Public Services and Procurement (Social Value) Bill 2015: Committee and Remaining Stages

I welcome the Minister of State, Deputy Simon Harris.

Sections 1 and 2 agreed to.
SECTION 3

I move amendment No. 1:

In page 5, line 19, after “enterprises,” to insert “micro businesses,”.

I understand the Minister of State has requested that we do not table amendments today and that he may consider them on Committee Stage in the Dáil. If that is correct, I do not mind withdrawing the amendment on the basis that we can resubmit it on that Stage.

Amendment, by leave, withdrawn.
Amendment No. 2 not moved.
Section 3 agreed to.
Section 4 agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

I will give way to the Minister of State should he wish to speak first.

I thank Senator Darragh O'Brien for the work he has put into developing the Bill. We had a very good debate on Second Stage in the House. I am pleased, in the spirit of bipartisanship and recognising that a very constructive effort has been undertaken by the Senator in consultation with a number of stakeholders, to allow the Bill to pass Committee, Report and Final Stages today and not to oppose it. I have one caveat, which the Senator and I have discussed, namely, that it will need further work. I envisage that work could take place in the Dáil when the social clauses working group has reported and I expect to receive that report in the next number of weeks.

For the benefit of the House, there is a benefit to having social clauses legislation because it sends out an important message in terms of the Statute Book, namely, that we want people to consider the social impact of procurement. I think the Senator will agree that it is important that such legislation is coupled with guidance in order that it has a practical effect.

I will not go through everything in the Bill, but I will mention one or two concerns I have for the interests of clarity. The definition of a public service body is something I would like to see examined further. I have some concerns about the inclusion of the Central Bank, NAMA and the NTMA, and would need to consult the Offices of the Chief State Solicitor and the Attorney General about this. The definition of "public service" contained in section 3(1) of the Ministers and Secretaries (Amendment) Act, may, for example, be a useful reference in defining public service bodies covered under the Bill. Section 2 puts a legal onus on contracting authorities to consider community benefit requirements, which is broadly acceptable and not prescriptive. It reads very well and has a good impact. However, there is obviously a need for flexibility, something we discussed on Second Stage. We do not want to have any unintended consequences whereby an SME or Irish company would be accidentally put at a disadvantage.

I see no major problems in a number of areas the Bill is trying to target such as training, recruitment, subcontracting, SMEs and innovation. As I said, there is an overlap with some of the work being done by the social clauses working group which is led by the Office of Government Procurement and we are already piloting a number of social clauses regarding the devolved schools building programme and the Grangegorman campus development. Another touchstone in the area to which I will have to return when the Bill goes to the other House is the 2010 guidance on social clauses developed by the European Commission which lists a wide range of social issues that may be addressed.

I am praising the Bill rather than being critical. It has a number of very good elements. I do not think it is overly prescriptive, but we need to tease out a number of definitions to make sure we achieve what everybody in the House wants to achieve. I am very pleased that the Bill can pass all Stages in the House today. I do not intend to move the Bill in the Dáil - I hope political parties on all sides of the spectrum would respect this - until the social clauses working group produces its guidance because we need to see that report if we want to make sure the Bill is implemented correctly.

I will shortly receive from the Office of Government Procurement a report on the SME working group, that is, stakeholders with whom we have engaged. That, coupled with the social class working group, should give us a real insight into some of the issues. The reform of public procurement is and remains driven by the need to obtain value for public money in procuring work, supplies and services. It is absolutely essential, even though we are in somewhat better economic times, that we continue to strive to achieve value for money. It cannot be adversely affected by the inclusion of social value clauses.

Public procurement is a very big market. We want Irish companies involved in it and we want procurement, where possible, to be used for social good. It is in that spirit that I am happy to accept the Bill and thank Senator Darragh O'Brien for the work he has done and his co-operation on it, with the caveat and clear understanding this is a Bill that will require significantly more work. I hope it is something his party and others will work on with me in the Dáil.

