Damien English (Meath West, Fine Gael)
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I welcome, from the Office of Public Works, Ms Clare McGrath, chairperson, Mr. Brian Allen, principal officer, and Mr. Jim O'Sullivan, chief engineer. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

I ask Ms McGrath to brief the joint committee on the eligibility of small firms in tendering for capital projects and other issues related to the Office of Public Works.

Ms Clare McGrath:

I am pleased to come before the joint committee to outline the role of the Office of Public Works, OPW, in the area of procurement of construction services. I propose to open with a summary of the core responsibilities of the office. The OPW has responsibility for some 2,200 buildings. This is a wide-ranging portfolio comprising Garda stations, office accommodation, heritage properties, museums, laboratories, storage facilities, etc. The office provides a shared service to Departments and agencies in the areas of property management and maintenance.

The National Procurement Service, NPS, which was established in 2009, is currently a function of the Office of Public Works. It provides professional procurement services to ensure the public service can efficiently and effectively access the best value goods and services in a legally compliant manner. One of the goals of the NPS is to encourage participation by small and medium-sized enterprises in public procurement. To this end, the eTenders.gov.iewebsite is a source for publishing and accessing tender notices on Government and public sector procurement throughout Ireland. As we continue to strive towards a more efficient delivery of public services, the NPS will continue its education programme and hold seminars on public procurement. This will assist buyers and suppliers to interact effectively with emerging markets and keep them informed of current procedures.

The Office of Public Works is the lead agency in co-ordinating the management of flood risk and we deliver our responsibilities directly through our own resources and contractors and in conjunction with other agencies such as local authorities. In respect of heritage services, the OPW manages in excess of 700 sites, catering for up to 3 million visitors at guided sites annually, and protects site fabric by a continuing programme of planned maintenance adopting best architectural and conservation principles. Furthermore, the office provides specialist procurement and technical input to the Government and various Departments on particular projects where the office is not funding the works, for example, assisting the Department of Education and Skills in the expansion or addition of 15 schools. These items do not appear as expenditure on the Office of Public Works Vote.

To address the topic under discussion today, the Department of Public Expenditure and Reform is responsible for determining national policy on public procurement. We, in the Office of Public Works, are practitioners and in our day-to-day operations we give effect to these national guidelines and, where applicable, European Union directives in this area. The OPW complies with the Government decision of 2009 in its commitment to pay contractors and suppliers within 15 calendar days, thereby improving on the statutory requirement of 30 days under prompt payments legislation.

For all construction and construction related services, the Office of Public Works is obliged to use the capital works management framework forms of contract. In accordance with the Department of Finance Circular 10/10, tenders for project works valued at between €50,000 and €250,000 are advertised on the eTenders website using the short or minor form of contract. This is the standard procedure for project work. Another form of building works contract used is investigation and building works designed by the employer. For the provision of services that may be required occasionally, namely, professional services, the relevant forms of contract for consultancy and archaeology are used.

Maintenance works, using the short form of contract, impact on small businesses. Given the volume of maintenance work required, tenders are issued to building contractors included on a list in the relevant region or outside Dublin. This current process is beneficial to small business as it has allowed for the inclusion of additional applicants on the current list through application at any time while the list system is in place. This avoids repetitive paperwork and the use of additional resources by small and medium-sized enterprises as only one application for assessment is required. Tenders for each region are distributed on a rotation basis so as to be fair to everyone on the list. There are approximately 225 contractors on the list for building works. I am pleased to be able, through the joint committee, to invite small firms involved in construction to apply for inclusion on the list.

Eligibility is based on turnover levels, relevant insurance, tax compliance, membership of the operative pension and sick pay scheme, health and safety compliance and relevant work experience. On awarding of a contract, a performance bond may also be required. Members will be interested to note that in 2011, just under 1,300 businesses undertook construction related activities, services or works for the Office of Public Works, on which some €160 million was expended. While these figures demonstrate the extent to which firms have access to and provide services for the OPW, they do not account for the number of suppliers to the businesses the OPW procured for the provision of these services.

I thank members for their attention and will do my best to answer any questions they may wish to raise on the eligibility of small firms in tendering for capital works projects in the Office of Public Works.

Dara Calleary (Mayo, Fianna Fail)
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While I thank the chairman and her officials for their attendance, when members invited them to appear before the joint committee, it was to participate in a broader discussion on procurement and small firms. I am unsure whether the scope of today's discussion can be extended or whether the witnesses can be invited to come back. I have some issues in respect of construction but members sought a broader discussion. Since the time of its predecessor in the previous Dáil, the joint committee has had an issue with matters such as printing contracts and so on. However I note the Chairman has confined her remarks to-----

Ms Clare McGrath:

The letter addressed to me concerned capital projects, which is the reason I brought with me my colleagues from project management and our mechanical and electrical service, whereas I might have brought representatives from the procurement service, had specific issues been raised. I might be able to treat with them but-----

Dara Calleary (Mayo, Fianna Fail)
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Perhaps we might have a discussion with the procurement service in the new year.

