Wednesday, 18 July 2012

Questions (119)

John Lyons


118 Deputy John Lyons asked the Minister for Public Expenditure and Reform if he will provide an update on the proposed reforms of public procurement to support Irish firms and to allow greater access by Irish small and medium enterprises to public contracts; and if he will make a statement on the matter. [35704/12]

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Written answers (Question to Minister for Expenditure)

I am aware that public procurement can be an important source of business for Irish small and medium enterprises (SMEs). Current guidelines (Circular 10/10) issued by my Department require public bodies to promote participation of SMEs in the award of public contracts. 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 National Procurement Service (NPS) is 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. For works contracts the threshold is €5 million; for supplies and service contracts awarded by Government Departments the threshold is €130,000 and for the remainder of public bodies the threshold is €200,000. The threshold for supplies and service contracts of entities operating in utility sectors (water, energy, transport and postal) is €400,000. 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 the latest information for above-EU threshold contracts is for 2010. In that year, the State spent €3.3billion on above threshold contracts of which only 8.7% went to non-domestic companies.

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

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. Therefore 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 €2.3 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.