Written Answers Nos. 43-52
43. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform his views on whether public procurement practices and policy must be strategic when planning what to buy, the way to buy and from whom to buy and that the lowest price does not always represent the best value to the State. [29558/13]
Amharc ar fhreagra52. Deputy Peadar Tóibín asked the Minister for Public Expenditure and Reform the progress his Chief Procurement Officer has made in addressing the problems arising for small and medium enterprises public sector collaborative tendering. [29556/13]
Amharc ar fhreagraI propose to take Questions Nos. 43 and 52 together.
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.
Progress has been made on several of the actions for procurement reform contained in the Public Service Reform Plan. The Government agreed on 12 June, 2012 to implement mandatory arrangements in respect of the centralised purchasing frameworks organised by the National Procurement Service (NPS), which will be transferring into the new Office of Government Procurement (OGP). 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.
While the key purpose of these reforms 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 on-going 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 addition, 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 in September, 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 of the review of the central procurement function 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 priority areas for the CPO include:
- 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 the 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.
The Government agreed on 23 April 2013 a plan to reform procurement across the public service. This is one of the elements of the Public Service Reform Programme, led by the Department of Public Expenditure and Reform. The plan sets out ambitious targets and timelines for changes to the structure and operation of procurement and will deliver much needed savings for the Exchequer. A new organisation called the Office of Government Procurement will be formed and headed by the Government’s recently appointed Chief Procurement Officer. The new office will be responsible for procurement policy and operations, working across the public service in delivering better value for the taxpayer. The Government has agreed an ambitious target of €500m of savings to be achieved over 3 years through the transformation of public service procurement.
To summarise: we in government want better value for money for our substantial procurement spend. To ensure the reform process takes account of the needs of stakeholders further consultations will be undertaken with industry representative associations, employees and workers' representatives as the new Office of 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.
44. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he will recall his circular of July 2012; and if he will issue a new circular to all public service procurers informing them that the use of the framework agreements is simply optional and not mandatory. [29561/13]
Amharc ar fhreagra49. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform the action he intends to take following the recent High Court judgment which concluded that his Department's Circular 06/12 is ultra vires and incompatible with EU law as it makes the use of the Managed Print Services Framework Agreements mandatory. [29559/13]
Amharc ar fhreagraI propose to take Questions Nos. 44 and 49 together.
As both of these questions relate to the Department for Public Expenditure and Reform Circular 06/12 I propose answering them together.
At the end of May the High Court gave its judgment on certain preliminary issues in relation to the case to which the Deputy refers. The matter was then back before the court in early June for further consideration and, on foot of a request made by the applicants, was adjourned for a number of weeks.
Upon receipt of the final High Court Order on this matter, the Minister and Department will review the judgement and take any necessary actions.
45. Deputy Pearse Doherty asked the Minister for Public Expenditure and Reform the annual monetary reduction to former office holders' pensions in payment to the value of the following amounts when the Haddington Road agreement reductions are applied from July 2013. [29560/13]
Amharc ar fhreagraThe Haddington Road Agreement (HRA) does not contain any pension reduction measure.
In drawing up the HRA, the Labour Relations Commission expressly recognised that Government plans for certain public service pension reductions did not form part of the proposals which comprise the HRA. The relevant paragraph in the HRA, headed "Public Service Pensions", reads as follows:
“Separately to this Agreement, the Parties note that the Government intends to align the reductions in public service pensions in payment with the reductions applied to serving staff. The Parties note that this measure will apply to pensions in payment greater than €32,500 only”
Reductions in those public service pensions valued in excess of €32,500 are due to occur next month, on foot of provisions in the Financial Emergency Measures in the Public Interest Act 2013. With effect from 1 July 2013, the Act reduces those public service pensions valued at €32,500 or greater, affecting all such pensions, including Office holder pensions, already payable on that date or awarded up to end-August 2014. The reductions range from about 2% near the €32,500 threshold level (subject to no pension falling below €32,500), to 5% in respect of the highest pensions.
