Dáil Éireann Debate, Wednesday - 23 January 2013
3. Deputy Thomas Pringle asked the Minister for Public Expenditure and Reform if he has assessed the impact of Public Procurement (Framework Agreements) circular 06/12, for the procurement of goods and services on local jobs that has provided for single suppliers on a national level in respect of day to day purchases for public bodies; and if he will make a statement on the matter. [3220/13]
Amharc ar fhreagraThe public service reform plan published by the Department of Public Expenditure and Reform in November 2011 identified procurement reform as a key instrument that can assist in maintaining the delivery of public services in an efficient manner. The National Procurement Service, NPS, has put in place a number of national arrangements designed to secure better value for money from leveraging the public sector’s buying power with regard 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.
Circular 06/12, to which the Deputy referred in his question, 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. The list of categories subject to national procurement arrangements includes electricity, natural gas, stationery and office supplies, paper, ICT consumables, managed print services, print media advertising and motor vehicles. These national arrangements will secure best value for money and facilitate contracting authorities to deliver services within their budgetary constraints. Where a mandatory framework arrangement exists, any public service body intending to make a purchase other than through the framework arrangement will be obliged to ensure it can explain the rationale for not using the NPS arrangement and can provide a value for money justification that takes account of the full costs, including those incurred in managing its own procurement process.
Additional information not given on the floor of the House
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 small and medium-sized enterprises, SMEs. While a number of the categories of goods and services mandated under the circular are suited to single supplier national arrangements, it should not be taken that single supplier frameworks are to 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 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 so-called meet the buyer events hosted nationwide. In 2012 the NPS, working with InterTradeIreland, for the first time brought together a number of the lead Government agencies to create a programme of major events for the island of Ireland. Attendees could also avail of educational seminars on a variety of topics ranging from the technicalities of public service procurement to procedures around consortia building for SMEs. To date, the NPS has facilitated workshops and presented at seminars to more than 3,000 SMEs nationwide. Surveys conducted at these events have indicated a high degree of satisfaction among suppliers. Parallel with these events, the NPS also works closely with business representative bodies such as ISME and IBEC to provide briefings for their members.
While I appreciate the Minister of State's response, it does not address the question. The question was whether, in drawing up the procurement frameworks, the impact or potential impact on local jobs nationwide was assessed as part of that process, and from the Minister of State's reply, it appears as though it was not. While up to now, local companies have been supplying materials to bodies such as schools, local authorities and so on, what will happen is those bodies will be obliged to buy from a single centralised company that will service the entire country. This will give rise to a real threat to local jobs throughout the country. In the case of County Donegal, a number of companies supply materials to schools, such as, for example, janitorial supplies. In future, the VECs and third level institutions will be obliged to buy from a single entity nationally when purchasing such equipment. This will have a real impact on local jobs.
A question please, Deputy.
Many companies are now fearful as to whether they will be able to sustain the jobs they have on the basis of losing so much of that type of business which they have built up over the years. This is an issue that should have been considered through the procurement process and it should be addressed as a matter of urgency because if jobs are lost across the country on foot of this development, the value of this procurement process then comes into serious question.
To answer the Deputy's question, it was considered by my Department very carefully. My Department stands over the decision it successfully brought to the Government for approval last July. That memorandum is crucially important for the procurement space into which the Government is trying to get. There is an enormous prize to be won in this regard. A recent independent report showed the State could save somewhere between €250 million and €650 million over a three-year period through better procurement, better and more efficient buying, knowledge of markets, fewer procurers and getting the best value for money.
I wish to make the procurement agenda an absolutely crucial part of the expenditure profile in the adjustment programme in the State. This can be done and the Government can get procurement to a much better space. However, this requires people who know the business and does not require people sorting out local suppliers, just because they know them, at jacked-up prices. Such quality procurement, as other small states have done, is what is required and this State can get there. I will make the following point carefully. Local public service bodies, be they schools or anyone else, which can get a better price than the price in the framework that we have negotiated centrally, thereby taking out major savings on administration, can use that better price. However, they should be able to explain to my Department, the National Procurement Service and to local procurers that there is justification for so doing.
If a better price can be attained, it can be used. As I said when I brought the issue to the Cabinet at that time, these frameworks should be allowed or it should be explained why they are not being used. The problem seems to be policy related and there is not enough implementation, but I will change that.
Savings may be possible in procurement and substantial savings would be made if the Government tackled the cartels operating in the likes of the concrete industry, etc. That would bring about real savings in contracts. The procurement policy will cost jobs in local areas, and this is not down to the fact that people will be making decisions based on whether they know somebody. Local managers in the public sector are achieving the best prices that they can and there is intense local competition with regard to provision of services. The circular does not state that local managers can make different procurement decisions. Will the Minister of State provide the House with the document that considered the impact on local jobs, as well as the rationale and justification used in that respect?
We had very substantial dialogue with representatives of the small and medium enterprise, SME, sector before introducing this because we want that sector to win more of these contracts. If there is a criticism I can make of the procurement, it is that we do not have multiple suppliers on those frameworks. I accept the criticism from some that a framework should not be created with one supplier and there should be a framework with multiple suppliers.
The managed print contract has a total of five suppliers with approximately half being Irish small and medium enterprises and the others multinationals. The Irish companies would win because they came together and are working collaboratively. I want to see more of that but I also want to see significant savings for the State. To be blunt, some people have been screwing the State for years as a result of prices they got and we must make the procurement agenda an absolutely key part of the expenditure agenda in this country. That means we must professionalise the process, and we have recently appointed a new chief procurement officer. We are also rationalising and changing the procurement service through the Department of Public Expenditure and Reform and the National Procurement Service.
There is a substantial prize to be won if people hold their nerve and believe we can get the country to a better place by way of procurement. It is an exciting opportunity for Irish SMEs to win a bigger share by coming together and using their expertise.
