Rose Conway-Walsh (Mayo, Sinn Fein)
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The joint committee is meeting today in public session for a briefing on procurement and the defence sector. The purpose of today's meeting is to provide the committee with details of the overall environment in which procurement takes place in Ireland ahead of the committee's meeting next week with the Department of Defence on the Defence Sectoral National Development Plan 2026–2030 and defence procurement. We are joined by the following officials from the Office of Government Procurement, OGP: Ms Anne Stewart, assistant secretary, Ms Anne Lannon, principal officer, and Mr. Fergal Grogan, assistant principal officer. We are also joined by Dr. Paul Davis, head of the management group school in the faculty of business in Dublin City University, DCU. On behalf of the committee, they are all very welcome. The format of the meeting will be that I will first invite Ms Stewart to make an opening statement and then Dr. Davis. This will be followed by questions from members. Each member will have a seven-minute slot to ask questions and for witnesses to respond.

I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate where he or she is not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precinct will be asked to leave the meeting. In this regard, I ask members participating via Microsoft Teams that, prior to making their contribution to the meeting, they formally confirm that they are on the grounds of the Leinster House campus.

Both members and witnesses are reminded of the long-standing parliamentary practice that 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 or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I now invite the witnesses to deliver their opening statements.

Ms Anne Stewart:

I wish everyone a good morning. I am the assistant secretary in the Office of Government Procurement. We are part of the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. I am joined this morning by my colleagues, Ms Anne Lannon, who is our portfolio manager in the central purchasing body, CPB, and Mr. Fergal Grogan, assistant principal officer in our policy division. I thank the Cathaoirleach and members of the committee for the invitation to provide members with an understanding of public procurement in Ireland.

The Office of Government Procurement comprises two divisions of the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. The OGP acts as the strategic adviser to Government on matters related to public procurement in addition to its primary functions, which are the responsibility for general public procurement policy and legislation in the State; management of the national electronic tendering platform eTenders, which is used by public bodies to publish tender opportunities and manage procurement processes in a compliant, transparent and standardised manner; and quality procurement data and analysis.

Second division looks after the operation as the central procurement body. The OGP establishes central frameworks for goods and services that serve the needs of public service bodies across the civil and public service. The OGP also leads on increasing commercial and procurement capabilities across the public service through training and guidance.

I will now set out the legislative regime that underpins public procurement from a standard goods and services and infrastructure perspective, noting where there is a difference in rules with the defence procurement directive. The general rules for procurement are provided for in EU directives 23/2014, 24/2014 and 25/2014, and their transposing national instruments. Following an evaluation process, this suite of directives is currently being reviewed, with a draft proposal expected during Ireland’s Presidency of the EU. The Department of Defence has legislative and policy responsibilities for procurement falling within the scope of Directive 2009/81/EC, which was transposed into Irish law by SI 62 of 2012. These regulations apply to public contracts in the fields of defence and security for the supply of military equipment as well as works and services for specifically military or national sensitive purposes.

Directive 2009/81 differs from Directive 2014/24 in a number of ways. Procurement processes conducted under Directive 2014/24 are intended for maximising competition and delivering the best value for money for the State. The defence directive balances competition with national security interests and recognises that in certain circumstances competition must be limited. In addition, there are material differences in procedural flexibility, the handling of data, security of supply and the usage of exemptions. It is necessary for defence and security procurement to have different rules to protect national security generally as well as classified information and Defence Forces personnel specifically.

At a national level, the procurement and acquisitions branch of the Department of Defence is responsible for providing policy direction in relation to defence equipment infrastructure and delivering a procurement function on behalf of the Defence Forces for defence equipment, materials and major procurement projects. While OGP frameworks can and have been used by both the Department of Defence and the Defence Forces, policy on defence procurement and the acquisition of defence equipment are matters solely for that Department.

At a national level, the committee will be aware of the development of Ireland’s first overarching national public procurement strategy. The Department is in the final stages of approval to publish Ireland’s first national public procurement strategy, which will set out the strategic direction of public procurement in Ireland for the next five years. This strategy is due to be brought to Cabinet for approval in the coming weeks. This strategy is distinct from the sectoral investment plan published by the Department of Defence, which the OGP has no oversight of, given the distinctions noted previously. This strategy has been in the pipeline since 2024 and delivers on a key commitment in the Programme for Government 2025: Securing Ireland’s Future to review the public procurement process to make it more transparent and work to ensure greater participation from SMEs.

Drawing on the feedback received as part of the review, which included extensive consultation with suppliers, the public sector and the wider public and informed by wider national and EU priorities, the strategy aims to deliver a transformative shift in both mindset and practice in how public procurement is approached across the public sector. It sets out, for the first time, a unified and coherent national approach to how the State will use public procurement strategically to strengthen our enterprise base, deliver better public services, drive value for money and generate wider societal, environmental and economic benefits. This expanded focus is reflected in the strategy’s vision to deliver strategic, innovative, sustainable and transparent public procurement that supports SMEs, competition and better public services.

This strategy supports the Accelerating Infrastructure report and action plan and the desired outcomes to remove obstacles and foster a culture of delivery through simplifying and streamlining Government procurement. To achieve this, it lays out an integrated framework of core values, shared enablers, objectives and actions for public procurement in Ireland and managing the regulatory framework. The four core values that underpin this vision of this strategy are transparency, procuring for impact, value for money and efficiency. These were informed by feedback from the public consultation as part of the review process. These values are supported by five enablers that will translate ambition into practice, including simplification, focusing on key long-term strategic priorities and risk, communicating effectively and engaging collaboratively and constructively, use of central procurement arrangements, and aligning with data and digital initiatives. Across its five pillars, the strategy contains targeted objectives, each with supporting actions and KPIs.

While I cannot go into the details yet as the strategy is still being finalised, I wish to share with the committee the following over-arching objectives for each pillar. Pillar 1 commits to investing in our enterprise base and sets out the ambition to optimise the use of public procurement as an investment tool through making it easier for SMEs to participate, particularly start-ups, microenterprises and social enterprises, thereby driving competition and value for money and delivering better public services. Pillar 2 commits to procuring for our future and sets out the ambition for a public procurement system that supports a greener, more socially inclusive and prosperous future for embedding sustainability, innovation and resilience considerations into policy and practice. Pillar 3 commits to safeguarding public trust and sets out the ambition for a procurement system that is transparent, fair and legally certain and that earns and maintains public trust by ensuring that public money is spent in an efficient and responsible way. Pillar 4 commits to building capability to help the public sector deliver and sets out the ambition for a public procurement system that fosters collaboration, problem solving and shared learning, where all public buyers have the skills, knowledge, professionalism and supports to deliver this strategy’s vision and objectives. Pillar 5 commits to managing complexity and sets out the ambition for a public procurement system that is fully equipped to navigate and manage the increasing legislative and policy complexity by focusing on the needs and experiences of policymakers, public buyers and suppliers, enabling greater simplification, and harnessing digital and emerging technologies.

This strategy aims to support the delivery of strategic, innovative, sustainable and transparent public procurement that promotes competition and value for money. In doing so, we will support the delivery of infrastructure and the delivery of the national development plan. I thank the members. I look forward to their questions.

Dr. Paul Davis:

Ireland's procurement system is designed around one question: what delivers value for money today? Defence procurement must answer a different question entirely: what keeps us safe in scenarios that we hope never arrive? It is not a subtle distinction. It is a fundamental incompatibility. Right now, Ireland is trying to force defence through a procurement model designed for the opposite purpose. The Office of Government Procurement and the Department of public expenditure promote category management, framework agreements and just-in-time efficiency. Buy what you when you need it at the best available price, consolidate demand, leverage competition and drive down unit costs, with the emerging success in savings delivered and contract compliance. This works for office supplies, IT services and maybe even infrastructure, although the national children's hospital suggests that the model has serious limitations. For defence, this logic is worse than inadequate; it is dangerous.

Defence procurement operates on a just in case logic. You do not buy naval capacity when a threat emerges. You do not build submarine capability when tensions escalate. You do not develop intelligence analysis expertise when you suddenly need it. By then, it is a decade too late. Standard procurement optimises for known, measurable, short-term needs. Defence procurement must provision for unknown, long-term, catastrophic scenarios. One asks mostly what the cheapest way is to buy today's requirements. The other asks what capability must exist permanently, regardless of whether we use it, because its absence would be strategically fatal.

Category management treats goods and services as substitutable commodities. Competition drives efficiency. If one supplier fails, you switch to another. Contracts are time bound, and relationships are transactional. None of that applies to defence capability. There is no competitive market for Irish maritime patrol capability. There is no real alternative supplier for airspace monitoring. There is no framework agreement that delivers strategic autonomy. There is no switching cost analysis that captures what it means to lose the institutional knowledge required to interpret threat. Let me be concrete about what this distinction means in practice. Under the Office of Government Procurement logic, we would assess Ireland's airspace monitoring requirement, issue a tender, evaluate bids on cost and compliance and award a multi-year contract to the most competitive provider. We would measure success by on-time delivery, contract adherence and percentage savings against baseline cost. Under defence logic, we ask entirely different questions.