Damien English (Meath West, Fine Gael)
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While the discussion was meant to be on all subjects, I apologise if we corresponded wrongly but I thought I had clarified the matter in our conversation. However, Ms McGrath might take what she can today and if it is necessary for her to return with other officials at another time, that can be facilitated.

Ms Clare McGrath:

If there are specific questions on individual contracts, I will be happy to take them away and then come back with specific answers to them. I apologise to the Chairman.

Dara Calleary (Mayo, Fianna Fail)
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I again welcome the chairman. Her organisation is one of the hidden assets to this country, particularly regarding the work it does on heritage sites and State buildings. While I have local arguments with the Office of Public Works on the manner in which it deals with flooding, that is a matter for another day. On heritage services, I have a non-construction-related question. Does the Office of Public Works advertise catering contracts regularly for the various heritage sites? If a person wishes to become a service supplier to a heritage site, whom should he or she contact?

The use of the short form of contract in respect of maintenance works was a welcome initiative. However, the OPW appears to hide it under a bushel to an extent. How many of the 225 companies to which Ms McGrath referred have left that list over the years? Is there much churn of companies on the list? What are the turnover levels for companies in this regard? As Ms McGrath made reference to eligibility being based on turnover levels, what are they and do they depend on the kind of work companies would be doing? Where does one apply and can details be found on the OPW website? On the issue of payment within 15 calendar days, is the OPW fully in compliance with that measure at present?

As for non-capital areas, one of the frustrations experienced by this joint committee's predecessor was that it heard a presentation from representatives of the Irish printing industry during the lifetime of the previous Dáil. They were of the opinion that they were getting a very raw deal in the manner in which State contracts were awarded for printing. The meeting took place at around the time of a referendum in 2008, when one of the referendum information booklets was published in Spain. It was because of the manner in which contract in Ireland are not broken up. The State tends to tender for big contracts and certainly at that point, did not tend to break them up into smaller chunks to facilitate smaller companies, which would qualify under all of those criteria. Has this situation improved and has consideration been given to breaking big contracts, including capital contracts, into smaller chunks to enable smaller companies to get involved?

Ms Clare McGrath:

Hopefully, I have picked up on all the Deputy's questions. We have franchises in place for the running of catering facilities in the heritage sites. They are publicly advertised when they come up and while I am unsure whether the Deputy had a specific site in mind, we publicly advertise.

Dara Calleary (Mayo, Fianna Fail)
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Is this done annually?

Ms Clare McGrath:

They could be multi-year contracts. It would depend on the circumstances and on what were the local arrangements. When such a contract is put out, we might not have a large audience for it and it might not be valued. It is like the Deputy's subsequent question, in that one looks at the market, at what the OPW wants and where it wants it and one then determines the procurement around what is the optimum, both for people to be able to apply for it and in respect of service provision and in order that the OPW is not obliged to go back out very quickly thereafter. However, such contracts are advertised.

Mr. Jim O'Sullivan:

Such contracts normally extend for more than one year because of the set-up costs associated with a new provider coming in. By and large, they are for at least two years.

Ms Clare McGrath:

As for the question regarding churn on the list, I cannot provide the Deputy with details of departures from it. Such departures would not have been because of anything the OPW has instigated but might have been on the other side, that is, pertaining to the aforementioned 225 companies. Turnover levels in respect of most jobs are determined on an annualised basis. Were we placing a contract for a particular amount, it could range, under the guidance from the Department of Public Expenditure and Reform, from 75% on an annualised basis to 150%. Again, however, the Office of Public Works examines such contracts, in cases where we are placing individual ones, ascertains what is appropriate and then sets turnover levels that are appropriate to what we seek to have done. Consequently, we do our utmost to ensure that people can compete. We cannot make them competitive but we do our utmost to make the position such that as many as possible can come in to compete in respect of the turnover levels. The guidance indicates 75% on an annualised basis, up to 150%. Moreover, there is an application form with which people may apply. I will go back and will make sure it is on the website, if it is not, because I am very happy to advertise before this joint committee that this is the case. However, we will send the application to anyone who contacts us.

On the Deputy's question regarding the 15 calendar days, we are at a compliance rate of 97% in respect of the 30-day target. As for complying with a 15-day target within that figure of 97%, I believe we are up at 65% and growing. It is at that level and the OPW is very concerned to ensure we are paying promptly. I reiterate the compliance rate in respect of the other figure is at 97%. As for the Deputy's reference to State contracts, again we carry out a lot of investigation and consideration of the market with regard to the service that is being sought. Moreover, we give consideration to regionalising or dividing into lots, as appropriate, taking into account both access for the market and the value for money question. There is not a single size, as it is about looking at each instance of procurement and determining what is the optimum strategy. I will take away the Deputy's comments with regard to printing and perhaps will revert to the joint committee on that particular subject. I think that might cover the questions.

