Mr. Paul Quinn:

I thank the joint committee for its invitation. I am accompanied by my colleague, Mr. Vincent Campbell, who is the policy director of the Office of Government Procurement. The document circulated in advance of the meeting will give the committee an understanding of the fundamental changes taking place within public procurement. I do not intend to go through it in detail as I have approximately five minutes in which to make my remarks. Nevertheless, I will highlight some of the areas that may be of interest to the committee.

It is important to note from the outset that the new structures for procurement are still at a very early stage. As chief procurement officer, I welcome this debate and the advice and guidance committees such as this can provide as we start to make significant changes to how procurement is done in the State.

The procurement reform programme is an element of the Government’s overall reform programme and is tasked with delivering increased value for money, more accurate and timely data and an improvement in the capacity and capability of procurement across the public service. The State spends significant amounts on goods and services, with an estimated spend in 2014 of €8.5 billion, of which €5.8 billion is addressable by procurement. A new model for procurement was approved by the Government in September 2012, with common goods and services to be procured by a new central sourcing organisation, the Office of Government Procurement, OGP, with central sourcing organisations in the health, education, local government and defence sectors procuring sectoral-specific goods and services.

In January 2013 I took up the position of the State’s first chief procurement officer. In consultation with key sectors, I developed a high level implementation plan for the new model and it was approved by the Government in April 2013. In addition to its operational procurement role, the OGP also provides the national policy function, customer support services and systems for all sourcing organisations, including electronic tendering systems, business intelligence and electronic catalogues. The new structural arrangements for the OGP and the sectoral sourcing organisations are going into place. Staff are being recruited into the OGP from across the public service, thereby concentrating and leveraging the public sector’s procurement expertise. Similar processes are taking place in the local government, education and health sectors to create the centralised sourcing organisations in these sectors. Transitional arrangements are being planned across sourcing organisations to realign responsibilities. The main changes will happen late this year and in early 2015.

The new model is underpinned by a common governance model that brings together the new sourcing organisations to co-operate and collaborate. The arrangements include a procurement executive, a steering group to oversee the transition to the new model and an interim board, chaired by the Minister of State, Deputy Simon Harris, to provide strategic advice for the OGP and the Minister for Public Expenditure and Reform on procurement matters. Accountability for sourcing rests with the sourcing organisation that undertakes the tendering. The OGP does not have the resources or mandate to oversee or audit the actions of the other sourcing organisations. The office relies on the governance arrangements in place for these public bodies, including the offices of the Comptroller and Auditor General and the Local Government Audit Service, to provide such assurance. Budget responsibility remains with the public service bodies. The contractual elements put in place by the new sourcing organisation helps these bodies to remain compliant and deliver value for money. Any saving from procurement remains with these bodies, enabling them to operate within their budgets, deal with increased demand or deliver new projects or services.

In the policy area public procurement has strong rules and regulations determined by the EU treaty and directives, as well as by national laws. The key principles enshrined in the treaty are openness, transparency, equitable treatment and non-discrimination.

This means that tendering must be conducted in a way that provides equal treatment to bidders regardless of whether they are big or small, are based in Berlin or Bantry or are a new or well-established business.
The OGP is fully aware of the significant role that SMEs play in the Irish economy and is strongly committed to ensuring that SMEs are fully engaged with public sector procurement and the opportunities presenting. In that context, the OGP has established the high-level group on SME access in conjunction with the Department of Jobs, Enterprise and Innovation, Enterprise Ireland and InterTradeIreland. The group is focused on monitoring the delivery of the procurement commitments under the Action Plan for Jobs and on developing further strategies to improve SME access to procurement. In addition, the OGP policy director chairs the SME working group, which brings together the Department of Jobs, Enterprise and Innovation, Enterprise Ireland, the Competition Authority and InterTradeIreland with industry representative bodies including IBEC, the Small Firms Association, CIF, Chambers Ireland and ISME.
On 17 April 2014, the Minister for Public Expenditure and Reform issued new guidance to public procurers regarding SME access in the form of circular 10/14. The guidance sets out that procurers should conduct market analysis in order to ensure they understand the markets they are addressing. This analysis will advise their strategies and actions to ensure they maintain competition in the market.
The guidance also encourages procurers to break larger tenders into "lots", which can enable smaller businesses to compete for tenders. It reduces the recommended thresholds for turnover to two-times contract value and sets out pragmatic insurance requirements. It also recommends that tenders are evaluated using the most economically advantageous tender, MEAT, methodology, which balances quality with price. The circular encourages consortia to come together and bid collaboratively. Finally, the circular requires procurers to electronically publish tenders for spends in excess of €25,000 on the national electronic tendering platform - e-tenders- and to record the outcome of the tender.
The OGP is leading on procurement policy development in a number of other relevant areas including the social clauses project group, the transposition process for the three new procurement directives and a number of developments relating to construction procurement policy, including the review of the public works contracts.
The OGP supports the work of Enterprise Ireland and InterTradeIreland in building awareness of public procurement and delivering training for small suppliers in bidding for public contracts. In particular, the OGP supports the "Meet the Buyer" events, which help suppliers meet public sector buyers to better understand how public procurement works and the relevance of their goods or services to the public service. InterTradeIreland data shows that attendees submit more tenders afterwards. The events this year are being held in Belfast tomorrow on 22 October and in Citywest on 12 November. I strongly encourage any members who are available to come along to the events and see the engagement with the SME community.
This year, the OGP has attended a number of business events such as Taking Care of Business and the National Ploughing Championships. At these events, the OGP focused on helping businesses understand how easy it is to register on the national tendering platform - e-tenders- and to receive alerts regarding business opportunities. The OGP also supports the State-subsidised Go 2 Tender programme for small businesses run by InterTradeIreland and a new programme on consortia building. The Competition Authority is currently developing guidance material for SMEs who are considering establishing consortia to bid for State contracts.
A wide range of data continues to be quoted regarding procurement spend. I would like to advise the committee on what the OGP is doing in respect of bringing about better data on procurement. Thousands of State bodies are spending money, the larger of which have IT systems for processing spend and the smaller of which are probably using spreadsheets or even paper to record spend information. The State had no mechanism in the past for collecting data on the amount of moneys spent across the public service on goods and services. It has not been possible to determine in detail how much was spent, with whom, on what and at what price.
In autumn 2013, the OGP initiated a project to begin collecting the spend information of the larger sectors, which account for over 80% of the State's spend on goods and services. To date, the OGP has collected approximately 53% of the State's spend in one database.

The project is moving onto a second phase, which will include central government. For the first time, this will allow the OGP in the coming months to publish far more accurate estimates of spend.

In summary, good public procurement is key to delivering sustainable value for money. The new centralised structures for procurement are at an early stage but offer a significant opportunity to deliver value for money, consistent implementation of policy, reduced risk for the State, and improved data provision.

A key policy focus is to sustain competition in markets and work with other State bodies to fully support and encourage smaller businesses in competing for Government business. The information I have provided demonstrates that the OGP has been proactively working with all stakeholders in identifying issues of concern for SMEs and effectively dealing with those issues to the betterment of the procurement landscape in Ireland. These reforms are fundamental in their nature and will take time to implement and bed in. As chief procurement officer, I am clear that we must listen to, and be open to, our stakeholders in industry in delivering for the Government a complex and challenging agenda. I look forward to the questions and comments of the committee members.