Who interprets what we are seeing? Who decides what constitutes a threat? Who exercises judgment about proportionate response? If that contract ends, can we reconstitute this capability and how long would that take? If the geopolitical environment shifts, does this arrangement constrain our room for manoeuvre? Critically, does the existence of this contract create dependencies that limit our ability to make independent decisions? These are not procurement questions; they are sovereignty questions, but Ireland's current system does not distinguish between them.

The UK's recent shift to a ten-year defence investment plan illustrates exactly this tension. The Ministry of Defence is trying to escape annual budgeting cycles and move away from in-year savings requirements that destroy long-term value. It is trying to align procurement with capability timelines, not financial years. However, even that ten-year horizon is too short for many defence capabilities. Building naval expertise takes decades. Developing credible intelligence analysis requires career-long progression. These are not projects with defined end-points. They are permanent state functions that must exist whether or not they are actively used, because their absence would mean strategic dependence.

Ireland does not just lack a ten-year plan. We are still operating on annual budgets, with procurement frameworks designed for standardisation and efficiency being applied to capabilities that cannot be standardised and where efficiency, as normally defined, is irrelevant. The Department of public expenditure measures success in savings delivered. Defence must measure success in catastrophic scenarios avoided. Those are irreconcilable logics.

Let us consider what category management would do to the Defence Forces’ capability development. It would favour proven, off-the-shelf solutions over bespoke development. That sounds sensible, but it means accepting equipment designed for someone else's strategic requirements, someone else's geography, someone else's threat environment. It would favour short-term contracts over long-term capability investment. That sounds efficient, but it means losing the institutional continuity required to operate complex systems or interpret strategic intelligence. It would favour competitive tendering over sustained industrial partnerships. That sounds like good governance, but it means Ireland never develops the sovereign industrial base required to maintain, adapt or upgrade critical systems independently.

None of this is hypothetical. We have already seen this pattern destroy State capacity across Irish public administration. In healthcare ICT, the Children's Health Ireland bought systems through competitive tender that could not perform basic functions. Medical histories have vanished. Appointments have disappeared. Managers cannot log into their own accounts. The procurement was compliant, but the capability was absent. In infrastructure, reliance on external project managers, procured efficiently through standard frameworks, left the State unable to act as an intelligent client at the national children's hospital. Cost overruns were not procurement failures. They were the predictable result of the State surrendering the in-house expertise required to challenge contractor claims or interpret technical advice. In regulation, ComReg relies on quarterly data supplied by the telecoms operators it is supposed to hold to account. Is this efficient? Certainly. However, when Eir breached its access obligations, ComReg had to pursue enforcement through the High Court, a process that took years and settled for a fraction of the penalty sought. The State had contracted out the verification capability required to challenge industry-provided information.

Defence follows the same logic, but the stakes are higher. If Ireland outsources airspace monitoring through a competitively tendered framework agreement, we will achieve procurement compliance, but we will lose the ability to interpret what we are seeing, exercise independent judgment about response and act without seeking permission from whoever holds the contract. That is not efficiency. It is strategic dependence. Here is the critical point: once lost, defence capability is prohibitively expensive to rebuild. You can sign a new contract overnight, but you cannot recreate the expertise, the career pathways, the institutional memory or the industrial base that takes decades to develop. By the time dependency becomes visible, the capability has already gone.

Ireland faces genuine resource constraints. No one disputes that. The answer is not to apply standard procurement logic to defence. The answer is to recognise that defence requires a fundamentally different approach. My recommendations are very simple. Ireland needs a sovereign capability framework that inverts standard procurement logic for defence. First, we need to establish a procurement capability board with the authority to designate sovereign capabilities that cannot be subject to standard category management or competitive tendering. Second, we need to introduce a sovereign capability test for all major defence procurements. For example, does this capability involve threat interpretation, sovereign judgment or independent action? Can this capability be reconstituted if contractual arrangements fail? Does this create strategic dependencies that constrain Ireland's decision-making autonomy? If the answer to the first question is “Yes”, or if the answer to the latter questions is “No”, the capability must be developed and retained domestically, regardless of short-term cost. Third, we need to ring-fence defence capability investment from annual budgeting pressures and in-year savings requirements. Defence operates on a "just in case" logic. It cannot be measured against "just in time" metrics.

This is not about rejecting efficiency or accountability. It is about recognising that defence procurement serves a fundamentally different purpose than standard public procurement. Category management asks what is the cheapest way to meet today's requirements. Defence procurement asks what capability must exist permanently to ensure we never face tomorrow's crisis without the sovereign capacity to respond. Those are incompatible questions. They require different frameworks, different metrics and different governance. Right now, Ireland is forcing defence through a system designed for the opposite purpose. We are measuring capability against efficiency metrics. We are applying short-term value-for-money tests to long-term strategic investments, and we are treating sovereignty as if it were just another category to be managed. The question is not whether Ireland can afford to treat defence differently from standard procurement. It is whether we can afford not to.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I thank Dr. Davis. We move to the members. I remind members, ahead of next week's meeting, that we are talking today about the overall environment in procurement rather than specific procurement contracts. Members have seven minutes. I remind them to allow for the answers within that time.

Dr. Paul Davis:

I would frame it as a more generic question rather than a specific one on those issues, because they are tenders that are currently ongoing. The question is the sovereign capability. If we go ahead and go through a contract for any of the elements that the Senator has just mentioned, the basic question is whether we can create that work ten years from now. Are we going to be dependent on a body that may act differently from our requirements in the future? Government-to-government procurement is an excellent resource, and it is something we have to take advantage of because it enables us to build capacity. Capability is different, though. Capability is making sure that when the contract ends, we are not dependent, or when the conditions shift, such as in the geopolitical climate, and changes occur, we are not left without the support to be able to manage on our own.

If the Senator is asking me in the traditional sense of buying from a sole supplier - not a sole country, but a sole supplier - then there is risk in that. Where there is sole supply, we have to ask what the dependency into the future of that supply is. Are we building in additional capacity that we can manage without that sole supply? What happens if that sole supplier decides, through circumstances that change, economics that change or political will that changes, that it is no longer going to support a contract that was put in place?

Where would that leave us? This is the sovereign test. We are asking whether, if the situation changes in ten or 15 years and we are left without a supplier, do we have the capability ourselves to manage and do we have the capability to recreate the contract with somebody else. If we do not, then we have built a dependency and we are putting at risk our sovereign state.

Ms Anne Stewart:

We do not oversee any Department in terms of its procurement. We just outline the rules. We provide guidance on the policy but we do not oversee. Unfortunately, we have no governance authority or oversight. In other words, we cannot tell a Department what to do.

Ms Anne Stewart:

The procurement process itself is governed by its own directive in the EU rules. If national policy applies, then it must be ensured that it is aligned with it. In the case of defence, I doubt that national policy would apply because national policy applies to much lower values. Essentially, it is the Accounting Officer. In the case of defence, it is for the Accounting Officer, who is the Secretary General in the Department of Defence, to be satisfied the conditions have been met. It is a question that comes up a lot with the OGP, in the sense that we work in a decentralised model and each Department and contracting authority has its own Accounting Officer who is responsible. If we set aside the Comptroller and Auditor General, who has auditing capabilities for contracting authorities and Departments, there is no other body that oversees the procurement of a contracting authority. This was very evident in the recent issues with the Arts Council's IT systems and with the Office of Public Works, OPW, and the famous bike shed. The OGP has no capacity to be parachuted in to independently audit these procurements. This is done by the agencies themselves.

Ms Anne Stewart:

It is the body itself. I do not disagree with Senator Craughwell. This is something the OGP has looked at a number of times but we just do not have a mandate to do it. Technically, it is the Accounting Officer who is responsible. What we are seeing for sure is more governance being put in by individual bodies. We see this now with the high-level public procurement group that has been set up in the Department of Defence to oversee its procurement, we see it in the HSE, and we have seen Mr. John Conlon speak about it in the OPW. They are putting in their own governance layers. I could go on and say this creates other challenges because there are questions as to whether it will delay a process that is already complex and can be lengthy.

The other challenge I see in the system is that we depend a lot on outsourced consultants to deliver some very complex and one-off-type procurement. In some cases, depending on where the consultants come from, they may not necessarily always understand the local rules. It all depends on specification, and something can be left out of the specification. To be perfectly honest, this is where things start to go wrong. Dr. Davis made a point about the process. The process can be compliant but if, at the start, the specification is not right to begin with, and the specification takes most of the time, then it will forever be in trouble. It is something that concerns us when we look at things such as MetroLink, which is going to be a massive drain on State spending. It is a concern for us as to how the specification is going to be built.

Ms Anne Stewart:

I apologise.