Peadar Tóibín (Meath West, Sinn Fein)
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Ba mhaith liom míle buíochas a ghabháil as ucht an cur i láthair cruinn. I am trying to get my head around a number of issues. What proportion of the complete public procurement within the State is carried out by the OPW? I understand it is responsible for the procurement of common goods within the State. On an annual basis, I believe that public procurements on the island of Ireland amount to approximately €20 billion. Ms McGrath mentioned a figure of €160 million in respect of the OPW's construction activities, which obviously would represent less than 1% of the total and I am trying to get an understanding of this issue.

One of the major subjects for discussion for this joint committee on a regular basis is that Ireland appears to be an outlier with regard to the level of procurement that leaves the State. We win prizes for this etc. but as a citizen and a representative of small to medium enterprises, I note this is not the type of prize one wishes to win. Can Ms McGrath provide members with details of comparative analysis on the level of extra-State procurements that occur through the OPW's functions and through those of another European economy of similar size? What have been the trends with regard to extra-State procurement versus internal State procurement over the past three or four years? Is the position improving or getting worse in this regard?

There has been a feeling within this State that due to the pressures we are under economically, contracts are being rolled up which then make them less accessible to small and medium-sized businesses, especially microenterprises.

The OPW has responsibility for 2,200 buildings. What number of them would have upward-only rents? I know of a business in Donegal that was forced out of business due to the fact that there was an upward-only rent on a State building in a harbour. Is it the case that the OPW pays upward-only rents and charges upward-only rents? What is the proportion of buildings affected in that regard?

Does the OPW help the enterprise boards train microenterprises in how to use eTendersand to tender in the best fashion? Does it take into consideration that a contract which might be cheaper could put 20 people out of business locally and there is a larger cost to the State involved? Are social clauses included such as for the long-term unemployed? Is compliance on wage rates taken into consideration? We often hear that businesses in the North of Ireland might deliver a contract in the Republic but they would not comply with wage rates in the Republic which gives them an unfair competitive advantage. How does the OPW deal with that?

It has come to my attention in recent days that an SME had to go to the High Court in a case taken against a large semi-State company to get it to pay money owed. It finally got paid just before the High Court came to hear the case, which meant that the small business was left with the legal costs. I learned subsequently that because the semi-State had not paid other moneys owed, a small business had gone out of business. Is compliance on payment within 15 days a consideration for the OPW? If subcontractors are involved in procurement, are they responsible for 15 days compliance as well? They are enough questions to keep Ms McGrath busy for a while.

Ms Clare McGrath:

Again, I hope I will not miss any of them. I referred at another committee of the House to the fact that, by value, 95% of EU advertised contracts remain in the State. I do not refer to the number of contracts but to the value. We had reason to look at contracts that were awarded by the National Procurement Service. It may have related to a parliamentary question. I stand to be corrected on it but 4% of all EU advertised contracts went outside the island of Ireland. Between the Republic and Northern Ireland, 96% remained.

Peadar Tóibín (Meath West, Sinn Fein)
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By value?

Ms Clare McGrath:

No, that was the number of contracts placed by the National Procurement Service. The next question related to a comparative analysis. A recent report examined potential savings on procurement of approximately €9 billion, excluding capital. The OPW’s own Vote is very small, at approximately €392 million. That includes rents. The amounts are to be found elsewhere in the public service. We place contracts on behalf of other public sector bodies through the National Procurement Service. The single biggest one of those relates to energy. The others are much smaller than that. There is much more public procurement in other sectors, such as the health sector or local authorities. When the State is procuring, many people are making decisions because there have been central cuts to allocations. It creates tension that could even become a conflict between obtaining value and getting the most for one’s euro and at the same time the impact that will have. One must balance both of those. Different bodies are responsible for setting targets and policy in that regard. The OPW, as a procurer, seeks to maximise value but also to spread it. We are conscious of that within the construction area. In certain instances one looks at where one can leverage the State’s covenant to get best value for the State.

Social clauses are a consideration. The Department of Public Expenditure and Reform is considering changes to directives and the inclusion of social clauses within contracts. They may well be included within the capital works framework. The Department will provide the lead in that regard and we will give effect to whatever is decided on the matter, but we do not have social clauses at present.

On the 15 days, I cannot make any comment on a semi-State body. The OPW is 90% compliant with the 30 days. We are 65% compliant, and increasing, on the 15 days payment on the construction side. We seek to continually improve on that. Issues usually arise on elements of the contractual relationship. We have not been in court over prompt payments. In terms of subcontractors, the privity of contract is with the main contract. I understand Senator Quinn’s Bill on the payment of subcontractors has gone through Second Stage and I believe it will go to Committee Stage after Christmas. Issues arise about the turnover in that regard. That will apply to the private sector and the public sector and it must be expedited. I am not aware of issues arising in the OPW with payments by main contractors to subcontractors.

Peadar Tóibín (Meath West, Sinn Fein)
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Ms McGrath mentioned that 95% of contracts remain within the State. That does not refer to the National Procurement Service, it only relates to OPW contracts. What is the percentage of other contracts that leave the State? The OPW pays upward-only rents on many of the buildings it currently uses and charges upward-only rents to people as well. What is the position in that regard?