In order to secure these pension reductions, the 2013 Act increases and extends the existing Public Service Pension Reduction (PSPR). The PSPR is a tiered reduction of certain public service pensions which has been in place since 1 January 2011, and which features five increasing bands of pension income, with rising reduction percentages associated with each band. Specifically, the 2013 Act changes the PSPR with effect from 1 July 2013 to provide separately, in respect of two groups of pensioners, as follows:
In the case of the first pensioner group, revised higher rates of PSPR will apply to pensions above €32,500 which have been subject to PSPR before July 2013, largely comprising pensions awarded up to end-February 2012. Table A illustrates the monetary effects of the July 2013 adjustment on this group at representative pension income levels.
Revised PSPR rates – impact at various pension levels
|
Pension before PSPR |
Total PSPR |
…of which “extra” PSPR imposed from 1 July 2013 |
Pension after PSPR |
||
|
€ 12,000 |
€ 0 |
% of pension 0% |
€ 0 |
% of pension 0% |
€ 12,000 |
|
15,000 |
180 |
1.2% |
0 |
0% |
14,820 |
|
20,000 |
480 |
2.4% |
0 |
0% |
19,520 |
|
25,000 |
810 |
3.2% |
0 |
0% |
24,190 |
|
30,000 |
1,260 |
4.2% |
0 |
0% |
28,740 |
|
35,000 |
2,280 |
6.5% |
570 |
1.6% |
32,720 |
|
40,000 |
2,880 |
7.2% |
720 |
1.8% |
37,120 |
|
45,000 |
3,480 |
7.7% |
870 |
1.9% |
41,520 |
|
50,000 |
4,080 |
8.2% |
1,020 |
2.0% |
45,920 |
|
55,000 |
4,680 |
8.5% |
1,170 |
2.1% |
50,320 |
|
60,000 |
5,280 |
8.8% |
1,320 |
2.2% |
54,720 |
|
70,000 |
6,980 |
10.0% |
1,820 |
2.6% |
63,020 |
|
80,000 |
8,680 |
10.9% |
2,320 |
2.9% |
71,320 |
|
90,000 |
10,380 |
11.5% |
2,820 |
3.1% |
79,620 |
|
100,000 |
12,080 |
12.1% |
3,320 |
3.3% |
87,920 |
|
125,000 |
19,080 |
15.3% |
5,320 |
4.3% |
105,920 |
|
150,000 |
26,080 |
17.4% |
7,320 |
4.9% |
123,920 |
In the case of the second pensioner group, PSPR will be introduced for the first time at special rates on those pensions above €32,500 not previously subject to PSPR, largely comprising pensions awarded after February 2012, and up to end-August 2014. Although not subject to PSPR before 1 July 2013, these pensions do reflect the 2010 public service pay cuts. Table A illustrates the monetary effects of the July 2013 adjustment on this group at representative pension income levels.
Table B: New PSPR rates – impact at various pension levels
|
Pension before PSPR |
PSPR |
Pension after PSPR |
|
|
€ |
€ |
% of pension |
€ |
|
30,000 |
No liability to PSPR below €32,500 if retiring on or after 1 March 2012. |
||
|
35,000 |
570 |
1.6% |
34,430 |
|
40,000 |
720 |
1.8% |
39,280 |
|
45,000 |
870 |
1.9% |
44,130 |
|
50,000 |
1,020 |
2.0% |
48,980 |
|
55,000 |
1,170 |
2.1% |
53,830 |
|
60,000 |
1,320 |
2.2% |
58,680 |
|
70,000 |
1,820 |
2.6% |
68,180 |
|
80,000 |
2,320 |
2.9% |
77,680 |
|
90,000 |
2,820 |
3.1% |
87,180 |
|
100,000 |
3,320 |
3.3% |
96,680 |
|
125,000 |
5,320 |
4.3% |
119,680 |
|
150,000 |
7,320 |
4.9% |
142,680 |
46. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent, if any to which he has updated or revised his projections in respect of savings, reform and reductions in expenditure throughout the public sector in the aftermath of Haddington Road agreement; the extent of the economic benefit accruing; and if he will make a statement on the matter. [29622/13]
Amharc ar fhreagraPublic service trade unions are currently considering the various proposals put forward under the Haddington Road Agreement and those unions and associations that need to ballot their members are in the process of doing so ahead of the implementation date of 1 July. The composition of the savings arising and subsequent reductions in expenditure can only be finalised when the results of the various ballots are known.
