Thursday, 14 November 2019

Ceisteanna (11)

Denis Naughten


11. Deputy Denis Naughten asked the Minister for Public Expenditure and Reform if the public procurement threshold will be increased from €25,000 in view of the impact same is having on SMEs; and if he will make a statement on the matter. [46498/19]

Amharc ar fhreagra

Freagraí ó Béal (6 píosaí cainte) (Ceist ar Public)

We need to facilitate SMEs in participating in public procurement in every way possible. Every minute, the Government spends €16,000 on buying in goods and services and we need to support innovation and greater access to public procurement contracts for SMEs, small business and micro-enterprise across this country.

The Government recognises the importance of the SME sector and continues to enhance the already substantial measures to support SMEs in accessing the public procurement market. Significant work has been undertaken by the Office of Government Procurement to ensure public procurement is accessible by all businesses. A group chaired by the Minister of State at the Departments of Finance and Public Expenditure and Reform, Deputy O'Donovan, chairs quarterly meetings of the SME advisory group. The membership of the group consists of officials from the Department of Business, Enterprise and Innovation, Enterprise Ireland, IBEC Ireland, the Small Firms Association, the Construction Industry Federation, the Irish Small and Medium Enterprises Association and Chambers Ireland. In May 2017, a proposal was put to the group to raise the current threshold of €25,000, exclusive of VAT, for advertising on the eTenders website. The proposal was discussed at meetings of the group from September to December and it was clear at that point the majority of members were against increasing the advertising threshold at that point. The outcome was that the current threshold of €25,000 was maintained. Through the work of this advisory group and through the work the Minister of State, Deputy O'Donovan, is doing, a suite of different changes have been made to try to support SMEs. Contracting authorities have been encouraged to divide public contracts into lots, work has been done to encourage SMEs to come together to put in bids for contracts that are of a scale that are bigger than they might be able to access on their own and public bodies are now required to advertise contracts for goods and services valued above €25,000 on the national eTenders portal. I know the Minister of State, Deputy O'Donovan, is doing a huge amount of work in engaging with SMEs to try to ensure they are aware of the opportunities that are available to them. The most recent figures we have indicate 94% of the €4.7 billion expenditure available for procurement is with firms that have an Irish base.

The majority of the spend is with the SME sector.

The €25,000 threshold has been in place for approximately a decade. As the Minister will be aware, the thresholds are reviewed every two years at EU level and they have increased incrementally. The EU thresholds were last increased at the end of 2018, yet the thresholds here remain stagnant. We need to encourage as many local businesses as possible to avail of public contracts. One way of getting them into the system is by addressing the threshold. Not enough subdividing of contracts is taking place because many public bodies seek the soft option and do not break up the lots.

The Deputy made a fair point that given the focus on SMEs being able to win more tenders and on ensuring they are part of our public procurement process, the threshold should be examined. It is interesting, however, that following an extensive discussion on the issue in the SME advisory group, the decision was made, due to the feedback of the majority of members, that the threshold should not be changed. Nevertheless, we need to keep the decision under review. The Office of Government Procurement, OGP, continues to monitor the issue and engage with the SME sector.

I met those involved in procurement yesterday. One interesting aspect of the discussion, a matter with which the Deputy will be familiar, is the degree to which green issues and climate change matter, and the degree to which procurement policy is now an important lever of Government policy for responding to that. As the team involved in the area get together their work plan and priorities for next year, such green and climate-related measures will be prominent in their work.

On the Minister's final point, we need to examine the whole-of-life impact rather than just ticking a green box. Unfortunately, that is what is happening, and we have previously had a discussion on the matter.

While the OGP is great from the perspective of centralising policy on the matter, it is not responsible for procurement but only for the setting down of the rules in that regard. It may be that turnover requirements have been unnecessarily put in place, that technology-specific solutions are sought that impede innovation, or that specifying the type of industry that can do the work is done in such narrow terms that it excludes businesses. In the interests of SMEs and the public purse, we need to encourage as many people who are capable of doing the work as possible to do it, and not consider purely the price, which may not necessarily in the long term be the best value for money for the Exchequer.

There is no way we can deliver efficiencies and effective procurement policies without price being central. Some have made the case that we need to examine broader factors than price alone. I am sure, therefore, that at a point in time the OGP is no longer able to point to savings, those who argue we need to move away from price will forget that and state the office is not doing a good job.

On the Deputy's point about ticking a green box, from talking yesterday to those involved in the OGP, when efforts intensify, such as in respect of single-use plastics, it will be anything but a box-ticking exercise. I expect that the area in which the tension between price and other priorities will become most evident will be when measures are under way to make more progress on green procurement.

It is not the case that the OGP is not directly involved in procurement. In fact, it is involved for certain kinds of procurement processes, while for others, it puts together a procurement framework within which local authorities are obliged to deliver their procurement.