A report in today's paper caught my eye because it seemed like a perfect example of something I've been talking about for a long time now: the need for clear thinking.
The final section of the Limerick-Dublin motorway is close to completion and the builder is Bowen Somague Joint Venture. This company has a contract with the State to construct the road, and whatever arrangements it has with its sub-contractors is nobody's business.
Bowen Somague, an Irish-Portuguese consortium, is claiming €26 million in extra money for work it claims to have carried out, and the State is contesting this claim because it doesn't think the company is entitled to receive this public money. Bowen Somague in turn, has declined to pay one of its subcontractors, KC Civil Engineering, and this company has not paid its workers since the 1st November.
KC Civil Engineering apparently negotiated a back-to-back deal with the main contractor. This means that they get paid when the money comes through. Everybody knew that right from the start, and presumably it was on this basis that KC Civil Engineering expected to make a handsome profit.
Unfortunately, it seems their workers, who didn't have a back-to-back contract, were unaware that their employers would hold their wages if there was a problem, and they're understandably annoyed. They've blocked access to compounds along the length of the new road and they say they'll continue to do so until they get their money.
Who could blame them? After all, they have families to feed, and their employer hasn't paid them. They even want Biffo to intervene, because the road happens to pass through his constituency.
Now here's the strange bit.
According to the Irish Times report, the workers have the support of their employer, KC Civil Engineering.
Hang on a minute. Isn't KC Civil Engineering the company that refuses to pay the wages?
Aren't they the people who owe the money? In what sense are they supporting the workers? How about paying them?
A national newspaper let this pass without a critical word.
KC Civil Engineering has no contract whatever with the State. Its contract is with Bowen Somague Joint Venture, who are claiming money that the State doesn't think they're owed. They took the decision not to pay their sub-contractors and this decision had nothing at all to do with the Irish government. It was a private matter between two civil engineering companies.
Managing director of KC Civil Engineering Chris Wholey said he had “a lot of sympathy” for the workers.
Imagine that. I have a lot of sympathy for the people I didn't pay.
In this case, I completely agree with the NRA who said “The Local Authority (not to mention the NRA) has no power to intervene in the commercial relationship between the Contractor and his subcontractors, and is not involved in the argument.”
Mr Wholey accused the NRA of “hiding behind the contract” even though he has no contract with them.
It seems everyone is turning to the State for money these days.
Since this company has a contract with the main contractor and not with the State, can anyone explain to me why Biffo should be asked to intervene? Is this not just another example of the way we Irish assume everything can be handled by the back door? Is this not precisely what's wrong with this country?
That's fucking unbelievable.
This kind of racket isn't just common to Ireland, behind it is an attitude to public contracts the world over – I know of many cases here in Germany as well. The public purse invites offers for a job of work and private companies make submissions. The public authorities then pick the cheapest. Then, in the middle of the job, the company which won the contract by underbidding the others (and, frequently, because they have friends in high places) suddenly says, "Sorry, it's costing more than we thought, you have to give us more money!" And, usually, the State pays up.
What sort of way is this to run a fucking business? You underbid the others with an unreal offer and then come back in the middle of the job and demand more money! Tough shit! This is the free market enterprise everyone is so enthusiastic about.
KC Civil Engineering should borrow the money to pay their workers and then sue Bowen Somague for the money due to them, plus the extra costs incurred by non-payment. Surely the back to back agreement wasn't based on BS getting extra money from the government?
That's exactly right. KC has obligations to its workers if it agreed to take on the extra work. Those obligations have nothing to do with the taxpayer.
The only reason that such a dispute would rise to such an extreme would be where merit exists. BS received an award of €26m from a conciliator out of a €118m claim. Laois County Council have refused to settle for the €26m which was awarded by an independent third party approved and selected by the parties to which the dispute pertains. Whilst Laois County Council and BS contest whether this matter is settled now or in 3 years time under arbitration proceedings it is the various sub-contractors and suppliers who have constructed and financed the works who will now end up financing the contest between a local authority and an international contractor. On the basis that the conciliator has already awarded a substantial sum to BS then it is likely that merit exists for their claims and they will go on to find themselves in a far stronger position in any arbitration. Therefore the settlement figure is likely to increase and the local authority will also have to fund the cost of the arbitration which would likely run to somewhere between €5m-€10m. It is the Irish Exchequer that will end up funding this.
