Mr. Seamus McCarthy:

As members are aware, procurement of goods and services by public bodies is a highly complex process that can be challenging from both a technical and legal point of view. Public procurement covers a vast range of goods and services from administrative supplies such as stationery and paper through to large scale and complex projects in areas such as information technology, capital works and the purchase of drugs.

A sustained focus on public procurement over the past number of years, both by my office and by the Committee of Public Accounts, has driven a significant improvement in public procurement practice across the whole public sector. As a matter of policy, I have drawn attention to any situation in an audited body where we identified procurement of goods and services that was not compliant with relevant national and EU rules, and where the aggregate value of the spending was in excess of €500,000 in a year. The committee has followed up on such cases, seeking additional explanations, and clear outlines of plans to address the problem. The Department of Public Expenditure and Reform has responded to recommendations made. As a result, we have seen improvements such as improved tracking by many public bodies of their procurement, including identifying cases where procedures followed were not competitive and-or not compliant; and more transparency by public bodies in their annual financial statements about situations where there has been significant non-compliant procurement, and the reasons for that. With the exception of the health service, there has been a downward trend in the level of non-compliant procurement requiring disclosure in the accounts of public sector bodies subject to audit by me.

Competitive and open procurement is generally considered to be the best way to ensure that a public body has secured good value for money spent. It should also allow legitimate suppliers who are interested in the business opportunity to submit bids for consideration, and to have those bids evaluated in an equitable and fair way. Public bodies need to take a strategic approach to their procurement activity to ensure these benefits are achieved. Competitive procurement needs to be followed up by careful contract agreement and effective contract management.

Members will be aware that some procurements carried out without a competitive process can still be considered compliant with procurement rules. Within the existing procurement rules, there are a number of types of circumstances where purchasing may take place without a competitive process. Examples of such purchases include where only a single supplier providing a required service can be identified; the purchase of proprietary or branded goods; where there is a genuine urgency; or where there are specific security considerations. Public bodies availing of such options need to be able to demonstrate that it is appropriate to do so, and that good value for money has nevertheless been achieved.

The Office of Government Procurement, OGP, was established as a separate Vote in 2014. It was created through a merger of units that previously existed in the Department of Public Expenditure and Reform and in the Office of Public Works. The OGP has responsibility for service-wide procurement policy and procedures, sourcing systems and data analytics. It also seeks to put in place shared framework agreements and contracts for the purchase of goods and services by public sector bodies. The OGP aims to provide information and support to public sector bodies through account managers and help desk staff.

The 2019 appropriation account for Vote 39 - Office of Government Procurement records gross expenditure of €16.1 million. This represented a small increase, of around 4%, on the prior year outturn. The expenditure was incurred on a single programme, with the bulk of the spending accounted for by salaries and other pay costs. The OGP had a surplus to surrender of €2.4 million at the end of 2019. The underspend fell into two areas: pay, with an underspend of €2 million or 13%; and procurement consultancy and other costs with an underspend of €589,000 or 24%. I issued a clear audit opinion in relation to the appropriation account for 2019.