Thursday, 20 June 2013

Questions (48)

Aengus Ó Snodaigh

Question:

48. Deputy Aengus Ó Snodaigh asked the Minister for Public Expenditure and Reform if he will provide a full and detailed breakdown of the projected savings to the value of €250 million to €600 million from his Department's procurement reform programme. [29564/13]

View answer

Written answers (Question to Public)

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.

As part of our drive for greater value for money and increased efficiency, my Department commissioned a capacity and capability review of the central procurement function to identify the actions required to realise substantial savings in public procurement in the short and medium term. This review is available on my Department’s website.

Approximately €9 billion is spent by public bodies annually on the public procurement of supplies and services, and the review estimated that €7 billion of this is "addressable spend". As the Deputy is aware, the review also estimated that implementation of its recommendations, over a three-year period, could yield potential annual savings in the range of €249 million to €637 million, depending on the approach taken. These estimated savings are broken down as follows:

Procurement Addressable Spend Suitable to be managed by Central Procurement Function

Category

Procurement Addressable Spend €m

Low Range Target Savings €m

Mid-Range Target Savings €m

High Range Target Savings €m

Central Managed Categories

Professional Services

€1,031

€35

€82

€99

Facilities & Services

€962

€55

€100

€115

Minor Building/Civil Works

€573

€33

€60

€69

Utilities

€551

€8

€18

€22

ICT

€454

€26

€47

€55

Travel

€290

€4

€23

€28

Print & Stationery

€178

€9

€17

€17

HR

€143

€5

€11

€17

Office Equipment

€99

€3

€8

€10

Marketing

€74

€2

€6

€7

Total

€4,355

€180

€373

€438

*Travel excludes Education School Bus Contract already contracted

Procurement Addressable Spend to be managed within sectors

Sector Managed Categories

Category

Spend

Low Range

Mid-Range

High Range

Medical

€1,638

€55

€131

€157

Plant

€142

€8

€15

€17

Managed Service

€93

€1

€10

€11

Fleet

€89

€3

€7

€9

Defence

€71

€1

€2

€3

Farming

€18

€1

€1

€2

Unclassified

€476

€0

€0

€0

Total

€2,528

€69

€166

€199

Total Procurement Addressable Spend and Savings Totals

Spend

Low Range

Mid-Range

High Range

Total Target Savings

€6,900

€249

€539

€637

In relation to the above, I would point out that further work is underway within the newly established Office of Government Procurement to develop a more accurate baseline from which to measure possible savings. The baseline is important as savings may be eroded through increases in demand for existing goods and services, new programmes driving new demands and increases in base commodity prices for supplies such as fuels.

Question No. 49 answered with Question No. 44.