I move: "That the Bill be now read a Second Time."
This Bill legislates for the mandatory inclusion of social clauses in all public procurement contracts worth in excess of €1 million. Social clauses enable Government to use public procurement contracts as a multitasking instrument of policy. Merely using public contracts to obtain goods and services is now an outdated approach. The inclusion of social clauses in public contracts requires public purchasers and suppliers also to protect the vulnerable, support the disadvantaged, develop the social economy, protect the environment and promote other social goals and community benefits during the course of the project as a condition of the contractual award. In other words, social clauses are a tool for getting more value out of each public euro spent. In the tendering process, such clauses provide selection criteria that sit alongside more traditional criteria, such as economic performance.
The State spends approximately €9 billion each year on goods and services. While social clauses have been included in a very small number of public contracts, they are not currently legislated for nor are they mandatory. It is our view that in order to best serve the public good, any value for money strategy in respect of the spending of public money must not focus exclusively on the bottom line, although that would be an element of the decision. Unfortunately, to date, current procurement policy has all but ignored the potential benefits for small and medium-sized indigenous businesses, social economy enterprises and wider society from Government spending.
Some Ministers have wrongly argued that EU directives prevent them from using social clauses. However, this was and is incorrect. Indeed, new EU rules under the EU public procurement directives adopted in January of this year:
Seek to ensure greater inclusion of common societal goals in the procurement process. These goals include environmental protection, social responsibility, innovation, combatting climate change, employment, public health and other social and environmental considerations.
The new rules modify the 2004 rules on public procurement and have been described by the Council as a "major overhaul". They introduce a new criterion of the "most economically advantageous tender", otherwise and perhaps unfortunately known as MEAT, in the award procedure. Applying this criterion will enable public authorities to put more emphasis on social considerations and the need to use public money to meet social goals while still taking account of price considerations. Any company failing to comply with obligations relevant to social clauses in a public contract may be lawfully excluded from public procurement procedures on this basis. As the European Parliament's rapporteur for procurement described it, the new EU criteria will "put an end to the dictatorship of the lowest price and once again make quality the central issue" in the spending of public money. It represents a much more rounded value for money concept than that which is currently applied in Government procurement decisions. In other words, it is no threat to value for money considerations but rather complements them. On the contrary, it has the potential to ensure better value for each public euro spent. This means that the Government is now legally obliged to legislate on the issue of social clauses no later than January 2016. While I do not argue that my Bill fully implements the new EU public procurement directives, it is simply a strong start that could be built upon by complementary legislation between now and the compliance deadline.
This reality of the new EU requirements recently forced the Minister for Public Expenditure and Reform to establish a social clauses project group within the new Office of Government Procurement, OGP, which is charged with increasing the use of social clauses on a pilot basis. It has not been afforded a robust mandate by the Minister and I understand that it has met only twice since it was established in June so it is hardly a bold initiative. Nevertheless in theory, this Minister and this Government are committed to at least the minimum goals of this Bill. I welcome the establishment of the OGP, the centralisation of procurement decisions into the future and the fact that the chief procurement officer is now charged with putting more focus on the issue of social clauses than in the past. However, this is hardly the same as putting social procurement on a statutory basis and making it mandatory, as I am proposing.
There is nothing stopping the Government and the Minister from supporting and adopting this legislation. I welcome the fact that the Government has taken the decision to allow this legislation pass to Committee Stage. I hope that it is not simply a strategy to put it in cold storage but nonetheless I welcome that decision. It is worth noting that Sinn Féin has successfully pursued the inclusion of social clauses in public contracts in Northern Ireland. The then Minister for Regional Development, Conor Murphy, insisted that social clauses be written into major capital road building contracts providing jobs for the long-term unemployed and also apprenticeships. There is no reason such an approach cannot be adopted here and rolled out on an all-island basis. It should also be noted that progress is also possible at local authority level with respect to the inclusion of community benefit clauses in public contracts. In March 2014, the Sinn Féin Dublin City Council group succeeded in passing a motion on including social procurement clauses in council contracts based on my proposed legislation.
It is hoped that similar initiatives can succeed in other local authorities. It will certainly be pursued by our local representatives in the forthcoming period.
It is not just a matter of promising what Sinn Féin might do in government. We have demonstrated that where we have influence or power, it is possible to deliver on these initiatives.
This legislation allows for a flexible minimum or maximum approach to social clauses with regard to content. However, it is robust in the scope of its application. It applies to all contracts valued in excess of €1 million tendered by all public authorities, which are defined in section 1 as including "any person or body established by law and through which any of the legislative or executive powers of the State are exercised, other than the President".
The legislation contains the following provisions under section 2, to which the main contractor must adhere while retaining all current employees of the company. Under section 2(b), one long-term unemployed person must be hired per €1 million value of the public contract. Under section 2(c), one apprentice must be hired per €2 million value of the public contract. Under section 2(e), the opportunity to develop work-related skills and, where necessary, training programmes must be provided for. Under section 2(g), the main contractor must contribute to sustainable development. These are the minimum social requirements and they are modest. However, section 2(h) is a crucial clause which provides for a Government to go even further, by allowing for "any other social clause which the Minister or public authority sees fit to be included in the contract". Of course, such clauses would also have to comply with EU rules.
Section 4 of the Bill provides that the new tender process will require applicants to demonstrate at the outset how the indicated social goals will be met, and that failure to meet the social clause criteria will constitute grounds for rejection of the tender application.
Section 5 introduces a penalty process where the social clauses contractually agreed have not been implemented in full. In this regard, the main contractor will be obliged to provide a quarterly report on the implementation of the social clause in the contractual agreement. Section 3 gives the chief procurement officer oversight responsibility. Finally, section 6 provides for an independent appeals process where the chief procurement officer makes a finding that a contractor is in breach of a social clause.
The Minister and the Government have previously argued that the inclusion of social clauses will displace existing workers in a company that is awarded a public contract. I do not accept that. Indeed, experience shows that this is not necessarily the case, and the new EU rules on social procurement arguably preclude this. However, to make absolutely certain that it cannot happen, we have included a further provision at section 2(d) that the contractor must comply with fair employment, equality of treatment and anti-discrimination principles as set out in employment law.
It is true that Departments are already including social clauses in certain public contracts, but this is done in an ad hoc way and on a small scale. While I acknowledge that they are being used under the devolved schools programme, they are only being piloted on a limited number of schools projects, according to the Minister. He has given no commitment that social clauses will be attached to all public works contracts awarded under the much-trumpeted €2.25 billion stimulus programme that he has repeatedly re-announced since 2012, or in the €17 billion in funding under the infrastructure and capital investment programme to 2016.
We argue that social clauses should be attached to all large capital projects without exception so that public moneys are used more smartly, more efficiently and in such a manner that citizens, who are in fact the investors, and not just companies, feel a tangible benefit from public spending. This should no longer be discretionary but mandatory. Hence we suggest legislating for this now, well in advance of the EU directive compliance deadline.
In conclusion, I commend the Bill to the House and I invite Members from all sides to support this legislation. I welcome the fact that the Minister for Public Expenditure and Reform will allow the Bill to progress to Committee Stage and will co-operate in the job of improving and amending it where necessary. I will be happy to have the legislation amended with a view to strengthening it, although, obviously, not with an eye to watering it down. I also welcome and encourage co-operation from colleagues across the House, including on the Opposition benches. I urge the Minister to take this opportunity to build on what has been a minimalist approach so far to social clauses and to resist the temptation to delay what is inevitable, advisable and beneficial. I look forward to the debate.