I thank the Minister of State and his officials for their engagement from Second Stage onwards. I also thank him for the manner in which he has accepted the Bill. I agree more work needs to be done on it. I will give him a commitment, on behalf of my party, that we will await the reports of the social clauses and SME working groups. We can work together on this.

We all know more work needs to be done on procurement. The value of social clauses in procurement legislation has been proved in other countries. I think we can do better. Putting this into law, rather than simply having guidance, is a better way of doing things. We all want to ensure Irish companies, particularly in the SME sector, have a fair shake of the stick and can tender for contracts, where appropriate. We also have to be mindful of value for money and quality.

It is to be hoped the Bill will be the beginning of setting a more level playing field. That is not a criticism of anyone in the Department or the Office of Government Procurement. Rather, we always have to consider how we can do things better and move things forward. I can give the Minister of State a firm commitment on behalf of my party that we want to work with the Government, other parties and Independent Members to introduce better legislation than this Bill. It sets down the parameters for what I am looking for. I thank the groups that fed into it, including Chambers Ireland, ISME, the Small Firms Association and many other individual businesses and firms across the country which have actively engaged with me on this legislation.

It would not have been possible to introduce the Bill without the openness shown by the Minister of State and his willingness to take on board new ideas. We had a very good debate on Second Stage when he asked me not to proceed to Committee Stage until certain steps had been taken and I agreed with his request. I hope this approach shows that in the final days or months of this Seanad we can agree on legislation once certain matters that need to be worked on have been addressed. It is a significant day for businesses, in particular the small and medium enterprise sector, that the Government and the Opposition have indicated that this important legislation will be allowed to pass all hurdles in one House of the Oireachtas. I fully acknowledge that the Bill will require amendment in the Dáil and I will seek further views on it. As the Minister of State noted, the working groups on social clauses and small and medium enterprises will report shortly and feed into the process. At this stage, we can agree what will be the next steps in the Dáil, either before or after the next general election. In that regard, I thank the Minister of State most sincerely.

I also thank my colleague, Senator Diarmuid Wilson, the co-sponsor of the Bill, and my colleagues opposite for engaging in the debate. I am pleased the Bill has overcome this hurdle and I look forward to working with the Minister of State and his officials to improve it further when it reaches the Dáil.

I welcome the Minister of State who has been very busy in recent days delivering something extremely positive for citizens. I also salute the Bill. This is a classic example of positive politics, with parties collaborating and working together on an issue that will be of benefit to citizens and businesses, especially small and medium enterprises. All Senators will be able to cite examples from their localities of things that would have been done better if a different outcome had been achieved in the tendering process. I have in mind some environmental projects in my local area where a better outcome would most definitely have been achieved if things had been done differently. I fully agree that tendering must be done properly with proper consultation.

The Bill provides a strong framework and has benefited from engagement with Chambers Ireland and the other bodies that fed into the process. The various working groups on small and medium enterprises and other matters, which are working under the auspices of the Minister of State, will make professional recommendations. Senator Darragh O'Brien has acknowledged that the Bill is a working document that will require amendment when it comes before the Dáil. It should be amended in a spirit of collaboration and positive politics to achieve a good outcome. The Lower House should learn from the Upper House in terms of how we have engaged on this legislation. I would like this type of engagement to occur with many more Bills. Perhaps it is because we are dealing with a young Minister of State who probably views politics from a different perspective from his predecessors. I believe in consensus when it can achieve good results.

With that, I wish the Bill well and look forward to observing from this House its passing through the Lower House.

I do not have much to add other than to echo the words of previous speakers. This is a day of positive politics and a good day for the Seanad. This is the type of collaboration of which we do not see enough and it is very welcome, irrespective of one's age. We do not discuss often enough the moments when we succeed.

