Wednesday, 4 July 2012

Questions (14)

Brendan Smith


12 Deputy Brendan Smith asked the Minister for Public Expenditure and Reform if he is considering streamlining the tendering process for public contracts, in a manner that is consistent with EU rules, so that local Irish firms achieve a greater success rate in winning tenders; and if he will make a statement on the matter. [32488/12]

View answer

Written answers (Question to Minister for Expenditure)

I am aware that public procurement can be an important source of business for local enterprises. Current guidelines known as Circular 10/10 issued by my Department require public bodies to promote participation of small and medium-sized enterprises in the award of public contracts. Circular 10/10 sets out positive measures that contracting authorities are to take to promote SME involvement in a manner that is consistent with the principles and rules of the existing public procurement regulatory regime. The guidance also highlights practices that are to be avoided because they can unjustifiably hinder small businesses in competing for public contracts. The key provisions of the guidance include:

supplies and general services contracts with an estimated value of €25,000 or more to be advertised on the website;

less use of "restrictive" tendering procedures and greater use of "open" tendering;

ensuring that the levels set by contracting authorities for suitability criteria are justified and proportionate to the needs of the contract;

sub-dividing larger requirements into lots where this is practical and can be done without compromising efficiency and value for money.

The reason why the threshold for advertising on (the national public procurement web portal) was reduced from €50,000 to €25,000 was to make such contracts more accessible to SMEs whilst also ensuring that each public body secures works, goods and services that are value for money. This initiative is consistent with national public procurement policy which is aimed at ensuring that all public sector purchasing is carried out in a manner that is transparent, and secures optimal value for money for the taxpayer.

The National Procurement Service (NPS) are responsible for producing annual statistical information in relation to above-EU threshold procurement activity by the Irish public sector and for providing these statistics to the European Commission. On average 5000 tenders for the procurement of goods, services and works are advertised on eTenders every year.

I am informed by the NPS that data in respect of 2011 will not be available until later this year. The latest information is for above-EU threshold contracts only is for 2010 and is as follows:

Of the €3.3billion spent by the State on above threshold contracts only 8.7% went to non-domestic companies.

In terms of overall procurement budget (approximately €14 billion in 2010), the NPS estimates that less than 5% of the overall spend went to non-domestic suppliers.

The Deputy rightly points out that the development of policy in relation to public procurement has to be seen in the context of a set of rules agreed by European Member States which have the aim of creating a transparent and competitive single market for public procurement contracts. It is a basic principle of EU law that between citizens and businesses within the Union there should not be discrimination on grounds of nationality. This principle of non-discrimination is one of the cornerstones of EU procurement rules. The purpose of these rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. It would be a breach of the rules for a public body to favour or discriminate against particular candidates on grounds of nationality and there are legal remedies which may be used against any public body infringing these rules.

The importance of procurement policy becomes apparent when one sees that each year public authorities across the European Union spend 18% of GDP or approximately €2 trillion on goods, services and works. In this context, it is important to realise that the open market regime offers critical opportunities for Irish companies to win business abroad. In this regard, Enterprise Ireland and Intertrade Ireland offer training and support to businesses in order to raise awareness of public procurement opportunities and to improve the capacity of indigenous firms to compete effectively for these opportunities.