Mr. A.J. Noonan:

I thank the Chairman and members of the committee for the invitation to make a submission and have a discussion on issues regarding public procurement today. I am joined on our delegation by the Small Firms Association, SFA, director, Patricia Callan, and Ian Martin, who is a member of the SFA national council and the managing director, MD, of his own business, Martin Services. I too have my own business, Rhonellen Developments. The SFA is the voice of small business in Ireland and internationally, with 8,000 members and seven affiliated organisations in all sectors and parts of the country. Our written submission today contains some detailed commentary on the issues our members face with public procurement and some examples of the type of specific feedback we have received from members on the tendering process.

In my brief opening remarks, I would like to highlight a few key points. In its pursuit of lowest price, the Government is neglecting the fact that this will not deliver either the quality, cost in use savings or service levels it desires, but will result in lost jobs here at home. Centralised large aggregated contracts make it increasingly difficult for small innovative companies to compete and this means a serious potential loss of business. These should be broken into lots. The idea that small companies can simply join together with their competitors and compete for larger contracts is simplistic in the extreme.

In 2013, the published data suggest that 28% of tenders are being awarded to countries outside of Ireland, up from a previous high of 18% recorded. Ireland frequently tops the list of countries most likely to award to non-national countries, and this trend is increasing all the time. This is completely unsatisfactory. We need to put supporting Irish SMEs and microbusinesses at the heart of all Government policy-making. While some progress has been made over the past year with the publication of circular 10/14, the establishment of the SME working group on public procurement by the OGP, and the development of the Competition and Consumer Protection Commission guide to consortium bidding, there has been no tangible improvement in SME access to public procurement over the past year.

What is now needed is removal of the price priority. Where price accounts for more than 35% of a contract, the whole contract becomes based on price. We need to set targets for SME procurement, as in other jurisdictions, and 75% is reasonable for local communities. The OGP needs to start thinking value as opposed to price. We need regionalised contracts, lower thresholds and a change in the provisions around subdividing a contract into lots as currently set out in circular 10/14 because it is easier for procurers to opt out than in. A full appeals mechanism should also be implemented forthwith, which would include mandatory feedback on all lost tenders, more scrutiny and transparency throughout the system, an internal appeals procedure in each Department and the opportunity to appeal to an ombudsman.

I thank the committee for its time and attention and we look forward to a discussion.