Dr. Paul Davis:

The issue becomes a misunderstanding about what public procurement is. The OGP as a central body is very good at what it does, and let us not underestimate its skills or capabilities. It was set up to bring about efficiencies in the purchasing of standardised materials and it does this extremely well. The issue is translating this down to sectoral delivery. When this is done, particularly at strategic level, the capabilities and capacities are not necessarily always present. We have diluted them over the years. When we speak about ring-fencing money to put away, the biggest issue, and here we will all agree, is whether the capacity or capability is still present in the organisation because in many ways we have hollowed out organisations over the years. Senator Craughwell used use the word "blame". It is not blame but more a case that if a Department does not have the capacity or capability it will look to the guidance and use it but it may not be the most appropriate guidance or legislation to use to procure the particular equipment being dealt with. We have mentioned two pieces of legislation. They cannot always be used in tandem. Sometimes, they have to be used very separately with different conditions. If we want to ring-fence €1 billion, we have to make sure that we have the capacity and capability in the Department to be able to deliver it. This is probably a secondary question that may be asked next week. It is certainly something that we would all agree needs to be looked at.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Perhaps we will tease this out in other questions.

Donnchadh Ó Laoghaire (Cork South-Central, Sinn Fein)
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I thank the witnesses and I very much appreciate their presence. I must attend another meeting shortly, so I apologise because I will have to leave.

This is a very interesting discussion. My first questions are for Dr. Davis and I also have a question for the OGP. Some of my questions for Dr. Davis are related to his opening statement and others are less so. In any area of business, and probably defence, weaponry and weapons technology in particular, there is the issue of ethical procurement. Ensuring we deal with companies and governments that operate on an ethical basis is an in important consideration but, obviously, we cannot be naïve. The world is a complex place and that is probably challenging to achieve. Perhaps Dr. Davis will offer a comment on how he sees it being best applied. It is important that there be a framework but I am sure many people would make the point that such a framework cannot be overly constraining.

Procurement in the area of defence is perceived in a more geopolitical way than other types of procurement, for example, the countries traded with and the level of reliance on particular companies located in particular countries. In many areas of public policy, the attitude might be to diversify and hedge bets but this probably becomes a bit more complex with defence. In a volatile world, how precisely does a country, particularly a small country such as Ireland, navigate this and the political implications that might be perceived in relation to particular transactions?

Dr. Davis outlined a number of recommendations which I think are very interesting. Talking in broad strokes, they refer to a procurement system that would maybe exist outside the current broad procurement system. It is important that the system, and I am sure Dr. Davis will agree, has to ensure that an eye is turned towards waste and ensuring it is minimised. I say that because there is a lot of discussion now, of which I am entirely supportive, of the need to enhance capabilities and to invest more. If we have a current political environment that talks only about investing more, it does not take a lot to imagine that there is an onus on public services to spend and to bring spending up, rather than necessarily looking at very precise outcomes and ensuring there is delivery. How does Dr. Davis imagine that can be avoided in the mechanism he has outlined?

Turning to the Department, my next question flows from the previous one. Dr. Davis has quite articulately outlined a different approach. I think the specific language referred to inverting the standard procurement logic for defence. It is an interesting point of view. There is a very valid point that this is a unique area of public expenditure. Would the witnesses from the Department agree with that point of view? Do they think it is applied to an extent already? The witnesses are not here as policymakers, so they are not in a position to say they recommend X, Y, or Z, but how do they believe that those considerations can be applied in terms of defence spending?

Dr. Paul Davis:

I will start in the middle, which is probably a nice place to start, on the geopolitical side of it. How do we navigate that? We have to look to where international practice has shown small countries that operate similarly to us. We have Finland, Austria, Denmark and Malta. In my submission, I outlined the different regimes in place in each of those countries.

Finland has a similar population and it is similar in terms of its relationships with countries, although it has a slightly different border situation, one under a bigger threat. It is able to build up its independent capacity for its military-industrial base to be able to support armed forces of about 14,000 personnel and reserve forces of about 140,000 personnel. The country does that within the constraints of the same geopolitical features that we have. It has a land border where it has to deal with an external party and a land border that is extremely difficult to manage. Finland does that, however, and it has built it up. Austria takes a slightly different approach, which is probably closer to where we could be. That country says it cannot build all its capacity but that it will build some industrial base. Senator Craughwell asked what would happen if we were not able to do this. Austria is asking whether it retains sufficient capability itself if it is not able to depend on another country. Denmark went down the road of deciding to get rid of all its capability, but 20 years later it has begun to realise that it actually cannot get rid of it all. It has realised that it has to rebuild its military and defence structures, and that is now an extremely expensive pursuit for Denmark to undertake. Malta completely depends on everybody around it. It has no defence structure for itself.

From a geopolitical point of view, we have choices. The legislators are the people who make those choices. I am the person who comes in and says here is the range of choices, but the legislators are the people who make those choices. When I am asked about the geopolitical aspect, I will respond by saying we have examples of where there are best practices and examples of where practice is, and it is up to the legislators to make the choices.

Turning to the ethical side of it, that is always a difficult question to answer, particularly when we are concerned with the military. What is an ethical viewpoint? Let us go back and ask the question in a slightly different way. What do we regard as a sovereign nation and what do we need to do to protect our sovereign nation? Let us now ask that ethical question within that context. When we do that, we can make decisions that are reasonable for what we need as a nation.

I cannot answer that personally, but perhaps the members of the body politic may have particular viewpoints as to what they believe is an ethical viewpoint for a sovereign nation, and that is where we make our decisions. It is not about one particular sector. It is a sovereign nation’s opinion in terms of what we need to do. It is not a conflict in terms of neutrality. It is about saying that this is a sovereign State.

When the Deputy asks about a recommendation concerning waste being minimised, I think he needs to go back to what I said at the very start. There is a just-in-time approach to a just-in-case approach. There is a risk that there will be waste. However, we have to ask the simple question: if something happened, if there was a catastrophic event, such as if cables were cut or if there was a cyberattack, as was said, what would then be considered a waste? Do we invest just in case or do we invest just in time? How do we measure that waste? Defence is different from buying something like a standard commodity. When we measure waste, we really have to ask the question of what we are measuring against. I cannot tell the Deputy that, but I can tell him it is an issue for us in the future and we do have to think about it when we purchase and procure.

Donnchadh Ó Laoghaire (Cork South-Central, Sinn Fein)
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I think that is an answer to a slightly different question, though, because, obviously, long-term strategic investments are not wasteful. I suppose the point in the context of a long-term threat being faced is that a Minister can come into the Houses or into this committee and say we have made this investment. It will be several years down the road before it will become clear whether the right investment has been made, the right contractor or operator has been chosen or the right system has been invested in. At the time of the decision, the onus is on the need to purchase something and to engage in a contract for it. It is about how we can ensure that if a mechanism exists outside the normal procurement procedure - and absolutely in terms of the long-term objectives - the question is what the check and balance will be if it is not going to the Department of public expenditure.

Dr. Paul Davis:

The check and balance is going to be the governance of the independent body and the Department itself. The Department itself controls the expenditure and the oversight. We have our Comptroller and Auditor General who will go in and review the work afterwards. We have systems with checks and balances already in place. We may not like the results that come out of those systems, but some of that comes down to choices of underresourcing. I think all of us here would agree that the Office of the Comptroller and Auditor General is probably completely underresourced in terms of some of the ability we are asking about. If we want those checks and balances, then there are choices to be made on investing in them to ensure they are put in place.

Again, I push this back to the legislators. When we look at waste, there are many different ways to measure it. For standard procurement, specifications and framework contracts work really well, and the Defence Forces and the Department of Defence use those frameworks in very logical patterns. Where we have defence procurement, where there are questions of sovereignty, the only addition that I made to the procurement process was somebody asking those three questions to determine if there will be an impact on our sovereignty over the next ten, 15 or 20 years or the life of this contract. That is an important distinction because it allows us to build the capacity and capability to be able to reprocure or manage the equipment, or whatever we have bought, without the dependence on somebody else. I do not know whether I consider that waste. I do understand the question the Deputy is asking, but a lot of the work done, certainly since 2014, in terms of waste has actually been very effective with many of the standard contracts and frameworks put in.

Robbie Gallagher (Fianna Fail)
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I too welcome our witnesses and thank them for their contributions so far. The whole area of procurement is fascinating and one that drives a great deal of frustration among the public. A number of examples were listed that drive people mad, which is the best way I can put it. As someone once said, when you are spending somebody else’s money, it is less painful. It really is frustrating and something that we need to get a handle on.

There is that end of it, and then there is the defence end of it. Dr. Davis outlined in his contributions how we can best move forward, and I think we all agree we require major investment in our defence mechanism. That goes without saying. From the perspective of shared interests, for example, some of our defence mechanisms have issues in common with our nearest neighbour, the UK, so how do we balance that from the point of view of expenditure?

