Dáil Éireann Debate, Thursday - 1 June 2017
20. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his plans to support the passage of the Public Services and Procurement (Social Value) Bill 2017 which passed Second Stage, and was referred to select committee on 22 February 2017; the measures he is taking to ensure that contracts are structured in a way that enables SMEs to compete; and if he will make a statement on the matter. [26204/17]
View answerWhilst the reform of public procurement has been a key element in the ongoing Government reform programme, care has been taken to ensure it is carried out in a manner that encourages SME participation. The EU Procurement Directives, transposed into Irish law in May 2016, contain provisions to make it easier for SMEs to tender for public procurement contracts. These include the following:
- financial capacity criterion is less demanding and generally limited to twice the contract value;
- there is discretion to divide public contracts into lots;
- there is a provision for "consortia bidding" to encourage SME involvement; and
- there are reductions in the time limits for receipt of tenders;
Moreover, Government Policy as set out in Circular 10/2014 updated and strengthened measures aimed at facilitating SME participation in Public Procurement.
My colleague, Minister of State Eoghan Murphy TD, in accordance with the Programme for Government, chairs the SME Advisory Group which meets quarterly and seeks to enhance the measures already in place to support SME access. This group comprises of SME industry representative bodies (IBEC, ISME, SFA, Chambers Ireland, and CIF) as well as the Office of Government Procurement (OGP), the Department of Jobs, Enterprise and Innovation, Inter-Trade Ireland and Enterprise Ireland. This positive initiative shows a willingness to engage with and learn from private sector counterparts.
In terms of assessing involvement of SMEs, data from the Public Service Spend and Tendering Analysis Report for 2014, published by the OGP indicates that 95% of the analysed expenditure is with Irish based firms and the majority of the spend analysed is with SMEs. In addition, the OGP conducted an analysis of the 122 Framework Agreements it has in place which shows that 67% of Framework members are SMEs and 63% of the Frameworks had multiple lots, facilitating SME access.
In relation to the Bill, you will be aware that it was not opposed by the Government in the Dáil. However, care must be taken not to disproportionately impact on SME's bidding for public contracts. If a blanket suite of social benefit clauses was attached to all public procurement opportunities, it is likely that this would be ineffective, disproportionately favour larger enterprises, reduce competition in supplying goods and services to the State and drive up the costs. SMEs representative bodies have raised similar concerns.
Social clauses impose additional costs on both the State and suppliers in meeting their requirements and demonstrating and verifying compliance. In general, the inclusion of social clauses in a procurement process would appear to be most effective where the benefit could be considered a core requirement and can be directly linked to the contracting authority's policy or strategic plan. The appropriateness of including social clauses in public procurement projects needs to be examined on contract by contract basis. There needs to be sufficient flexibility to allow each individual contracting authority to decide what, how and when social clauses can be used taking account of, for example, the economic environment and labour supply in a specific sector.
In conclusion, the reform of public procurement across the public service is on-going and will continue to provide opportunities to the SME sector to win business. The OGP will continue to work with industry to ensure that winning government business is done in a fair, transparent and accessible way and to ensure that government procurement policies are business friendly.