Whilst all this is ongoing it is the workers of KC Civil Engineering who are really hurting. Frantheman, I note your comment about borrowing money and suing BS for whatever damage they have caused but in fareness how can a small Irish sub-contractor take on the likes of Somague with an annual turnover of €4bn. All these supersize Main Contractor's have legal representation that is sometimes larger than the sub-contractors that they employ to undertake the work in the first place.
Bock, I disagree with your statement that the obligations to the workers have nothing to do with the taxpayer. Remember, when the government agencies are preparing tender documentation there is an onus on them to prepare this properly. Most claims under both the old forms of contract and the new forms of contract relate simply to inadequate preparation of documents and the costs arising thereafter. Therefore, if the Local Authorities have been deficient in sending out information in the first place then it is inequitable for the same Local Authorities to expect the various contractors carrying out the work to bear the additional costs incurred purely as a result of their own failures. Therefore, the obligations to which you refer have everything to do with the taxpayer.
As far as I know, KC have no contract with the local authority. Am I wrong?
Correct, KC have no contract with the local authority. However, the matter is not a private matter between two civil engineering companies and this can be vouched by the fact that KC Civil Engineering and Cappawhite Plant Hire were allowed to meet and discuss the disputes direct with Laois County Council. The new government forms of contract step down the risk and therefore any disputed matters are no longer just between two contracting parties but are actually between all the contracting parties. The various new sub-contracts have a 'back to back' clause which means that both the Main Contractor and Sub-Contractor's are intertwined in terms of risk and reward and therefore have to act in the best interest of one another.
What are KC's obligations to its employees?
It's obligations are to pay it's employees of course. But any company cannot pay what it does not have. Do you want the company or it's employees to just bend over and take the proverbial. What would you suggest doing as I know some of these men and want it to work out for them?
Why did the company ask its employees to do the work if it wasn't sure it could pay them?
I don't know the answer to that as I don't work for the company. However, the men that I do know that work for the company will vouch for the company and it's directors as being very fair and honourable men. Anyway you answered my previous question with a question. What do you think these men should do now.
I don't know what the men should do. That isn't what the post is about. In my opinion, the obligation is on the company to pay the employees.
A company that is unable to meet its financial obligations is insolvent.
So if Bowen Somague are insolvent and unable to pay KC what they are entitled to and this consequently makes KC inslovent and unable to pay it's workers then should KC pack it in as a company and let Bowen Somague ride off into the sunset in a couple of years time with a large settlement from the Irish State and not having to settle it's debts with the likes of KC whilst their ex employees and suppliers etc. bear the brunt of what could happen. Are you suggesting that the employees should just stand by idly and let this happen?
Must go now. Will check your response tomorrow. Thanks.
I have no views on what the KC employees should do.
All I know is that the Irish state has no obligations to the company. The contract is between the State and Bowen Somague.
It would seem the smart boys reckoned, probably rightly, that by making the employees of KC take the hit they could put pressure on the government to pay Bowen Somague by making it look like it's the state who are to blame for not paying the workers. They are simultaniously holding the workers to hostage while getting them to do their dirty work by putting pressure on the government. Corporate synergy I believe it's called
K C would like to pay the workers but has it occurred to anyone that they cant pay and thier bank wont help
I have every sympathy for KC and their workers. However, the point is that the Irish taxpayer doesn't owe the money.
You're kidding, right?
Blindboy was dynamite on Duffy today. I really dig the bandits.
I know this is off topic, but it was great radio. Have to go now, the horse's bollix is turnen blow out in the car park, what with the cold weather like.
…..and Joe thought that the Limerick accent of itself was an act.
Right lads. Back to the motorway, if that's ok. There might well be a Rubberbandits thread here, but not on the instructions of Tommy, and probably not the sort he'd like to see. I'm a cantankerous sonofabitch that way. I hate being told what to do.