Thursday, 20 June 2013

Questions (43, 52)

Pearse Doherty

Question:

43. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform his views on whether public procurement practices and policy must be strategic when planning what to buy, the way to buy and from whom to buy and that the lowest price does not always represent the best value to the State. [29558/13]

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Peadar Tóibín

Question:

52. Deputy Peadar Tóibín asked the Minister for Public Expenditure and Reform the progress his Chief Procurement Officer has made in addressing the problems arising for small and medium enterprises public sector collaborative tendering. [29556/13]

View answer

Written answers (Question to Public)

I propose to take Questions Nos. 43 and 52 together.

Reform of public procurement is one of the major projects of key strategic importance in the Government’s Public Service Reform Plan, which was published in November 2011. Procurement of supplies and services accounts for around €9 billion of current spending by the State per annum. This represents a very significant portion of overall spending and it is, therefore, essential that the Public Service achieves maximum value for money and operational efficiency in its approach to public procurement.

Progress has been made on several of the actions for procurement reform contained in the Public Service Reform Plan. The Government agreed on 12 June, 2012 to implement mandatory arrangements in respect of the centralised purchasing frameworks organised by the National Procurement Service (NPS), which will be transferring into the new Office of Government Procurement (OGP). These national arrangements have benefits that include:

- cash savings;

- administrative savings from reduced duplication of tendering;

- greater purchasing expertise;

- improved consistency; and,

- enhanced service levels.

While the key purpose of these reforms to enable the State to do more with less by aggregating procurement to secure better value for money, it is worth noting that such aggregation arrangements can be implemented in a manner that achieves value for money with a minimal negative impact, or indeed a positive impact, on SMEs. While a number of the categories of goods and services mandated under the Circular are suited to single supplier national arrangements, these need not be accepted as the norm. The greater use, where appropriate, of multi-supplier frameworks can address local supplier issues while also ensuring on-going cost competitiveness of the framework itself. Such multi-supplier frameworks may also offer SMEs the opportunity to participate in national level contracts, thereby offering valuable reference work when competing for public procurement contracts in other jurisdictions.

In addition, an external review of the central procurement function was commissioned by the Department of Public Expenditure and Reform. The report of the review, which was published in September, found that significant savings can be achieved through the implementation of a transformational change to the central procurement model.

In December 2012, arising out of recommendations in the report of the review of the central procurement function the Minister announced the appointment of a Chief Procurement Officer (CPO) to lead a key element of the Government's Public Service Reform agenda. The priority areas for the CPO include:

- integrating procurement policy, strategy and sourcing in one office;

- strengthening spend analytics and data management;

- much greater aggregation of purchasing across public bodies to achieve better value for money;

- examining the specifications set out for goods and services;

- evaluating demand levels to assess how demand and volume can be reduced; and

- strengthening supplier and category management.

Since the appointment of the CPO, on 28 January 2013, he has initiated and completed a series of engagements (workshops and one-to-one meetings) with key stakeholders within the public sector and their representatives in relation to the development of the proposed governance structures, implementation plan, transition arrangements and savings targets for the procurement function. The following sectors were engaged in workshops / meetings: Health, Education, Local Government, Defence, Justice, and other Central Government Departments.

The Government agreed on 23 April 2013 a plan to reform procurement across the public service. This is one of the elements of the Public Service Reform Programme, led by the Department of Public Expenditure and Reform. The plan sets out ambitious targets and timelines for changes to the structure and operation of procurement and will deliver much needed savings for the Exchequer. A new organisation called the Office of Government Procurement will be formed and headed by the Government’s recently appointed Chief Procurement Officer. The new office will be responsible for procurement policy and operations, working across the public service in delivering better value for the taxpayer. The Government has agreed an ambitious target of €500m of savings to be achieved over 3 years through the transformation of public service procurement.

To summarise: we in government want better value for money for our substantial procurement spend. To ensure the reform process takes account of the needs of stakeholders further consultations will be undertaken with industry representative associations, employees and workers' representatives as the new Office of Government Procurement is established. We are committed to ensuring that SMEs are fully engaged in the process and will be encouraged, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work.