Dara Calleary (Mayo, Fianna Fail)
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On the OPW not having any issues with subcontractors, a case concerning a school arose recently in Limerick, and that is replicated throughout the country. In some respects the OPW is the facilitator for the contract and many people consider that to provide security. Does the OPW have a policy in terms of providing information to tenderers that the OPW is not the payer and that it is the board of management or a contractor?

Ms Clare McGrath:

We are not involved in school projects.

Dara Calleary (Mayo, Fianna Fail)
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This could apply to any number of public works contracts in recent years where the OPW might have facilitated a contract. The OPW might not have awarded of the contract but it was seen to be behind the development.

Ms Clare McGrath:

I missed the detail of what the Deputy said.

Dara Calleary (Mayo, Fianna Fail)
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I will email Ms McGrath some of the specific contracts. The issue of subcontractors is important.

Anthony Lawlor (Kildare North, Fine Gael)
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Ms McGrath referred in her documentation to the office providing specialist procurement and technical input to the Government and various Departments on particular projects where the office is not funding the works, for example, assisting the Department of Education and Skills in the expansion and addition of 15 schools.

Ms Clare McGrath:

The Office of Public Works is the contracting authority for the 15 schools in question and will manage the contractual relationship for these schools.

Dara Calleary (Mayo, Fianna Fail)
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In the case of the 15 schools, if I were to lose my seat and set up as a subcontractor, would the State guarantee payment to me in the event that the principal contractor on a project managed by the Office of Public Works went bust owing me money? In such circumstances, I would have paid my suppliers and workers and carried out work or installed equipment in the building. I would be then left at a loss because the main contractor went bust and failed to pay me, despite the building having been handed over to the OPW.

Mr. Jim O'Sullivan:

The government form of contract is being used by all State bodies that are publicly funded. This contract provides that the main contractor is the only contractor with which the Office of Public Works has a contractual arrangement. All other contractors on the site are domestic subcontractors. The old system of nomination was dispensed with in 2005 when the new contract was introduced and whatever security was provided by nomination is no longer in place. As to whether the Office of Public Works provides a guarantee for the payment of subcontractors, the position is that there are no contractual arrangements between any subcontractor and the office or any other public sector contracting authority.

Ms Clare McGrath:

I believe this issue may be addressed in the Bill in respect of all private and public sector bodies. The Office of Public Works is an employer of contractors and continues to be in that relationship. It is not a one-off relationship, as would be the case with a board of management. We are in a better position to the extent that people wish to treat with us again, particularly where the sums involved are below the EU thresholds. We our minded that past performance should inform future contracts and we raise this issue with the Government Contracts Committee, GCC, through the Department of Public Expenditure and Reform.

Mr. Jim O'Sullivan:

A review of the existing contract is being carried out. I attended a workshop on the issue attended by a large number of other representatives from the public sector. The payment of subcontractors is a major issue throughout the economy, both in private sector and public contracts. The chairman of the Government Contracts Committee is well aware of this issue. I hope any review will try to take on board these problems and produce solutions to them. In that regard, if the Deputy wishes to raise specific issues with the GCC, I will do so on his behalf.

Ms Clare McGrath:

On upwardly only-----

Peadar Tóibín (Meath West, Sinn Fein)
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The proportion of national procurement contracts going outside the State was raised. The Office of Public Works manages the National Procurement Service. What are the trends in respect of contracts outside the State in recent years?

For how many premises does the Office of Public Works pay upward only rents and in how many cases does it charge upward only rents? I referred to an example involving a semi-State company and small business. The OPW manages the procurement element of contracts small businesses secure with semi-State companies. In a scenario where a semi-State company defaults on its payments to a small business, would the OPW have a role in the matter or is this strictly a matter for the semi-State company and contracting company?

Ms Clare McGrath:

The office would not be directly involved with the semi-State company. When I alluded to a figure of 95%, I was referring to Ireland and all European Union advertised competitions for procurement, rather than procurement solely in respect of the OPW. We recently answered a parliamentary question on contracts placed by the National Procurement Service in which we indicated that 4% of such contracts went outside the island.

In terms of trends, I understand from the Department of Jobs, Enterprise and Innovation via Enterprise Ireland that the latter works closely with the small and medium enterprise sector to facilitate SMEs in participating in competitions in other jurisdictions. While I do not have figures with me, I understand Enterprise Ireland has provided valuable assistance for companies seeking to compete in other jurisdictions by leveraging their ability to win competitions elsewhere. I do not have a comparative analysis in respect of other jurisdictions, although I will suggest to the National Procurement Service that it consider this issue with a view to being able to identify trends, as requested by the Deputy.

