Ms Róisín Fleming:

I thank the Chairman and the committee sincerely for this opportunity to speak on this issue, which is of such importance for small businesses throughout Ireland.

We represent the Irish school art supply industry, a group of family run micro businesses which serve their local schools and employ approximately 1,600 people.

Our industry, like many others, is under threat of extinction from the Office of Government Procurement, OGP. We need the committee’s help, not just for the companies we represent but for microbusinesses throughout Ireland. The heart of the problem is that Ireland has a public procurement policy which is not fit for purpose. Our economy is mainly comprised of microbusinesses which are locked out of the €9 billion public procurement spend. The current OGP policy is to get the lowest price for goods and services and to use large aggregate contracts to achieve price economies. These policies exclude microbusinesses in several ways. While microbusinesses may not offer the cheapest price they do offer value for money. If the criterion of the most economically advantageous tender were used instead of price, then value for money, after sales service and social value could be assessed. This approach is encouraged by the EU and would allow microbusinesses to win tenders. Procurement savings can be made while achieving other Government goals such as boosting job creation, preventing regional imbalances and fostering innovation. The OGP sees these goals as outside its remit and contrary to EU policy, despite their successful use in other jurisdictions such as Wales. The narrow price focus has led to the OGP exporting vital business to other countries. The amount lost is unknown because there are no figures. When the amount is tallied in the future, probably by the EU, Irish people will demand answers.

It is a practical impossibility for a group of microbusinesses to win an aggregate contract. It needs one principal applicant big enough to take responsibility for the entire tender, and if our products become the subject of an aggregate contract, our industry will be wiped out overnight. Even if groups of small companies overcome the practical difficulties of forming consortia, they cannot win against multinationals with deep pockets such as Office Depot, the winner of the stationery contract, which has an annual turnover of $17 billion. The OGP has insufficient safeguards against predatory pricing. Aggregate contracts are not designed to deliver quality or, in some instances, safe products. They may also have losses on non-core items. There have been piecemeal attempts to make current procurement policy more SME, not microbusiness, friendly but they have failed to stanch the haemorrhaging of jobs. Educating SMEs about procurement was one. Lack of participation is not down to ignorance but to a business decision not to waste money chasing contracts they have no hope of winning. Circular 10/14 is another. It encourages SME involvement but is purely aspirational and has no sanctions for non-implementation. Breaking contracts into lots will not work unless the lots are sufficiently small and limited to one per company.

Why save microbusinesses? We would make a costly addition to the live register and microbusinesses put more money back into the localities than large firms, which has a multiplier effect. We support local supply chains, regional employment and pay rates. Our profits remain in Ireland and, unlike multinationals, we support our communities. We maintain competition and, by destroying so many microbusinesses, the OGP may be acting anti-competitively. We ask the committee to conduct an economic impact study on the effects of current procurement policy and find a new model more suited to the Irish economy, one which utilises the €9 billion spend to achieve value for money, boost employment and support local communities. The OGP is capable of so much more than merely delivering cheap goods and services. Why waste it?