Public Procurement Contracts

Dáil Éireann Debate, Wednesday - 4 June 2014

Wednesday, 4 June 2014

Ceisteanna (9, 11)

Seán Kyne

Ceist:

9. Deputy Seán Kyne asked the Minister for Public Expenditure and Reform if he will, in the context of the establishment of the office of public procurement, outline the measures that are being taken to maximise the participation in procurement of small and medium enterprises and local businesses which, while mindful of the European obligations, contribute enormously to local economies through the business secured from procurement contracts; and if he will make a statement on the matter. [23681/14]

Denis Naughten

Ceist:

11. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform the steps he is taking to assist local business in tendering for public contracts; and if he will make a statement on the matter. [23691/14]

Freagraí ó Béal (9 píosaí cainte)

Deputy Seán Kyne

This question relates to the setting up of the office of public procurement and the measures taken to maximise the participation in the procurement process of small and medium enterprises.

Deputy Brendan Howlin

I propose to take Questions Nos. 9 and 11 together.

Public procurement is governed by EU and national rules, the aim of which 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 EU rules for a public body to favour or discriminate against particular candidates on grounds such as nationality, organisational size or any other matter, and there are legal remedies which may be used against any public body infringing these rules.

The Government acknowledges the significant role SMEs play in the Irish economy and is committed to ensuring SMEs are fully engaged with public sector procurement and the opportunities which public sector procurement presents to them. To encourage greater SME participation, the Office of Government Procurement 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 throughout the country.  These meet the buyer events are run in conjunction with Enterprise Ireland and InterTradeIreland. To date, the Office of Government Procurement has facilitated workshops and presented at seminars to more than 4,500 SMEs nationwide.  These events afforded suppliers an opportunity to meet and discuss the issues with public service buyers and provide networking opportunities for suppliers to build consortia and synergies between suppliers to facilitate joint bids.

My Department has also recently finished reviewing and updating existing guidelines and procedures aimed at promoting SME participation in public procurement. Circular 10 of 2014, launched on 17 April, sets out new initiatives aimed at opening up opportunities for small businesses to bid for State business. These new guidelines are aimed at reducing the administrative burden and costs on businesses that want to tender for public contracts. The SME working group, established under the Government's Action Plan for Jobs, was consulted on the new guidelines. The SME working group is chaired by the Office of Government Procurement and includes representatives from the Irish Small and Medium Enterprises Association, ISME, the Irish Business Employers Confederation, IBEC, InterTradeIreland, Enterprise Ireland, the Competition Authority, the Small Firms Association, Chambers Ireland and the Department of Jobs, Enterprise and Innovation. The new circular has been broadly welcomed by industry representative associations.

The reform of public procurement across the public service is ongoing and will continue to provide opportunities to the SME sector to win business here and to shape them to win business abroad as well. The Office of Government Procurement will continue to work with SMEs 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.

Deputy Seán Kyne

I thank the Minister for his reply. SMEs are the lifeblood of our country. It has been said before that if every SME were to hire one person it would put a huge dent in our dole queues.

Is the Minister happy that the office is functioning to the best of its ability? There is concern that saving money on procurement may inadvertently cost jobs in the SMEs which lose out. I welcome circular 10/14 which contains many welcome initiatives, including sub-division into lots, the use of consortia and the use of e-tenders for contracts of under €25,000.

Does the office report on the savings in each Department? Are annual reports published to show the savings as the office tries to meet the target of the €500 million savings between now and 2016?

Deputy Brendan Howlin

We have centralised procurements and will have a handle on what we spend when buying goods and services for the State. This will probably be the first time we have a comprehensive picture so that different State agencies do not buy goods and services from the same supplier at different rates.

Less than 5% of the overall public procurement spend is now won by foreign companies. In excess of 95% of public procurement in Ireland is won by Irish companies, 75% of which are SMEs. That was the figure for last year, up from 60% in 2012. Whatever we are doing, we are moving in the right direction.

It is equally important to open the vista and enable Irish SMEs tender for the enormous EU public tendering market, which is valued at €2.4 trillion. A small slice of that would work wonders for the Irish economy.

Deputy Denis Naughten

I thank the Minister for his response. A significant number of small local businesses are not registered on the e-tenders website and are not competing. While the bulk of the value of overall contracts is won in Ireland, a considerable amount is won by foreign companies. I welcome circular 10/14, which is a significant development. If we do not get our act together here it will be very difficult for us to tender for European contracts. If we can get 0.5% more of that, it will be worth twice as much as the public procurement contracts for the whole State.

It is vitally important to apply that circular consistently. What measures are being taken to do that? The Minister said these issues cannot be targeted locally. Kilkenny County Council has introduced a public contract for the maintenance of its water and waste waterworks and set a condition of response within two hours. That allowed local contractors to tender and it was won by local contractors. A bit of ingenuity would help ensure that there is a level playing field and that local companies get a fair crack of the whip.

Deputy Brendan Howlin

I welcome the broad support for the work of the Office of Government Procurement. Not only will it save money for the State and the taxpayer, something that Deputy Naughten always espouses, but it is more efficient. It will make SMEs more efficient. It has already done so.

Between 2012 and 2013 we have increased the participation rate of SMEs overall. We have more than maintained the level of Irish companies winning public procurement contracts. This is an ongoing process. We have only started. We need to see how we can work with industry and its representatives to build those synergies to get a slice of the €2.4 trillion EU procurement contracts market. I am determined that the Office of Public Procurement will be a professional body that will help small companies to tender, either individually or collectively.

Deputy Seán Kyne

How does the office propose trying to encourage SMEs? The Minister mentioned information days but will it do further work to try to reach those who are not registered or who do not come to the information meetings?

Deputy Denis Naughten

Last November, when I raised this matter with the Minister of State at the Department of Public Expenditure and Reform, Deputy Brian Hayes, I suggested that the Department contact a company called tenderscout.com, which brings SMEs together and allows them to get on the e-tenders website and participate in the procurement process. Will the Minister facilitate engagement with that company? It is a high-potential start up supported by Enterprise Ireland and could help many more SMEs get into this sector.

Deputy Brendan Howlin

I do not know whether Deputy Kyne is a member of the Oireachtas Joint Committee on Jobs, Enterprise and Innovation. It would be useful for that committee to invite Mr. Quinn, the chief procurement officer, to explain what he is doing. I think the Deputy would be excited by it. This is a very important initiative in the reform agenda to do things more efficiently and well. The Deputy asked the profound question of how we get those who are not motivated to motivate themselves. I have run meetings around the country where there are plenty of people complaining about not being able to avail of tenders. They will not avail of them. Companies have to be proactive. We will work through the industry representatives to make them as proactive as possible.

I do not know the company Deputy Naughten mentioned but if he sends me the details, I will consider it.

Written Answers follow Adjournment.