I thank my colleagues opposite for introducing the legislation and the Minister of State for accepting it and seeing fit to discuss it and to try to frame it. This is a good moment. The terms "procurement" and "tendering" are often regarded as dirty words and it raises hackles when one discusses them. Tendering causes damage to businesses and certainly tries people's patience and makes them cross. There must be a better way; it is as simple as that. As previous speakers stated, the issue is well and truly above politics and we should try to find a common sense approach to it.

This is a good day and I thank all of those involved. I wish the legislation well, particularly the idea of negotiating with others to bring more substance to it.

I compliment my colleagues, especially the Fianna Fáil Party leader in the Seanad, Senator Darragh O'Brien. He outlined the merits of the Bill and I compliment him on his initiative in bringing it forward. I also welcome the Minister of State and ask him to respond to a query that arises in the context of procurement. Contracts go out to public tender in all State agencies. Is any in-house evaluation done of value for money for the taxpayer regarding tenders? I will provide a hypothetical example which reflects a real case in the area of education. Let us take the case of an extension to a school for which a contract goes out to tender. Three tenders are received, which I understand is the norm, and the bid with the lowest price contains a technical flaw and must be withdrawn. I understand it is the norm in such circumstances to take the second lowest tender. If this is also found to have a technical flaw and must be withdrawn, the third bid will be chosen. Let us say the gap between the third tender and the first tender, which would have been successful but for the technical flaw, is significant. In such circumstances, what happens where the price quoted is in excess of what had been allocated for the job? If the price is almost one third higher than the allocation, will an in-house evaluation be carried out in the relevant Department? I have singled out education but I am speaking in general terms about Government contracts.

I have been somewhat frustrated by the view that there may be - I choose my words very carefully - a reluctance on the part of Government agencies to reopen tendering processes as to do so could leave them open to litigation. I refer to a case in the public domain, namely, the awarding to a helicopter company of a contract to operate an air service to the Aran Islands and the subsequent withdrawal of that contract. From what I have read in newspaper reports, the original successful tenderer is considering the legal position. I am not sure if the matter has gone beyond that, but I know from making general inquiries that there is a reluctance in State agencies to reopen tendering processes because they are afraid of litigation. Perhaps the Minister of State might concede that point.

Is there not an obligation on State agencies to provide value for money? Given that building prices are involved and considering that most agencies are based in Dublin, is there also a question mark over the assessment process carried out by Dublin-based individuals who may not necessarily-----

The issue the Senator raises is not covered by the Bill.

I raise the issue in the context of procurement which is the subject of the Bill.

The Bill does not deal with the general issue of procurement.

I will repeat myself. I am discussing value for money for taxpayers. I was attempting, admittedly in an obtuse manner, to explain my case. The Minister of State has an indication of the issue I am discussing. My main concern is to achieve value for money, particularly in the times in which we live. I have no doubt that Government agencies view value for money as a priority. However, I wish the perception to be dispelled that they may be more inclined to allow a process to continue because they do not want to have to face the law. I am curious to know the overall approach taken in respect of tendering. In the hypothetical case I have outlined, the second bidder would, in normal circumstances, take the job if the first tenderer was unable to do so. It would be unusual, however, for the job to go to a third bidder. Are State agencies obliged to accept the third bid in such circumstances?

Therefore, the question arises of whether there is an obligation on State agencies to accept the third tender without having to explain that they are not casting any aspersion on a given company or its capacity to do the job, but they can question the cost the company has put on the job because it is far in excess of the original allocation given by the agencies concerned.

I thank Senators for their contributions. The summing up of this as positive politics is exactly how I would like to see it. We are making significant progress by agreeing on all sides of the Chamber that there is a place in law for a procurement and social clauses Bill. We agree that such a Bill should be accompanied by rigorous guidance which provides clarity, flexibility and an understanding of exactly how we wish the elements of our procurement system to interact. It follows that the legislation should be broad enough to allow the guidance to provide this flexibility.