On rents, we have something in the order of 450 leases, a small number of which are upward only rents. We seek to leverage our covenant in relation to this and we have been able to optimise the position where reviews have been done. I do not have figures on the number of upward only rents in cases where the Office of Public Works is the landlord, although I can revert to the joint committee on the question. I am not sure if the Deputy is asking how many of the tenants in such leases have expressed to the OPW that they have a difficulty with their rents. I take his point about the case in County Donegal and I will revert to the joint committee on OPW leases. As members will be aware, upward only rent clauses have been illegal for the past couple of years, which means no new leases can be created with such clauses. This is an historical issue.

Anthony Lawlor (Kildare North, Fine Gael)
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Like my colleagues, I expected representatives of the procurement section of the Office of Public Works to appear before the joint committee today.

Damien English (Meath West, Fine Gael)
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That is our fault.

Anthony Lawlor (Kildare North, Fine Gael)
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We must deal with the position as it presents. I am fascinated by Ms McGrath's statement that 96% of contacts are awarded in Ireland. I have a list of 100 tenders which featured on the eTenders website in the period from 4 September 2012 until this morning. Is it not strange that not one Irish company tendered to operate the eTenders website, which is run by a Swedish company? I find it strange that small companies which do not have experience in online tenders are dealing with a Swedish company. The eTenders website is experiencing serious glitches and small companies are encountering difficulties with the facility. Was the tender document drawn up by the procurement section of the Office of Public Works for the website so prescriptive that not one Irish company was able to tender for the contract?

I have here a tender document on the suitability of contractors for small works associated with an extension at Kill national school in County Waterford. Ms McGrath referred to a turnover requirement of between 75% and 150% of the value of the contract. The tender document for Kill national school includes a declaration that the contractor's annual turnover for the three previous financial years be not less than one and a half times the sum tendered for the project. In light of this, I find it difficult to understand Ms McGrath's earlier comment. The document also states that the level of public liability insurance must be €6.5 million and employers' liability insurance for the contract was €13 million. This requirement excludes a large number of small companies from tendering for projects. Our task is to try to help small businesses.

I have an interest in this issue because the OPW is engaged in works on my farm which were intended to last for six months but have taken 18 months.

The one thing that stood out was the fact that the company that did it had done a number of jobs for the OPW. The question I must ask is how small companies get access to the tendering process. I will give details of a recent contract from the document:

I declare that the above named Contractor has carried out and satisfactorily completed 3 works of a similar nature, size and complexity within the last 7 years and will (if so requested in writing or email by the Contracting Authority) provide details of those 3 projects including the start and finish dates for the projects, the name of the Foremen, the scope of work completed by the above named Contractor and contact details.

Ms Clare McGrath:

I am not aware of Kill national school being an OPW job.

Anthony Lawlor (Kildare North, Fine Gael)
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No, I took it off the eTenders website.

Damien English (Meath West, Fine Gael)
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Is it a school?

Anthony Lawlor (Kildare North, Fine Gael)
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Yes, it relates to a school. The point I am making is that there is total exclusion of small companies purely because of the contracts put out there. It is coming from the NPS.

Ms Clare McGrath:

I must clarify that eTenders is a portal that enables public sector buyers to advertise their contracts to suppliers. The eTenders website has been in existence since 2003. It was previously held by a Scottish firm but was retendered in the past 12 months for an off-the-shelf system to provide a portal to enable communications between public sector buyers and suppliers. The NPS is responsible for the eTenders website but in respect of procurement, it is responsible for supplies and services and not for works. Works are the responsibility of whoever the public sector buyer is. The documentation that would be put on eTenders would be done by the public sector buyer who wants to-----

Anthony Lawlor (Kildare North, Fine Gael)
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Can I interrupt Ms McGrath? Her opening statement stated that one of the NPS's goals is to encourage participation by SMEs in public procurement and that to this end, the eTenders website is a source for publishing and accessing tender notices on Government and public sector procurement. In her speech, Ms McGrath stated that as efforts continue to strive towards a more efficient delivery of public services, the NPS will continue its education programme and hold seminars on public procurement. If this is what the NPS is prescribing and encouraging within the public sector, it automatically discourages small and medium-sized enterprises, particularly companies that are starting up. We are trying to push new start-up companies but they are obviously being excluded because of conditions in contracts. We either decide to have a public policy to encourage as many start-up companies as possible or we ring fence existing companies that work with the OPW and the NPS. It appears to me that everything is ring-fenced.

Ms Clare McGrath:

As I understand it, neither the OPW nor the NPS is the relevant entity in respect of the school in Kill.

Anthony Lawlor (Kildare North, Fine Gael)
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I simply pulled that example off the eTenders website. I have another example.

Damien English (Meath West, Fine Gael)
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Does Deputy Lawlor's question relate to the role of OPW in those type of contracts? Is Ms McGrath saying that it does not have a role?