From the perspective of value for money, as far as it can be pushed, should we be pooling our resources together to buy in bulk by involving some of our EU colleagues in procurement to try to ensure we get value for money? How does that fit into the defence end of things? Local industrial participation in all of this undertaking, as far as we possibly can, would be one thing I would be very keen on.

For example, if we are spending €50 million on drones or whatever, how much of that €50 million can we farm out to local SME involvement? For example, could we have a 50:50 split? Is that possible, depending on the equipment that we are purchasing? I understand some EU states go down that road in that there is something built into the framework that ensures that there is local participation from SMEs and I would be keen that we would max-out on that from the point of view of Irish SMEs. Have we that built into our framework?

Ms Anne Stewart:

There are a couple of points. In terms of the bulk buying or leveraging other countries, under the defence directive they have the ability to by Government to Government and they utilise that fairly frequently. Senator Craughwell mentioned a specific country and the Defence Forces work a lot with that specific country in terms of some of the equipment and services that they buy. The Defence Forces use that as much as they possibly can, because it makes more sense. It is more cost-effective. The most important thing is the security of supply and that is built into the defence contracts.

In terms of SMEs, Senator Gallagher is really talking my language when he talks about SMEs. This is something that we are working hard on in the OGP, in general, right across the State. I certainly believe that when we look at our environment in terms of corporate tax and how dependent we are on that vulnerable type of tax, we need to work to leverage our public procurement contracts to drive business through to our SMEs as much as we can so that we can drive economic growth, employment in them and, hopefully, ultimately certain revenues from them that will sustain us in the longer term. This is something that is at the forefront. It is why we held our Government expo, in November, purely targeted at them.

The challenge, and I do not want to speak too much for defence because I am not in their world, for them in buying something such as a drone goes back to the point that Deputy Ó Laoghaire mentioned about whether we have chosen the right product. You have to choose the right product first so that you are not wasting funding, you are investing in the right things and that does what it is supposed to do and I suppose trying to put stipulations in there that it has to be 50:50 SME or 50:50 whatever way it goes could be challenging. I am not saying they do not do it. I would imagine that could be challenging but that is not to say that it could not be done because one of the great advantages that the defence directive has over the classical directive is it has the ability to negotiate directly and could go to an SME and work with it to develop exactly the type of system that it needs. It is certainly within the realms of possibility that that could be done because they have that advantage over the classical directive. The classical directive makes it a lot more difficult to go direct. There is an innovation partnership procedure under the classical directive for standard goods and services, but you really have to prove that this product is not available anywhere else. That can get challenging for contracting authorities, but not impossible. In fact, in the OGP, we are trying to eat our own cooking. We are moving forward on a project using that procedure to prove that it can be done and use it as a test case. Those types of things are challenging for defence. I am sure they could add more detail into that.

Dr. Paul Davis:

The Senator used the phrase, "value for money". The Senator has to stand back and ask, what do we mean by value for money? We have a variety of definitions on that. Let us take value for money. Ms Stewart used the phrase, "security of supply". Security of supply is value for money, in other words, we need to ensure that we have security of supply and then we build an industrial base in order to ensure that. Whether that is investing in SMEs or whether it is using third parties to invest in SMEs and build it out, we make a decision to do that. Finland did that. Finland said that it would build an industrial base, it would do that over a period of years and it would put in place, using, maybe, the security directives or whatever was available, to build that industrial base. Is that value for money? From their point of view of neutrality and from their point of view of where they sit and the industrial side that they are doing, it makes sense. Austria took a slightly different approach. It said that it can involve itself in European defence frameworks and it will do that, but it will also narrow it down whereby there are some pieces that it will not allow to go outside and it will always retain the capacity and capability internally in its country to be able to do that. The security directive allows you to do that. You can choose to do that and you can build that capacity over time.

When the Senator asked me for value for money, if it was buying stationery, value for money might be buying a large amount delivered with a very low cost. Buying defence might be about security of supply, ensuring that I retain control over that over the next 15, 20 or 30 years. I have to make those choices about what I am doing. The question then becomes, do we have the capacity or capability to do that? We are growing that capacity, the capability is there, but we need to understand that we are trying to build something that we have lost the capacity and capability over in the past 20 years and we are trying to grow this over three-to-four years. With the increase in spending we have got, we are trying to increase that capacity rapidly. We have to be careful that we do not rely on external people to do that because if we do that, we will not have the capacity into the future, which is when we will need it. We have to build that slowly to ensure it. That is value for money.

Robbie Gallagher (Fianna Fail)
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Does it make sense then to build up our own capacity here even though it might take a number of years?

Dr. Paul Davis:

It makes sense to choose the areas that you want to build it in. It makes to have a look at the model that both Austria and Finland adopted and try make a decision as to what are the skill sets. Senator Craughwell talked about cybersecurity. That may be one, given the level of technology infrastructure we already have in Ireland and given the support of technology people that we already have. That may be an area that we can invest and become a leader in because we may already have a technical base.

Robbie Gallagher (Fianna Fail)
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It makes sense.

Dr. Paul Davis:

However, it is making the choices. That is value for money. It is very different to stationary.

Ms Anne Stewart:

It is an important point. What often gets lost in these conversations is that if we can build our own base not only to secure our own supply, it is something that we can then sell on to other countries as well. It is another revenue stream for us. Sometimes that piece gets lost in it. The investment is not lost only on Ireland's utilisation; it is something that could be open to other countries and a revenue stream for us.

Robbie Gallagher (Fianna Fail)
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As long as it is a priority to do it ourselves when we possibly can.

Dr. Paul Davis:

I will jump in on one last point. There was a Professor Timoney, somebody might remember, in the 1960s. He came with a land vehicle, that the Government, in 1968 or 1969, did not have the intention of building a military profile on. We exported it. Not only did we export the technology, we exported the design and we gave it away. Australia now runs and has the most capacity of building these vehicles, and they are still in use by all military around the world. Making the choice is sometimes seeing it beyond the initial cost and looking 25 or 30 years out.

Robbie Gallagher (Fianna Fail)
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Down the line, yes.

Duncan Smith (Dublin Fingal East, Labour)
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I thank the witnesses for their opening statements and their answers so far.

I was taken with Dr. Davis's opening statement and the paper he sent in to the committee. I agree on the exceptionalism of defence. To what extent has the decades-long near political consensus around neutrality, without going into its various definitions, inhibited us as a State in making a leap forward in how we approach our security?

Dr. Paul Davis:

This is where - when I went and looked at the research on it and looked at how we use language - we have confused neutrality with sovereignty and we need to separate the two out. We can be a neutral country but we can also be sovereign. Sovereign means building an independent structure that we can manage. What has happened is that neutrality has substituted itself for the word "sovereignty" and in defence, we need to be able to put that word back in to what we are talking about.

Do I think it has damaged it? It is not damaged. We have just chosen the wrong word to describe a situation.

Has that led to maybe an underinvestment in the Defence Forces and has that led to an undervaluation of the Defence Forces? Maybe it has, but if we use the word "sovereignty" as it is supposed to be used, that investment and what we are currently doing in terms of making an increased investment is showing a shift back to that. It is that confusion of the two words that has occurred over the past 20 or 30 years.

Duncan Smith (Dublin Fingal East, Labour)
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I would add national security into that confusion as well. Investing in national security does not necessarily have to impact our neutrality.

Dr. Paul Davis:

That is the point on the word "sovereignty", in understanding what that means.

Duncan Smith (Dublin Fingal East, Labour)
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I refer to the exceptionalism of defence versus, let us say, health.

Dr. Davis mentioned the national children's hospital in his contribution. Ms Stewart mentioned MetroLink for example, which has not begun properly yet. They are all involved. With MetroLink we do not know how it will go, but we know it will cost a lot of money. The national children's hospital has overspent, but no matter what happens, when it is built we will be able to point to a building which will have health workers in it and children will be able to go in and hopefully come out better. There will be something to point at. With MetroLink, we will be able to point at a train service that is running every nine seconds, please God. With defence, the value for money is pointing to a clear sky and a nice day and saying, "Thank God nothing happened there." However, in terms of what Dr. Davis is proposing, that will ultimately cost billions of euro over the course of years.

Dr. Paul Davis:

The reality is-----

Duncan Smith (Dublin Fingal East, Labour)
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The political selling of that is difficult. I want to get to a point where we are standing on our own two feet as a modern, sovereign nation that has a sophisticated national security architecture and we are engaging with allies on our own terms, but we are not bound by being members of NATO or a common defence body. That is where I want to get to. Politically, it will be about selling the investment of so much money in what Dr. Davis is proposing, which I think is very attractive. He is also proposing a form of exceptionalism. We do not need to buy loads of tanks. That is not where modern security is going and that is not what Ireland needs. We need intelligence gathering, monitoring and cybersecurity, as Senator Craughwell mentioned. The need to get the public to buy into that and trust it will be a major inhibitor, in my view.