The small and medium-sized enterprise working group and the social clauses working group contain representatives of the various appropriate Departments and agencies. When the working groups report, we will be in a better place to advance the Bill through the other House and, ultimately, onto the Statute Book. I offer the House my commitment, as the Minister of State with responsibility for public procurement, that my position and that of the Government is that we are keen to see a public procurement social clauses Bill in law and we will work with people of all political views and none to make that happen. I was pleased to hear Senator Darragh O'Brien's intention to consult further with the business community and I will do likewise. We should ensure we have the best possible legislation in this area.

Senator Paschal Mooney asked a valid question. I will begin by making the point that until the establishment of the Office of Government Procurement which is a newly born organisation, we had a scenario whereby many people in the public service worked on procurement as part of their job but few did so as a full-time job. Through the establishment of the Office of Government Procurement, we have created and continue to create a level of expertise. Now, we have a scenario whereby, regardless of the Department or State agency involved, those responsible know that the Office of Government Procurement is the organisation that contains the expertise to carry our procurement and has the level of understanding, experience and qualifications necessary to get value for money for the taxpayer. As a result, all tenders are assessed by people with professional qualifications and expertise. This work is coupled with the work we are doing with the small and medium-sized enterprise working group, which has representatives from ISME, the Small Firms Association, Chambers Ireland and many others. The social clauses working group considers the impact on certain constituent communities or a given demographic of a procurement decision.

That brings me to the Senator's next point. We are also engaging in upskilling people who are filling in tendering documents in order that their documents are not invalid and they can make valid submissions. That is why we will have the Meet the Buyer event in Citywest shortly. I expect there could be up to a thousand business people there. They will have an opportunity to meet face-to-face with each of the State agencies and organisations. For example, I can go along and explain that my name is Simon and I sell pens and I can ask who needs to buy pens and how I can get involved. We are working with InterTradeIreland on an all-island basis to train and upskill SMEs. We had people at the National Ploughing Championships in this capacity.

The process is twofold. It is a question of building up the expertise within the public sector and the Office of Government Procurement, as well as within the business community. Let us suppose a scenario were to unfold as the Senator hypothetically set out. In the first instance, the market response would include the question of whether those involved could re-tender, if necessary. It is possible to re-tender and it does arise. In my role as Minister of State with responsibility for the Office of Public Works, I have seen how we reissue tenders. Ultimately, it is a matter for the organisation or Department to decide whether it can afford the new higher tendered price within its Vote or allocation. For example, an Irish Coast Guard station may have been expected to cost €1 million, but when those responsible go to the market they may find that the only valid submission is €3 million. Do those responsible accept the €3 million bid or consider scaling back, postponing or re-tendering the project? It is complex. We need to build up expertise within the public service and ensure we have the best people looking at these things.

A point was made about Dublin versus the rest. The Office of Government Procurement has staff based in several locations outside Dublin. Ours is very much a national organisation in that sense. That is important. We are also developing category councils to build up expertise on what a given element of the market might need and what the future needs of the market might be in terms of framework agreements. It is early days for the Office of Government Procurement and there is a bedding-down process, but I am proud that we are making progress.

It is welcome that the Government is accepting the Bill.

We are not opening up the debate.

Absolutely not. I have no intention of doing so.

The Senator left that to me.

I simply wish to welcome the fact that the Government is accepting this important Bill. I pay tribute to my colleague, Senator Darragh O'Brien, who drafted the legislation. I was honoured to co-sponsor it. I pay tribute to the Minister of State. I have been a Member of this House for almost 14 years and have spent most of that time as a Government representative. There are few examples of Opposition legislation that were accepted during that period. Much of the time it is down to the Minister in question. I pay a particular tribute to the Minister of State for accepting this legislation. As Senator Darragh O'Brien stated, it needs some tweaking here and there and I accept the fact that the Minister of State will have to do this in the Lower House. Again, I thank the Minister of State and the Government for accepting the Bill.

Question put and agreed to.
Sitting suspended at 4.25 p.m. and resumed at 6 p.m.