Public Procurement Regulations

Dáil Éireann Debate, Thursday - 2 July 2015

Thursday, 2 July 2015

Ceisteanna (5)

Mary Lou McDonald

Ceist:

5. Deputy Mary Lou McDonald asked the Minister for Public Expenditure and Reform if he will clarify that public bodies are not restricted to using public procurement framework agreements such as the managed print services framework agreement and are free to use local providers; if he will issue a circular to this effect; his views on the implications of this clarification for other existing public procurement framework agreements; and if he will make a statement on the matter. [26607/15]

Freagraí ó Béal (15 píosaí cainte)

Deputy Mary Lou McDonald

My question relates to public procurement framework agreements, particularly the managed print services, MPS, framework agreement. There have been controversies and legal actions on foot of that framework and its related circulars. Will the Minister clarify that public bodies are not restricted to using public procurement framework agreements such as the MPS and are, in fact, free to use local providers? Will he agree to issue a circular to this effect? In addition, will he give his views on the implications of such clarification for existing public procurement framework agreements?

Minister of State at the Department of Public Expenditure and Reform

I thank the Deputy for her question. The reform of the public procurement system across the public service is a key element of the public sector reform programme.  Fragmented procurement arrangements have facilitated, among other things, suppliers charging different public service bodies different prices for the same goods and services. Public procurement savings are necessary to enable public service organisations to deliver much needed services within the tighter budgets they must now operate.

Since the start of the procurement reform programme, total savings of €100 million across 2013 and 2014 have been reported by the Office for Government Procurement, OGP, and its partners.  The reform of public procurement is being carried out in a manner that recognises the clear importance of small and medium-sized enterprises, SMEs, in the country's economic recovery.  The recently published report of the OGP, Public Service Spend and Tendering Analysis for 2013, indicates that 93% of public service procurement expenditure was with businesses in the Republic of Ireland. This was based on an analysis of €2.742 billion worth of expenditure across 64 large public service bodies and involving more than 35,000 suppliers.

All public bodies are keenly aware of the importance of maximising the value for money achievable when procuring commonly acquired goods or services.  The central procurement frameworks and contracts established by the OGP are designed to optimise benefits for the public service through the strategic aggregation of its buying power.  The managed print services framework agreement is no different in this regard.     

Public bodies are reminded that such central procurement frameworks are targeted at securing best value for money and facilitating contracting authorities to deliver services within their budgetary constraints. In this regard, public bodies are encouraged to use the arrangements. The benefits arising therefrom include cash savings, administrative savings from reduced duplication of tendering, greater purchasing expertise, improved consistency, enhanced service levels and legal certainty.  Officials are also reminded that it is Government policy that public bodies, where possible, should make use of all such central arrangements.

Deputy Mary Lou McDonald

We have debated many of these issues in the past. The Minister of State will not be surprised to hear that I do not concur entirely with his assessment of the reformed procurement function for the State. My view is that it has had a number of very negative consequences, but we do not have the scope to debate that issue today. The Minister of State knows, too, that I am very positively disposed towards rigorous public procurement procedures not only to save money and enhance efficiency but also to secure a range of positive social consequences. However, I asked him a number of specific questions which hinged on the managed print services framework agreement. In particular, I have asked him to make it clear, whether he encourages public bodies and schools, in particular, to avail of it, that their doing so is voluntary and that there is no absolute obligation to work to the panels established under the agreement. The reason I am asking the Minister of State to be so specific is that this is one of the frameworks that was challenged in the High Court and the Supreme Court. The challengers won and the Government and the State lost. It is essential that the Minister of State make clear to schools that adherence to the agreement is voluntary and that they will not be penalised for failing to comply with the panels under the framework agreements.

Deputy Simon Harris

I acknowledge the Deputy's support for the OGP. We have had some useful discussions in the House on these issues, including on the legislation introduced by the Deputy which dealt with the social clauses aspect. That is an issue the working group continues to consider and I hope to be able to report progress shortly in that regard.

Circular 16/13, issued by the OGP and the Department of Public Expenditure and Reform, reminded public bodies that central procurement frameworks were targeted at securing best value for money and facilitating contracting authorities to deliver services within their budgetary constraints. It went on to state that where a body was not in a position to utilise a central procurement framework, it should be in a position to provide a value for money justification. That justification should take into account the full costs of running a public procurement competition. Public bodies must comply with their obligations under national law and guidelines.

In regard to SMEs, there is room for discussion on what we can do to encourage them to become more involved in procurement. Reform does offer opportunities in this regard, both domestically and at European and international levels. Circular 10/14 put in place a number of measures to encourage SMEs to become involved, which is something we intend to drive throughout the public service.

Deputy Mary Lou McDonald

There is, however, a difficulty.

The circular and the framework have had the effect of locking out a number of SMEs and microbusinesses, some of which have gone under because of the reformed system. Jobs have been lost. To the astonishment of the sector, when it approached the Government and the procurement authority, it was told jobs are not their concern, they were none of their business. That is a consequence of the lack of joined-up thinking and, I respectfully suggest, basic cop-on or a sense of what is happening in the real world. What these businesses need in accordance with the rulings of the courts is for the Minister of State to be explicit that the framework is voluntary and that there is no penalty for sourcing materials and services from local suppliers. They also need in the instance of the MPS framework for the Department of Education and Skills to make that absolutely crystal clear in line with the rulings of the courts to schools right across the State. Businesses and those they employ are seeking that level of assurance and clarity from the Minister of State this morning.

Deputy Simon Harris

As I have already outlined, Circular 16/13 encourages public bodies to utilise the central framework agreements.

Deputy Mary Lou McDonald

They are voluntary.

Deputy Simon Harris

I have outlined that where they are not in a position to do so, they must produce a value-for-money justification.

Deputy Mary Lou McDonald

So, they are voluntary.

Deputy Simon Harris

In regard to that, I have outlined that the value-for-money justification must include the full cost of running a public procurement competition. I hope we have an opportunity to engage in a sustained, lengthy and necessary debate on the purpose of public procurement because it is not a subsidy. Deputy McDonald and I had the pleasure of serving on the Committee of Public Accounts together and would be among the first to criticise public servants coming before that forum who wasted taxpayers' money or failed to seek value for money. What we have here is an opportunity for our SMEs to get involved in a public procurement market that is worth €12 billion a year. I want to work with Deputies on all sides of the House to encourage our SMEs to get involved and provide them with as many opportunities as possible. That is why we have introduced the tender advisory service and the Meet the Buyer event and it is why we are looking at social-----

Deputy Mary Lou McDonald

The reason they challenged it in the courts was because so many of them have gone to the wall.

Deputy Simon Harris

We have a duty-----

Deputy Mary Lou McDonald

Do not talk down the clock. Give them the assurance.

Deputy Simon Harris

I am not talking down the clock, the Deputy is interrupting me. We have a duty also to get value for money for taxpayers. We need to encourage our SMEs to get involved in the reform programme and I remain absolutely committed to that. However, we have a duty on value for money. We cannot be hypocritical and criticise public servants for not getting value for money for taxpayers and then call on them to use public procurement as a subsidy.

Deputy Mary Lou McDonald

The Minister of State cannot let SMEs go under. That is what he is doing. That is the consequence.