Ms Clare McGrath:

We do not have a role. The Department of Public Expenditure and Reform, through the GCC, is the body which sets the guidelines, for example, those relating to works contracts concerning turnover being 75% of the annualised value up to 150%. When the OPW carries out these types of contract, we look at the contract and determine what is appropriate on an individual case-by-case basis. I cannot state what other procuring entities follow or why they might determine that the turnover levels should be at a different level. I accept the Deputy's point in respect of making access as wide as possible and I will certainly raise this issue when we attend the GCC. The chair of the GCC might raise it as well. I am very happy to deal with individual instances where people say we are not complying with respect to our own works contracts. I am not aware of that because internally all parts of the organisation involved in procuring works are very conscious of facilitating firms with regard to having access to a competition - not necessarily how it might win it but at least facilitating access.

Anthony Lawlor (Kildare North, Fine Gael)
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Ms McGrath is chairperson of the OPW and the NPS is under her remit.

Ms Clare McGrath:

Yes. The NPS does not have procurement responsibility for works.

Anthony Lawlor (Kildare North, Fine Gael)
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The NPS is the national body that is supposed to be supervising eTenders and also helping small and medium-sized firms to get these contracts. I have other contracts with me. I have one of 50 pages for about ten printers.

Peadar Tóibín (Meath West, Sinn Fein)
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I understand why it is necessary for companies that are tendering to have some level of track record because one wants to work with companies that will still be in existence while the contract is under way. We are regularly in contact with small businesses. I believe the Small Firms Association reckons that about 60% of people it surveyed indicated that they have had very negative experiences regarding public procurement in this State. We are talking about the development of the local enterprise offices as part of the new enterprise structure. We finally got some interaction between small enterprises and the development of the local enterprise offices. What role do small enterprises have in the design and culture within the OPW regarding tender contracts? Does the OPW work regularly with ISME and the Small Firms Association? Does it meet with groups to examine how tenders can be structured to make them small business-friendly?

Ms Clare McGrath:

I will treat these two things differently. We interact with industry on the work side on a daily basis because we do a lot of procurement works. Many of the questions have concerned supplies and services. The NPS would interact at very senior levels with the Small Firms Association, ISME and IBEC. "Meet the buyer" events have been held in various locations throughout the country through the NPS and InterTradeIreland. These are trade shows, for want of a better word, where public sector buyers meet public sector suppliers and inform them of what is happening in their business areas. There are forums for interaction at various levels with supplier representatives.

Damien English (Meath West, Fine Gael)
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On a point of information relating to Deputy Lawlor's question, each Government agency is responsible for its own tendering but does the OPW think to advise them about some of their tenders? The point raised is that some tenders seem prohibitive to a certain number of businesses. The OPW does not necessarily have a role in the tender but does it advise agencies? It works with the tenderer in terms of small businesses but does it work with Government bodies?

Ms Clare McGrath:

In terms of supplies, it would be through the NPS. In terms of works, our engagement with other public bodies would be through the GCC and the Department of Public Expenditure and Reform.

Mr. Brian Allen:

It is common practice as well for the OPW, after the tender competition, to invite the unsuccessful contractors in and to go through the tendering process with them and explain to them, perhaps, why their tender did not succeed on that occasion. We do that regularly. We are required to do it under EU directives. There is interaction with the contractors. The most recent example that comes to mind is the schools building programme. At present, we have prequalified for eight new schools, and there are seven others coming down the track. At the prequalification stage we received 79 expressions of interest from contractors for those schools and a huge number of them had feedback sessions after the event to explain to them why they were not on the list of ten or 11 contractors who will be invited to tender when the time comes. That is ongoing.

Damien English (Meath West, Fine Gael)
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That is feedback with those who wish to tender. Do you have the same discussions with the buyers and let them know their tendering process is prohibitive? Is that part of your duty?

Mr. Jim O'Sullivan:

No, it is not part of ours. The Department of Public Expenditure and Reform has very detailed guidance on the appropriate thresholds and most individual organisations would have training sessions for their individual staff on going through those guidance documents and stressing the issue of appropriate thresholds. Turnover and the like are indicative of people's capacity to do work. The insurance levels in the example the Deputy mentioned appear to be high. There is guidance on all those thresholds.

Damien English (Meath West, Fine Gael)
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To summarise, our concern is that the NPS is under your watch, as it were.

Ms Clare McGrath:

Yes.

Damien English (Meath West, Fine Gael)
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Our assumption was that you would have a greater say about those tenders where the levels were so high. Obviously, we have to go further with this but what Deputy Lawlor is saying is that this is under the watch-----

Anthony Lawlor (Kildare North, Fine Gael)
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I have a contract from the OPW with me. It is the single supply framework contract for the supply of printing devices for the EU Presidency. It comes from Ciaran Murtagh at the OPW through the National Procurement Service. The contract is 50 pages long. It is for ten printers. One would need a degree in legal science to go through this OPW contract.

Mr. Jim O'Sullivan:

The document is large because the standard conditions are part of it. I do not know the individual-----

Anthony Lawlor (Kildare North, Fine Gael)
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I am not blaming the individual. He is the contact point.

Mr. Jim O'Sullivan:

The standard contract has been developed to enable contractors to get to know what is a standard contract, so there is certainty in that aspect of the tender. It is a large document but caters for all eventualities. The hope is that it will become the contract that will be used throughout the public service for services and supplies. There is a huge benefit in that people are not required to go through line by line for each tender for which they wish to apply.