Dr. Paul Davis:

If we look at the infrastructure that Ireland and Europe depend on, particularly the undersea cables and the major infrastructure and data centres, I do not think it is that difficult to tell people that we need to be able to protect that in whatever way we can. This is where our income from foreign direct investment comes from. That is where our tax revenues are coming from and will probably continue to come from for the next number of years. I will touch wood on that one, because geopolitics changes. We have large multinationals investing in data centres and infrastructure. Selling it is not so much about telling people that we need to do this because we want to have an armed force; it is about saying we want to retain the sovereign ability to protect the resources that bring us the income to invest in the likes of the children's hospital and the MetroLink. To do that, though, requires building capacity and capability. We can kid ourselves by saying that this is going to be done in three years, because in many ways we said by 2030, we are going to hit a certain number of people in the Defence Forces. We are now realising it will be 2035. We need to take a longer-term view. This is going to take 15 to 20 years.

In the same way, I might be a highly vocal critic of the ability of the State to manage the children's hospital because we did not have an intelligent client function. Absolutely, I hold my hand up but then let me reverse it. We will have spent €2.4 billion, maybe €3 billion, depending on what happens with the EHR system that goes in, but over the lifetime of that hospital of 100 years, that will account for 2% to 3% of the total spent. Sometimes we have to take a longer view of infrastructure when we are making these sorts of decisions. Defence suffers a little bit because of the immediacy - no offence to my colleagues here - but procurement is seen as an immediate thing that we do within three to five years, within annual budgets. Defence sits outside that, like many of the large infrastructure projects, and they require a different mindset and a different function in order to be able to buy these. I call it an intelligent client function. I know my colleagues would agree. That has to be built over time, and we have to retain that function. Retaining it does require investment. It may require billions or millions - I cannot say - but that is going to be over the life of it. By the way, if the value for money is that we have a clear sky, we have our Internet working, the data centres are still here, we have our foreign direct investment and we have our infrastructure with the income coming in, then we have probably spent it wisely.

Tom Clonan (Independent)
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I welcome the witnesses and thank them for their very interesting contributions. I listened on the way here so I caught most of it. When it comes to the children's hospital, I get it. I know why we need a children's hospital, notwithstanding all the challenges around the intelligent client scenario and all that. I know why we need a metro, but I do not know why we are spending €0.6 billion on armoured personnel carriers and armoured fighting vehicles. It does not make any sense to me. What is the hypothesised threat or what is the hypothesised need for such a massive spend? Does Ms Stewart have any idea why we are doing this?

Ms Anne Stewart:

It is the first I have heard of it. We are not involved in any of the defence procurement so I do not know the logic behind it.

Tom Clonan (Independent)
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In her contribution, I heard Ms Stewart mention the different divisions in the Office of Government Procurement. One of them had a responsibility around the strategic interests of the State. How does spending €0.6 billion on a fleet of vehicles fit into that?

Rose Conway-Walsh (Mayo, Sinn Fein)
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Sorry, Senator Clonan, if I could just interrupt. Rather than discussing specific contracts versus specific pieces, I think maybe it goes back to the question of who makes the decisions as to what is purchased and what rationale or matrix is used for that decision making. That is not the purpose of our meeting today.

Tom Clonan (Independent)
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Yes, sure, but I think it goes to the heart of the matter, namely, the first principles and the domain assumptions as to how we go about what we are going to do next. I am very interested to note that Ms Stewart has no idea why we are doing this. If we are spending money on a children's hospital, we need to know what it is for. Does that not raise a red flag somewhere with somebody? It is an interesting response that Ms Stewart says she does not know.

Ms Anne Stewart:

The Office of Government Procurement provides a lot of services but if I consolidate them down, we have a central procurement body that looks after the central register of service and then we just do the policy-----

Tom Clonan (Independent)
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I appreciate that.

Ms Anne Stewart:

-----so if the State decides-----

Tom Clonan (Independent)
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I am just conscious of my time. We have Six Counties in NATO. I do not know if they will stay in NATO or whether they will opt to remain, in whatever even horizon happens politically. Does the OGP have a cross-Border relationship with our partners on this island or with the UK in terms of procurement in this space for whatever the defence, intelligence and security needs of the island will be? Is there any contact?

Ms Anne Stewart:

No, because again, it goes back to the fact that we work in a decentralised model. Any of those relationships for defence would be done by the Department of Defence.

Tom Clonan (Independent)
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Okay. I thank Ms Stewart. I want to ask Dr. Davis about specification and this idea that the process might be compliant, but for that to really be impactful and to represent value for money. How do we as a committee intervene in that specification process? I have no idea what other decisions the Department is making, because we do not have oversight. We have been given a very narrow scope. We are confined to undersea cables and related hybrid threats. As a committee, we do not have the kind of the remit to ask the questions about the decisions that are being made in terms of the specification. With his academic and professional hats on, would Dr. Davis see that as a red flag or a cause for concern?

Dr. Paul Davis:

I cannot answer either of those questions directly but I will try to answer them in a slightly different way. Most Departments have a very clear strategy in terms of what they are achieving and certainly the Defence Forces have issued strategies for what they hope to achieve over the next three, five and ten years. That includes recruitment, equipment and what they hope to do. For next week's session the Department will be in here along with members of the Defence Forces and hopefully they can share with the committee clear strategies on what they are doing. From my perspective on the procurement, it is always useful that we know what is going to occur over the next five, ten or 15 years and the same applies for my colleagues in the OGP.

Tom Clonan (Independent)
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I thank Dr. Davis. He spoke about the Finnish model, which is probably most appropriate for the direction this island is going in. There has been a tendency to frame our defence and security needs exclusively through the lens of what is happening in Ukraine. What is happening in Ukraine is appalling and it is interesting. However, the particular challenges we face do not align with the strategic direction the Department of Defence is taking. It is going in the wrong direction. It is manifest and clear. The witness says that the Defence Forces or the Department talk about their strategy, and they do, but there is no evidence base. I am on other committees where we talk to other Departments. They have a clear set of evidence-based, international practice comparisons for what they do, but when it comes to defence they do not, and it is really opaque. I am frustrated as a member of this committee that we cannot ask the question.

My next observation is for any of the witnesses to comment on. I did a review of Lawrence Freedman's essays. He is one of the most eminent thinkers on strategic defence. One recurring theme is that if decisions about strategy are made in secret, or if there is confidentiality around them, those decisions are universally incorrect. People reach the wrong decisions. I think that is what is happening here. Do they have a view on that? They are all about procurement. They must have a view.

Ms Anne Stewart:

Procurement in any instance, defence or otherwise, starts well beyond the procurement itself. What I mean is that the intelligence gathering, the understanding of the supply chain and who can deliver what and when happens a long time before. Experienced procurement professionals work with stakeholders and a procurement person specifically will always work with an expert in a particular field to build the scope and requirements and it sounds to me like that is the piece that is missing. There is obviously intelligence happening in the background that determines what the threats are, and a strategy comes from it.

Tom Clonan (Independent)
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My frustration is that I have an interest in this area. If I heard CHI was going to spend millions buying leeches to take blood from people, I would ask why they would do that. That is how I feel about some of the decisions we are hearing about. Almost every decision they are making, like the one to deploy the Defence Forces under the aid to the civil power as opposed to the aid to the civil authority mechanism, is incorrect. I put on the record while the witnesses are here, and in advance of our meeting next week, that I am extremely concerned about the strategic direction, decision-making and thinking. It is not evidence based. It bears no relation whatsoever to the threats and challenges that confront us.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Yes. We will hopefully bring some more clarity next week to the questions Senator Clonan has raised.

Catherine Callaghan (Carlow-Kilkenny, Fine Gael)
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I apologise for not being here sooner. I was listening online, and I was speaking in the Dáil. I listened to both opening statements and I thank the witnesses for those, for the clarity about their role and the difference between the Office of Government Procurement and the special procurement procedures in place for the defence sector.

I will start with Dr. Davis's opening statement. I was nodding my head in my office as I listened to him, in particular as he spoke about how capability must exist permanently whether it is used or not. I often think about investment in our Defence Forces as being akin to an insurance policy. We might complain about the cost of it, but we understand the true cost of not having it if an incident occurs or if we need it. That is the position I take when I speak about investment in our Defence Forces. That is coupled with the fact that any investment in our Defence Forces and national security, contrary to it being at the cost of our welfare state, from my perspective and I think that of Dr. Davis creates and supports the mechanisms that allow our welfare state to exist in the capacity it does.

