Aengus Ó Snodaigh
Question:394. Deputy Aengus Ó Snodaigh asked the Minister for Public Expenditure and Reform the barriers to micro and small and medium-sized enterprises in tendering for public contracts. [35286/13]
View answerTuesday, 16 July 2013
Questions (394)
Written answers
In relation to improving access for small and medium-sized enterprises my Department has issued guidelines (Circular 10/10) that require public bodies to promote participation of such enterprises in the award of public contracts. The guidance does not distinguish between micro-enterprises and other SMEs, and the approach set out is intended to be applicable to them all. These guidelines set out positive measures that contracting authorities are to take to promote the involvement of smaller enterprises 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 www.etenders.gov.ie 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.
In order to promote and improve such practices the National Procurement Service (NPS), which will be transferring into the new Office of Government Procurement (OGP), established its 'Working Group to assist Small and Medium Enterprises' in February 2012 to facilitate open discussion on the issue of public service procurement. The Working Group consists of representatives from the NPS, the Health Service Executive, the Irish Business and Employers Federation, the Irish Small and Medium Enterprises Association, Chambers Ireland, and the Small Firms Association. The Group has met on a number of occasions and has raised many issues relating to procurement and particularly how these issues impact on SMEs. Resulting from these discussions the NPS has issued two circulars to all buyers in, and suppliers to, the public service with the aim of improving practice in the procurement arena.
In order to encourage greater SME participation the NPS, over the past three years, has conducted a targeted programme of education for suppliers who wish to learn more about doing business with the Irish Public Service. This programme consists of seminars, workshops and large scale 'meet the buyer' events hosted nationwide. To date the NPS has facilitated workshops and presented at seminars to over 4,500 SMEs nationwide. Parallel with these events the NPS also works closely with business representative bodies such as ISME and IBEC to provide briefings for their members.
Circular 10/10 has been in place for just over two years. It is clear that there is a need to ensure greater consistency in relation to the implementation of this circular. In this regard, I am arranging for my Department to remind public bodies about this aspect of the public procurement guidance and the importance of contracting authorities ensuring they implement it appropriately.
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.
In this regard, the NPS has put in place a number of national arrangements designed to secure better value for money from leveraging the public service’s buying power in relation to a range of goods and services that are commonly purchased across the public service. 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.
In some instances the take up of the NPS arrangements has been low. In order to increase the usage of the NPS arrangements and thereby secure best value for money, the Government decided that it should be mandatory for public service bodies to use specified national procurement arrangements. Last year my Department issued Circular 06/12 which implements the Government decision by making it a mandatory requirement that public service bodies avail of specified national arrangements put in place by the NPS.
While the key purpose of Circular 6/12 is 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 ongoing 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 relation to plans for further reform of public procurement, 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 late last year, 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 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 new approach to public procurement will involve:
- 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 Paul Quinn, 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.
To summarise: we in government want better value for money for our substantial procurement spend and we want Irish SMEs, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work. To ensure the reform process takes account of the needs of stakeholders, further consultations will be undertaken with employees and workers’ representatives as the new Office for 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.