• GN 1.5 – Public Works Contract (v1.2 – 31 March 2011)
• GN 1.6 – Procurement Process for Consultancy Services (Technical) (v1.1 – 23 March 2011)
• GN 1.6.1 – Suitability Assessment of Service Providers, Restricted Procedure (v1.0 – 23 March 2011)
• GN 1.6.2 – Suitability Assessment of Service Providers, Open Procedure (v1.1 – 23 March 2011)
• GN 2.3 – Procurement Process for Works Contractors (v 1.1 – 10 May 2011)
• GN 2.3.1 – Suitability Assessment of Works Contractors, Restricted Procedure (v1.0 – 28 January 2011)
• GN 2.3.2 – Suitability Assessment of Service Providers, Open Procedure (v1.0 – 28 January 2011)