He also made the critical point that once it is lost, defence capability is prohibitively expensive to rebuild. I cannot shake the feeling that we are already at this prohibitively expensive position if we look at our capability. The committee has made visits, particularly to the Air Corps in Baldonnel, and has seen the money being spent. It needs to be spent on aircraft maintenance, which I am not complaining about, simply because our properly and fully qualified aircraft maintenance technicians have not been retained in our Defence Forces. We are then paying extra to have private contractors fill that void. That is the lack of capability that is prohibitively expensive to rebuild playing out in real time. This is the space we are in now. That is why it will take considerable investment in our Defence Forces to build our capability. I am struck by what seems to be a thread going through Dr. Davis’s statement and a lot of our conversations in this committee, which is that there seems to be confusion between process and strategy. That might back up Senator Clonan's point about strategy. There is not a strategy in my view. They are ticking the box in terms of process. Unfortunately, we know that when we have unclear strategies it provides cover for poor performance because teams are focused on ticking the box rather than the long-term outcome. There has to be a change. We often talk about a change in culture in the Defence Forces. We have to have a change in the culture of how the Defence Forces is managed. I mean that in the context of investment in the Defence Forces. I am not criticising anybody who is serving.

I made a note on the APCs budget, so I did not forget. I do not think the decision on that money has been made yet. I know the Senator was talking about €0.6 billion. From the most recent conversation I had with the Minister for Defence that is just out and is being speculated about. No contracts have been signed between Ireland and France. I wanted to clear that matter up.

I return to my question. What is Dr. Davis's perspective on my statement that we are stuck in a rut of confusing process with strategy, and that we need a clearer strategy? I have questions for the Office of Public Procurement if they are able to answer. What specific measures are being taken to ensure that we have local industrial participation embedded in the procurement processes? I also have a question about the Government-to-Government agreement with France and maybe future agreements. Has consideration been given to a two-way mechanism that not only supports French industry but Irish industry as well?

Dr. Paul Davis:

The first answer is "Yes". We have clearly lost capacity and capability, but we have said this in numerous sectors over the past 25 or 30 years. This is not just defence. However, losing that capacity does not mean we cannot recognise it has been lost and start rebuilding it.

Catherine Callaghan (Carlow-Kilkenny, Fine Gael)
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Agreed.

Dr. Paul Davis:

It is about the recognition of building that capacity and capability. I use that phrase, and I used it recently in another committee where I talked about intelligent client function. It is a slightly different role but is critical for large-scale projects where we are looking at the long term. To do that you need to build skills and capability in-house rather than relying on getting those externally. Here is the catch. You are not going to do that in three years. You will do that over the next ten or 15 years. We need to be conscious, when we put contracts in place, that we are building the capacity to manage when those contracts finish rather than thinking we only need them for the life of the contract. We do not; we need them beyond the life of the contract. Therefore, when you visit the air force at Baldonnel, you will be looking at career people who see their career in the armed forces and Defence Forces in such a way that they will stay for 20 or 25 years and deliver on those but deliver beyond that. That is again something that has to be looked at from a defence point of view.

I make a point on what procurement is. It is a tool of the State. It is an important tool. The State exercises its monetary spend through procurement. It makes the choice as to where that is to go and you ask if it is going to go here or there.

It makes the choice of whether it wants to support indigenous businesses, which are the SMEs. In this sector, it can make the choice of saying, "We will grow this sector, and therefore, we will use procurement to do that." However, procurement is a strategic tool. Too often, it seems a transactional tool but it is not. As a strategic tool, it makes you responsible for where you spend the State's money. You choose the strategy; you choose how you spend the money and what it looks like over the next ten or 15 years.

Those are big choices you make but procurement is the tool to enable you to do that.

Catherine Callaghan (Carlow-Kilkenny, Fine Gael)
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It implements the strategy that is created.

Dr. Paul Davis:

To do that well, you have to have people with the right capacity and capability. We have that and have built that over the past ten years, under the standardisation of many of the goods and services. In certain other areas, we have been in decline. The metro was a good example, because we stopped building metros ten years ago. Because we built it, we lost a capacity and capability and we have had to reinvest in building that capacity and capability.

Deputy Smith spoke about the metro and how it would be great to see it in ten years. The question then becomes what are you going to do after ten years with the capacity and capability you have built? Are you going to retain it to build more metros or are you going to stop? What are you going to do in defence when you have built the capacity and capability? Are you going to retain it or are you just going to say, "We are stopping"?

Catherine Callaghan (Carlow-Kilkenny, Fine Gael)
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I might come in on that point. At present, we are very focused on level of ambition 2, which is already outdated, but we cannot get to level of ambition 3 until we get to level of ambition 2. We are so far behind the time. With the nature of warfare, and I am not suggesting we go to war, we cannot be fully neutral unless we can adequately protect ourselves and we cannot do that unless we have the capability.

To use a Carlow saying, we are not within an ass's roar of level of ambition 2, and that would not be sufficient for us to be able to protect ourselves in the current geopolitical atmosphere and the nature of warfare. I 100% agree with Dr. Davis, we cannot be thinking in the short term - in five-year Dáil terms - we have to have long-term thinking. If we speak to anybody who is involved in the Defence Forces, they will echo everything he is saying. We are looking at it but there seems to be a complete lack of political will to put the money where our mouths are. That is the thing that needs to change.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I could not agree more, Deputy Callaghan, and right from the Opposition.

Brian Stanley (Laois, Independent)
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I thank the witnesses for their presence at the committee here this morning.

Regarding procurement, there have been a couple things established here. One thing Dr. Davis said was that being a neutral country does not prevent us from strategy and improving the capabilities of the Defence Forces, the equipment available and all that. Picking up on the point relating to strategy and the role of the Office of Government Procurement, I am interested in this because of a previous incarnation I was in at the public accounts committee, and I am just trying to think of a comparison. From the discussion, what I am picking up is that the Defence Forces will suss out and decide, with the Department of Defence, what equipment and technology they need. They then come to the witness to procure it.

What I am trying to figure out is whether the Office of Government Procurement has any role in deciding what is the best way of doing this. For example, and I do not want to harp on too much about it but it is one I have laboured a lot over, as have others, the children's hospital is a big project. There is no large project that is easy to do, and I do not want to rehash it, but I want to use it as an example. If you picked the most difficult site in Dublin, we probably found it. If you tried to design the most expensive building, we went with it. If you tried to design a building that will have the highest maintenance costs, we have done it. As regards fit-out and everything like that, it is like two bananas stuck together - in terms of being on top of it and looking out at it - and I have been out at it a few times.

What we need is a functional hospital, but obviously, an architectural company arrived in with a wow project, popped it down and away we went with it. With the Office of Government Procurement, in a situation like that, and the Defence Forces, I am not a military expert but it is very important we do not buy equipment we do not need or that we are not buying the best equipment. I am using the analogy of the children's hospital here. As I said, big projects are never easy - I know all that. If you go to build a house, it is not easy. However, we seem to make things very difficult and very expensive, and they take longer to do.

In the case of defence, or other procurement, does the Office of Government Procurement ever say, whichever Department it is, that it looks fantastic, is a wow project and whatever else, but "Hang on here lads and lassies, is this unnecessarily complicated? Is there unnecessary expenditure here, is it going to slow the project and are we increasing the number of complications?" It might be the same with defence. Are we cutting our way through the wrong jungle?

Ms Anne Stewart:

First, we do not do the procurement on behalf of defence. In fact, we do not really do procurement, which I know sounds like a strange statement to make, but the only procurement we do is the central procurement framework. That is, frameworks for standard goods and services. It is anything from professional services, vehicles, energy, stationery and all that type of stuff.

With the CPB, which Ms Lannon is one of the head of portfolios there, we put the frameworks in place and then contracting authorities draw down from them. It makes it very simple for them; everything is done for them, from green to social, all those things are included in the frameworks.

However, we also do bespoke competitions. Sometimes, we will have contracting authorities come to us. We had one recently with the Coast Guard. They will come to us and say, "I normally buy X, Y and Z, but they have now asked me to buy this special ship with all this equipment and it is going to cost hundreds of millions. I do not have the experience for this, I do not know what I am doing, blah, blah, blah" - I am paraphrasing. The OGP will look at that because we have a lot of expertise in-house and at times, we will take competitions like that on board and we will run them. We then ask all those probing questions, such as what is it you are buying, why are you buying it, what is the strategy, what is it to deliver, what will be the ongoing operating costs of it and what is it supposed to do?

We lend our expertise to those competitions, and generally we can say - John who is in the bleachers back there runs that section - we do not have many issues in terms of any challenges legally against all those.

Brian Stanley (Laois, Independent)
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I have a couple of questions but in short, the OGP would question it.

Ms Anne Stewart:

Absolutely, because we have the expertise. That is the difference. Certainly, one of the things I would always be concerned about is we have approximately 8,000 contracting authorities across the State and about 4,000 of those are schools. We often say let us put schools aside but aside from buying general goods and services, sometimes they are building schools themselves or adding classrooms.

Brian Stanley (Laois, Independent)
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There are a lot of projects there.

Moving along for a second, it is accepted that we have to improve the capacity of the Defence Forces in every way, in personnel, equipment, technology, etc., and I say that as somebody who supports neutrality. However, my understanding is the discussions taking place at European level are that we have moved to a situation where Europe as a whole is, to use the term, "tooling up." The defence industry in Europe is gearing up and obviously, there would be a lot of private industry involved in that, particularly Germany and industrialised countries, with some in Ireland also, and there is a defence budget being set out.