The measures set out in the Agreement will enable the Government to achieve the targeted savings of approximately €300 million in the public service pay and pensions bill in 2013, including savings on Local Government. Furthermore, it is estimated that the measures set out in the Haddington Road Agreement will reduce the public service pay and pensions bill by €1 billion by the end of the Agreement.
The Revised Estimates Volume was published on 17 April this year on the basis of the previous Labour Relations Commission (LRC) recommendations, prior to the recent re-engagement between the Department of Public Expenditure & Reform and the Trade Unions. These recommendations were, at the time, the most appropriate means of achieving the savings required and it was important that the relevant Oireachtas Committees could begin the process of examining the Vote allocations for 2013.
While the recommendations set out in Haddington Road Agreement have changed since the previous LRC recommendations, the pay allocations for individual Votes based on the implementation of these recommendations remain largely the same.
With regard to the economic impacts of the pay and pension savings, there are no easy options for Government in ensuring that Ireland’s deficit targets are met. However, by adhering to the medium-term fiscal plan and continuing to meet our fiscal targets we can generate positive confidence effects. These in turn can have a favourable impact on economic performance.
47. Deputy Mick Wallace asked the Minister for Public Expenditure and Reform the percentage of public sector pensioners currently receiving a pension of €5,000 or less per annum; the percentage of public sector pensioners currently receiving a pension of between €10,000 and €11,000 per annum; the percentage of public sector pensioners currently receiving a pension of between €11,000 and €20,000 per annum; the percentage of public sector pensioners currently receiving a pension of between €20,000 and €40,000 per annum; and the percentage of public sector pensioners receiving a pension of more than €40,000 per annum; and if he will make a statement on the matter. [29684/13]
Amharc ar fhreagraThe data provided applies to retired Civil Servants only. Pensions payable to Spouses and children are not included.
|
Range |
Number |
Percentage of retired Civil Servants |
|
|
>5,000 |
4464 |
28% |
|
|
10,000 |
11,000 |
309 |
2% |
|
11,000 |
20,000 |
2507 |
16% |
|
20,000 |
40,000 |
6114 |
40% |
|
<40,000 |
2017 |
14% |
The figures take account of the Public Service Pension reduction.
Details in relation to the pension of other Public Servants and (eg Local Authority workers Health Sector) in relation to State Pensions can be provided by the relevant Minister for each sector.
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]
Amharc ar fhreagraReform 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.
50. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform if he will amend procurement rules requiring locally based agencies to purchase products from local suppliers where they are able to offer similar or better value to the nationally appointed provider, for example where a local school has discretion to purchase stationery from a local supplier who is able to offer similar or better value than the nationally appointed supplier; and if he will make a statement on the matter. [29492/13]
Amharc ar fhreagraUnder EU law, public contracts above a certain values must be advertised EU-wide and awarded to the most competitive tender in an open and objective process. The aim is to promote an open, competitive and non-discriminatory public procurement regime which delivers 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 location or nationality and there are legal remedies which may be used against any public body infringing these rules.
The National Procurement Service (NPS), which will be transferring into the new Office of Government Procurement (OGP), 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. 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 need to ensure that it can explain the rationale for not using the NPS arrangement and provide a value for money justification that takes account of the full costs including those incurred in managing its own procurement process.
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 on-going 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 '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.
To summarise: we in government want better value for money for our substantial procurement spend. To ensure the reform process takes account of the needs of stakeholders further consultations will be undertaken with industry representative associations, employees and workers’ representatives as the new Office of 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.