Damien English (Meath West, Fine Gael)
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I will call Deputy Lyons now and then we will go back to the other question the Deputy wants to have clarified.

John Lyons (Dublin North West, Labour)
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I will move the discussion away from this and focus on something Deputy Peadar Tóibín mentioned, which is the social agenda and the social clause. Ms McGrath said in her opening statement that the Department of Public Expenditure and Reform is responsible for determining national policy on public procurement. Is that a two way process? Can Ms McGrath influence that in turn and make recommendations surrounding how we should conduct our national procurement process? In other words, if the Department of Public Expenditure and Reform is not encouraging her or does not have a policy requiring her to have some type of social clause, where possible, within any of the procurement processes, is she in a position to say this could be good thing or can she go it alone without the Department stating it or without feedback?

With regard to the social clause issue, I have been doing a little work on this. I have a Private Members' Bill relating to public procurement. There are a few glitches in it which must be fixed before it goes any further. However, the social agenda in Ireland at present is to create jobs. It has come to my attention from speaking to various experts in public procurement that it is possible to build the concept of a social requirement into the criteria from the beginning when one is advertising with the Official Journal of the European Union. Once some type of social clause or social agenda is included there, one can then implement what is really a social clause around job creation. The reason I raise this is that we are spending €2.25 billion in a capital investment programme that was announced earlier this year. If we are serious about taking the unemployed off the live register and giving them jobs and if we are one of the biggest providers of capital investment through schools building programmes and with nearly €1 billion being spent on roads and so forth, do we have to wait until the Department of Public Expenditure and Reform states that a social clause must be included before the procurement or is Ms McGrath in a position to do that beforehand?

What experience has Ms McGrath had of developing social clauses and developing them effectively? If she has had such experience, does she speak about the benefits of a social clause as part of the education programme being rolled out to show people the way to effective procurement? The National Assembly for Wales has a social clause but it will be most likely knocked down by the EU because it contravenes EU legislation. However, it can be done in the right way. The people to whom I have been speaking, who are expert in this area, say that once it is included at the beginning of the process, not when the tender comes out but when the advertisement is put in the Official Journal of the European Union, and a number of other things are done - it is not as simple as the advertisement - we can include a social clause, particularly with regard to having a job creation procurement strategy in any of the capital programmes we are procuring.

Ms Clare McGrath:

The Department of Public Expenditure and Reform is leading this with regard to the inclusion of social inclusion clauses. The capital works management framework and the various contracts that ensue from that are set out. No public sector procurer who avails of the use of those contracts can change them. We must go back through the Department and make suggestions, which we do in this regard. We would not run on our own on this because of the impact on the guidelines and the contracts the Department sets out. I take the Deputy's point about raising it first when advertising in the journal, but we would do that only under the auspices of the Department. We are practitioners in that sense. We are policy takers, but the policy is set by the Department of Public Expenditure and Reform. However, where we have issues with elements of contracts or other issues or where we have ideas to improve things, we refer back to the Department, as do all other public sector bodies which procure works. They revert to the Department as well, and it would take on board all these suggestions.

John Lyons (Dublin North West, Labour)
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Currently, however, we do not have anything like that in the guidelines.

Ms Clare McGrath:

No.

Damien English (Meath West, Fine Gael)
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I will take a question from Deputy Tóibín. I believe Deputy Calleary also has a question.

Peadar Tóibín (Meath West, Sinn Fein)
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In the North of Ireland where Mr. Conor Murphy, MLA, was looking at the development of tenders in respect of roads, certain elements were put into contracts. They were broken up as much as possible without incurring extra costs on the state and ensured a certain level of local employment, including apprentices and individuals from the long-term unemployed. It worked successfully. With no disrespect to anybody, there is different culture among people working in the public service and those in the private sector. Many businesses are at breaking point and find it difficult to operate. An application for a tender is a very expensive process and can takes weeks on end with full teams working on a weekly basis on a tender. They could prepare ten tenders and have nothing to show at the end of the day. While we are giving confidence to the State that the company will be able to fulfil the contract and has the necessary balance sheet to deal with any problems, we are cutting down on red tape and ensuring such contracts are accessible to small business.

Has the Office of Public Works ever advertised a tender in the European Union that fell below the requirement value for tendering there?

Dara Calleary (Mayo, Fianna Fail)
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I have a somewhat similar issue to that raised by Deputy Tóibín and Deputy Lawlor. The delegates said they have a database with 225 contractors on their list for building works. The meet the buyer events conducted by the Office of Public Works are excellent but I suggest it speaks to the buyers about the design of contracts and the 225 contractors. I appreciate one has to visit organisations. That is fine, I used to work for a business organisation, but one is not at the coalface. I recognise that many legal issues have to be provided for in a contract today. I suggest OPW use its 225 contractors and its database for those really good events to speak to business people about the design of contracts. It is good to speak to them after the event but it may be more beneficial before the actual contract is designed. A regular process might result in the OPW being able to refine those 50 pages into what is required to keep the lawyers and everybody else happy towards a practical business friendly document.