With regard to procurement, is there pressure on Departments and the OGP to purchase from Europe-based companies? Is there pressure to procure from, or any emphasis on procuring from, western European countries?

Ms Anne Stewart:

The EU preference is starting to emerge through the review of the current directives. One of the Council’s agenda items is related to the notion of buying European. Up until now, we have all operated on the basis of an open market. In fact, public procurement guidelines stipulate procurement must be done in an open and transparent way. In other words, there is no favouritism towards certain countries or certain suppliers. It all has to be done in an open, transparent and fair way.

Brian Stanley (Laois, Independent)
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There would be security implications, depending on where you were buying from.

Ms Anne Stewart:

Defence is different because it can go direct, whereas standard goods and services-----

Brian Stanley (Laois, Independent)
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In other words, there are security implications.

Ms Anne Stewart:

If there are security implications, you can go direct.

Brian Stanley (Laois, Independent)
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I thank Ms Stewart.

Dr. Paul Davis:

In answering that question, it is important to consider individual levels within the Defence Forces, whether it is the Naval Service, the Air Corps or the Army itself. There is limited capacity and a limited number of organisations globally in each of those fields. In the European defence industry or other defence industries, there is a limited supply market. In many marketplaces – let us say I am going out to buy staplers – there is a huge supply market. Yes, there will be a European perspective creeping in – “creeping” is probably the right word to use – rather than the forming of a policy requiring us to look to Europe and industries within it to support. Within defence, however, you are limited. You may not actually have either the industry supplier or the manufacturer available within the State or area you are buying from. You have to be very careful about the way you ask the question because automatically somebody might turn around and say they want to buy a Boeing aircraft they have to use for defence and that they are buying it because it has capabilities Airbus does not have. The person will use the securities directive and approach the supplier directly. Is that reasonable? Europe might not think so but, on the other hand, the Defence Forces may turn around and say that, given their capability, the fact that Ireland is an island nation and the size of the border, they have to think about it in this way.

I wanted to highlight that difference because it is important. We do not have a wide-open marketplace to choose from. We have a limited marketplace and limited suppliers for many of the technologies and support equipment available. That leads to the questions of what the relationship and supports will be. This goes back to building capacity and capability locally to ensure that, should a geopolitical shift happen, we actually have the resources available to deal with it.

There are also security concerns. Europe has made this clear, as has America. One will not buy from certain countries, be it equipment or otherwise, because of the security concerns. General procurement thinking would require open, transparent procurement and not taking the concerns into account, but in the area of security, defence forces will take it into account because of the nature of the equipment and services they buy. The marketplaces are very different . Sometimes when we talk about public procurement, we tend to forget we are not dealing with one sector. The education and defence sectors are completely different. The health sector has a completely different set of outcomes from the defence sector. We need to understand that, from a procurement perspective, each demands a different set of skills and knowledge to implement the policies of the Government. They are not the policies of the buyers. The buyers implement them. A different set of skills and a different market understanding are required for each policy. I hope that has answered some of the Deputy’s questions. The market is not as wide open as might be thought. Everybody would favour having a local defence industry and local suppliers, but people also recognise that having a local defence industry may take 25, 30 or 40 years.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I thank Dr. Davis for the answer. I have just a couple of questions. Reference was made to expertise. I take it to mean internal expertise within the Department. Do other Departments have sufficient internal expertise?

Ms Anne Stewart:

One of the challenges we see and that we talk about a lot, and in respect of which I mentioned the 8,000 contracting authorities in the schools, is what occurs once you go beyond the top 100 spending departments, which generally have very experienced procurement teams with staff from procurement backgrounds. Some teams are very specialised in their fields. For example, there are procurement specialists in IT, communications, defence and health and they are very knowledgeable. Beyond those, the next layer comprises generalists. In other words, they may have bought something somewhere and understand the process. After that, there is a whole heap of people whom we classify as novices. In other words, they are in a Department or contracting authority and might do a bit of accounting in the morning, some communications in the afternoon and a bit of procurement a few times a year. That is often where the OGP steps in. The staff concerned might be used to buying consulting services, stationery or energy, for example, but are then told their organisation needs a new IT system. Let us take the Arts Council as an example. I am not saying it is an inexperienced buyer because I cannot speak for its procurement staff. Suddenly the council might be asked to buy a new commissioning system and will not know what to do.

Rose Conway-Walsh (Mayo, Sinn Fein)
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What are we doing to address that? Ms Stewart referred to schools. We ended up in a situation in which contracts were given to people when it was very obvious, when looking at their accounts, that there was no stability. The due diligence work was not carried out and the repercussions were far and wide and reached into so many communities. What are we doing to address this?

Ms Anne Stewart:

Within the central purchasing body, CPB, function of the OGP, we have set up what we are calling professional practice. Currently a programme is being developed to outline what skills are necessary for public procurement practitioners to have. The medium- to long-term plan is to pull together a curriculum around that, a training programme, that we would hope the likes of the Institute of Public Administration, IPA, would deliver. It is a question of getting the practitioners at least to a certain standard. Other than that, the only thing the OGP can do is provide all the guidance and supports. We have a help desk and have some bespoke competitions. Those are the kinds of things available.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I do not believe that is nearly efficient enough. Involving the IPA would be grand in the longer term, but are we not bringing in the external experts and employing them permanently within the Departments to ensure that expertise is available? With the changes in IT, tech and artificial intelligence, experts will be made redundant. Are we recruiting them? Are we actively identifying who we need from the pool of people who may become available to us?

Ms Anne Stewart:

I cannot speak for specific Departments but, generally, where procurement is a key function, they will hire people who have the expertise. I stress that acquiring public procurement expertise is quite difficult. If a Department needs a person who is going to do some accounting and some communications as well as procurement, that person will not be a procurement specialist but an all-rounder or generalist.

Rose Conway-Walsh (Mayo, Sinn Fein)
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That does not instil any confidence. It speaks to Dr. Davis’s point that we have contracted out everything. That leaves us so vulnerable not only to bad actors but also to a failure to build up the needed capacity needed to deliver value for money in the medium and long term.

How are we steering the ship around? How are we going to stop this? The witnesses will have read The Big Con. It is not only in Ireland that this is happening. It featured particularly after the financial crash, when there was urgency to get rid of people and have very lean governments. Now we are so lean we do not have the required expertise, leaving us extremely vulnerable. I do not know how you could manage all the external personnel being brought in when there are so many rogue actors. This all speaks to our defence and national security.

Defence is not just defence in itself. Defence is in our utilities. What secures our water, for instance? What are we buying these components for? Can the witnesses tell me that there is some urgency within government to turn the ship around as regards the expertise we need in procurement?

Ms Anne Stewart:

Departments will hire expertise based on the role. If procurement is only a quarter of the role, I do not know whether they would hire that expertise. The OGP does not have a role in that. We certainly have a role in building up standardisation around skills and pulling together training but we do not have a role in determining what each Department's needs are in terms of procurement. That is something they need to determine for themselves. When you look at big organisations such as Irish Water and the ESB - I have met with Irish Water myself - you see they have very experienced procurement people who know exactly what they are doing. However, a small contracting authority may not necessarily have that expertise. The OGP will support such agencies but we can only support so much. We have 240 staff. Of those, about 150 are in the sourcing division. We only have so much capacity to do bespoke competitions outside of the frameworks. We would love to do more of it.

We also often talk about the possibility of introducing apprenticeships or bringing people in on a rotation to spend a year in the OGP before working in public procurement in the broader system. There would then be a bench of people that could be farmed out, almost like a consultancy. That can be difficult to manage. We see that the Office of the Government Chief Information Officer, OGCIO, is doing something along those lines at the moment. It brings in 40 or 50 apprentices to teach them IT skills and then sends them out to Departments that are looking for IT people. We are not doing that yet. We have discussed it but a huge change to our mandate would be required for us to be able to do that. It is not currently in our mandate.

From the OGP's perspective, we are frustrated about a couple of things. One is that side of making sure those skills are available. The other is oversight and governance, which has been mentioned here today. We do not have any mandate to take that on. We often see contracting authorities ending up correcting their own homework. Let us just say that we have our frustrations as well.

Mr. Fergal Grogan:

The level of competence and skill required will depend on the nature, complexity, value and risk associated with the procurement project. As Dr. Davis said, the skills required to procure a pen and a pencil are not the same as those required to procure a new ship for the Defence Forces. The competency framework Ms Stewart mentioned will go a long way towards determining the level of competency required, depending on the type of procurement being undertaken. It is also important to note that it is not uncommon across Europe to bring in specialist expertise. When it comes to general goods and services, we are used to using the open and restricted procedures. The open procedure is obviously not in the defence directive. Where we go outside of those procedures, we sometimes have to bring in external experts, especially when it comes to innovation. Procurement also-----

Rose Conway-Walsh (Mayo, Sinn Fein)
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Where is the innovation within government? Where is the innovation within Departments? I just cannot see it. Maybe it is happening but I cannot see it. We are all for innovation. One of the things the State is now forced to do is to have our own innovation. We have relied on FDI and external innovation. Surely, we need to start with innovation within government. It is about being able to decide what we want to buy in the first place, why we want to buy it and what purpose it will serve now and in ten or 15 years. When we look at the contracts, many of them are kept concealed. I have a big problem with that because there is a lack of transparency. They are kept concealed for commercial reasons but where there are substantial overspends, we know that the contract was not the right contract to sign in the first place. We need to know who signed that contract and who stands over the decision. It is very hard to see who is accountable.

