It is important to note at the outset that no such practice exists whereby a percentage of public contracts are awarded to foreign companies. Contracts are awarded following a competitive process conducted in compliance with the established procurement rules and procedures.
Under EU Directives on public procurement public works, supplies and service contracts above certain thresholds must be advertised on the Official Journal of the EU and awarded on the basis of objective and non-restrictive criteria. For works contracts the threshold is €5.186 million; for supplies and service contracts awarded by Government Departments the threshold is €134,000 and for the remainder of public bodies the threshold is €207,000. The threshold for supplies and service contracts of entities operating in utility sectors (water, energy, transport and postal) is €414,000. For contracts below these thresholds, the general requirement is that they be advertised on the national public procurement website www.etenders.gov.ie or, depending on value, awarded on the basis of a competitive process of direct invitation to an adequate number of suitable suppliers.
The aim of these European 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 Office of Government Procurement (OGP) 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. The aforementioned information is based on data available on EU threshold awards.
- In 2011, 10.55% (valued at €240M) of the total known awarded contracts above threshold by the State went to non-domestic companies. This represents less than 5% of the overall annual public procurement spend (approximately €13.1 billion). I am advised by the OGP that more up to date data on above EU threshold contracts for 2012 and 2013 will be available later this year.
I should point out that the Public Service Reform Plan published by my Department includes a recommendation to improve performance measurement and procurement expenditure analysis. In this regard, a key focus of the Office of Government Procurement will be a move towards centralisation of data collection in the area of procurement activity. The centralisation of data collection will not only enable the Office to procure in a more cost efficient manner but will also capture more informative data on SME participation.
It is important to remember that open tendering is a two way street and that it provides Irish companies with opportunities to compete abroad. The public procurement market in the EU is estimated to be valued in excess of €2.4 trillion. In this regard, it is worth pointing out that the open market regime also offers opportunities for Irish companies to win business abroad and reliable EU studies indicate that many Irish businesses are successful in this regard.