Ms Clare McGrath:

In regard to the standard form of contracts for supplies I will take that point back to the National Procurement Service and raise it with the Government contracts committee. A great deal of effort has gone into arriving at the point where something is legally compliant and there can be certainty. I take Deputy Lawlor's point concerning the expense and the difficulties that arise. I meant to say in response to Deputy Lyons and Deputy Tóibín's question that the Minister of State, Deputy Brian Hayes, is exercised in regard to the amendments to the directives and what is being considered to ensure that social clauses are included. He has responsibility for the Office of Public Works but this issue is being dealt with by the Minister of State at the Department of Public Expenditure and Reform.

On the issue of EU advertising. Suppliers and buyers can register their advertisements on the eTenders website. The suppliers who register on the website can be from anywhere. The EU tenders website does not necessarily comply with EU procurement rules. It is a website that allows and facilitates access by businesses to competitions.

Peadar Tóibín (Meath West, Sinn Fein)
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My knowledge is not specific in this area but I have anecdotal evidence to suggest that the Companies Registration Office tendered at a level which was below the requirement for the European journal. Even when there was no requirement to open up tendering to jobs outside of Ireland, some public companies were doing that which, in effect, was likely to cost Irish jobs during the most acute jobs crisis in this generation.

Ms Clare McGrath:

All I can say is that eTenders is a public portal for suppliers to register. Under the provisions of the directive, I understand there is a move to electronic procurement in many other jurisdictions in Europe. Therefore, the same situation will apply to all jurisdiction. It will enable one to register within that jurisdiction as a supplier and then one is notified of opportunities.

Anthony Lawlor (Kildare North, Fine Gael)
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I mentioned earlier the exclusion of small businesses. This is one for ten printers, for an extension to a school. Both have similar employers liability of approximately €13 million and public liability. Whoever draws up the contracts appears to apply a similar standard of figures to exclude smaller companies. I would like to have an opportunity to speak to the National Procurement Service in respect of the framework agreements and the problems around it because it definitely excludes small companies. In the move to centralisation all that is wanted is big companies. People sometimes ask why not get five or six small companies to come together. The position is that they are all in competition with each other for the local business. How can they be brought together to make an agreement? We are seeking competition yet under the framework agreements we are excluding competition.

How many procurement managers are in the Office of Public Works? When a company gets through the hoops of preparing a tender document, how is the tender awarded? I notice consistently that 65% depends on price and 35% on something else. Within the education sector in my parish, the builders went to the wall before two schools were built. It appeared to me that the contract was judged on tender price rather than any other criteria, that the lowest possible price was chosen without a due diligence on the companies or whether the price was viable and sustainable. Consequently there is a delay in the children going into their new school as a result.

Ms Clare McGrath:

I will confirm the number to the committee. Within the National Procurement Service, which is responsible for supplies and services, there is a total of 47 staff. I will come back to the committee on the number involved in placing major works contracts. We provide a service in respect of engineering services, civil works, and on the supply side in relation to schools and we have minor contracts which would be placed in different locations. The people managing those projects are not solely procurement managers, they would also manage a region of work on construction.

Damien English (Meath West, Fine Gael)
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Does Ms McGarth want to comment on the framework?

Ms Clare McGrath:

If I can, because it is specific to the point, I would prefer to come back to the committee in the new year or whenever the committee wishes.

Damien English (Meath West, Fine Gael)
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That is okay.

Anthony Lawlor (Kildare North, Fine Gael)
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It covers a wide range of areas - motor vehicles, advertising, energy, ICTES, print, stationery, paper, janitorial supplies.

Peadar Tóibín (Meath West, Sinn Fein)
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I n respect of the specific problems that have been brought to my attention will we get a response back on them?

Damien English (Meath West, Fine Gael)
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In fairness, the Deputy asked for that beforehand and members were given an opportunity. I know questions can arise thereafter but we will have another opportunity again.

Ms Clare McGrath:

There is a question of striking a balance.

Prior to the National Procurement Service the Office of Public Works through the Government Supplies Agency provided a shared procurement service for central government. We would have bought the paper, the uniforms and so on for Departments. There is the question of striking a balance and we sought to leverage the strength of the covenant against the facilities. That was done for central government purchases prior to 2009. There was a report which considered leverage and ways to optimise procurement. It is about striking a balance and getting a return on high volume low value goods and purchases for sectorial areas. For example, medical supplies are a very specific area, which one would treat in an unique way because of the risks attached to the nature of the procurement. It is a value proposition. I take the points made by members about giving small firms the greatest possible access to compete for contracts.

Damien English (Meath West, Fine Gael)
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I thank Ms McGrath and her officials for attending today's meeting. She has done her best in answering the questions relating to her areas. This has been an informative and useful process. We will continue to examine this issue further as it is very important that small businesses can access public contracts. We will revert to Ms McGrath with more questions.