Ms Anne Stewart:

We see the term "commercially sensitive" used quite a lot. I take it issue with it because if a contract has been awarded, it is no longer commercially sensitive. All you are putting on the system is the actual amount. You are not putting in the commercial pricing methodology of the contract. One of the things we are doing to enforce more transparency in contract award notices will begin in the next couple of weeks. We have just a huge development on the eTenders platform. We have introduced a "once entry" principle. Once the tender goes up, the information from the tender is automatically populated into the contract award notice. This forces the contracting authority to just put in the value and the awarded supplier when it concludes the contract.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Does that apply to defence as well?

Ms Anne Stewart:

Defence is slightly different. As a result of the secrecy required, the same rules do not apply. Where something is felt to be a matter of national security, disclosure is not required. However, we are increasing enforcement for everyone else.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Is the eTenders website used for defence procurement, even if not for all of it?

Ms Anne Stewart:

Yes, eTenders is used. The Department absolutely uses the platform. For certain sensitive contracts, it only publishes the notice and does not provide any further information. I had a really good conversation with Department officials about that particular point a year and half or so ago. The Department rightly tracks who is opening those tenders and it sees visitors from certain countries that would raise some suspicion. I guess that feeds into its intelligence. As a result, certain things are not put up on the system, which is fine.

Rose Conway-Walsh (Mayo, Sinn Fein)
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That is understandable. Is there a dedicated category manager within defence?

Ms Anne Stewart:

Fiona Lafferty is the head of defence procurement. She is a fantastic lady. We do a lot of work with her. With the support of the OGP, she has built up her team over the past number of years to reinforce the skillsets available. She has an expanded team. She could do with a few more people but she certainly has a few additional resources. Her unit has also put in a new system for tracking its projects and, as I mentioned earlier, the Department has also set up a high-level public procurement group. We have quite a bit of interaction with the Department of Defence and, to be honest, with all Departments. Within my division, I have a service delivery team, which is a bridge between the Departments and agencies and the OGP. We provide support and work with Departments and agencies on their category plans to understand what is coming down the chain. We try to get a forecast of any bespoke competitions they might need so that we can feed that into Mr. Cummings's team. We work with all of the contracting authorities on an ongoing basis. Unfortunately, we cannot just tell them what to do but they often ask us for advice and we happily give it because, as I have said, we have a lot of expertise in-house.

Rose Conway-Walsh (Mayo, Sinn Fein)
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The Secretary General is in charge of procurement for each Department. That is where the buck stops. Is that what Ms Stewart is saying?

Ms Anne Stewart:

The Secretary General is the Accounting Officer and is ultimately responsible. We develop the circulars, which provide guidance. In the past three years, we have also done a huge amount of work in opening up the kimono. The OGP was always quite closed. We would write things in isolation and then send them out. We are now doing huge amounts of engagement with Departments and agencies, with academia and even with citizens. When we developed the strategy, citizens came to those sessions. We have also included suppliers in a lot of this engagement. All the new developments on the eTenders platform and the additional functionality we are introducing through application programming interfaces, APIs, have been developed in conjunction with both public service stakeholders and suppliers. We have a design group that involves SMEs and other suppliers because we know they interact with the systems as well.

As the Cathaoirleach will know, the programme for Government commits to reviewing the procurement process to make it more efficient. The challenge is that the procurement process has two parts. There is the legal regime under which we have to operate. We find ways of doing that.

All of the expert procurement teams understand the directives and are well able to work within them. The suppliers who submit on a regular basis understand them as well. Then there is the process itself. There is the support from the eTenders platform. We are doing a huge amount of work to have the enter-once principle and put in kind of AI helpbots. It is not AI interpreting. Rather, it helps novice users and tell them the reasons they have to fill in this and that box.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I will come back to Dr. Davis, but Senator Clonan wants to contribute.

Tom Clonan (Independent)
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I apologise. I have to leave because I have another commitment.

This has been one of the best sessions we have had in terms of the frame and context the witnesses have given us. Deputy Callaghan is correct. No national defence strategy has been published yet. It will be interesting to see it. The Commission on the Defence Forces set out levels of ambition 1 to 3. I am very much in favour of us reaching level 3. Through no fault of the commission's, the report is out of date, as it was published before events in Ukraine, so it will be interesting to see what the overarching strategy will be.

I asked the Minister for Defence during statements on defence matters in the Seanad a few weeks ago about the proposed purchase of this fleet of armoured personnel carriers and other vehicles and she was unable to answer the question. She was either unable or unwilling, but it was a direct question, so I am concerned about that matter.

The most recent hostile act on the island was a car bomb outside a police station in Dunmurry. On the development of AI-enhanced surveillance systems, acquisition and all the algorithms around that, the technology that underpins drone technology and anti-drone technology, we have a unique skill set in this country's workforce that could be harnessed. What was said about trying to direct that to our SMEs and developing our own whole-of-society resilience was interesting. There is huge potential there and I would welcome that.

The witnesses might remember the Hunt report on the future of higher education to 2030, which was published after the crash. Dr. Hunt suggested that universities should be the engines of Ireland's economic recovery. To answer some of the questions, they should also be the engine of Ireland's ethical and societal recovery. However, the universities could play a unique role in innovation by harnessing all of the skill sets we have to redevelop that all-of-society resilience.

Does DCU get people from the Department of Defence or the Defence Forces contributing to knowledge, presenting papers and doing PhDs?

Dr. Paul Davis:

Yes. We are working with them at the moment in looking at the idea of procurement and what they are doing. I have done some work, not with the Department, but with An Garda Síochána, especially around its procurement techniques. However, one thing is important to remark on. We have a lot of process improvements. Procurement is measured by the outcomes we achieve. People have to stand back a bit and ask what the output they are trying to achieve is. That is sometimes missing from the conversation. We are so focused on the process of what we are doing and the compliance we need to observe that we forget that we have to develop an outcome. The purchase of the children's hospital can be questioned process-wise, and I would certainly question it, but we also have to ask what the outcome is. We are not in a position to measure the outcome, but I hope that the outcome will be that we can treat children more effectively and efficiently.

One question that is asked is whether that outcome is sufficient for us to move fast enough to deliver on. That is where the outcomes are important. Therefore, when I look at defence procurement, I think about what the outcome is. It is that a catastrophic event did not happen, we did not have a car bomb or we stopped something. Sometimes, we cannot see that outcome. We can see it in a lot of other procurement activities we do. In defence, though, we sometimes cannot. I want to emphasise that because the outcome the Defence Forces are trying to achieve is one where we do not see anything. We need to respect that because it is a hard job to do. From a procurement perspective, I might build a radar system to make sure I do not detect anything, but I have to detect everything. Sometimes, the outcome is that we do not want an outcome. That is something we need to consider when thinking about defence spending.

Tom Clonan (Independent)
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I apologise. I have to go. Gabhaim buíochas leis an gCathaoirleach. I thank the witnesses. It was very useful.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Dr. Davis is correct about the outcome, but it can be also be measured in security. National security has become more and more important in terms of being a driver of foreign direct investment, indigenous growth and so on. The value is in that as well.

I will give the witnesses an opportunity to say anything they have not had a chance to say today that may inform us for next week's session.

Dr. Paul Davis:

I have one line. I wrote it down because I thought about how to end this. The question is not whether Ireland can afford to treat defence differently for standard procurement. It is whether we can afford not to.

Ms Anne Stewart:

I always try to put myself in the seat of the person who has to deliver all of this. I mentioned Ms Fiona Lafferty, who is a great lady who heads up procurement in defence. It is a big challenge for that unit.

On Senator Clonan's point, the officials have to work with a strategy that is a bit unknown because it has probably been developed through some sort of intelligence that cannot be disclosed, whereas under normal circumstances, strategies would have backup and transparency and we would have the research behind them. Therefore, theirs is a difficult role. However, from what I see of what they are trying do to make sure they are doing the right things, they are certainly putting things in place. It goes back to the question about whether we want compliance or to buy the right things to secure the country. Unfortunately, defence is never a problem until it is a problem. It goes back to the point that it cannot be seen. Certainly, from a procurement standpoint, the right things are being done. The question is whether the right things are being bought and that is down to what intelligence is telling them to buy.

Rose Conway-Walsh (Mayo, Sinn Fein)
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We will have to be agile enough to meet the outcomes we need along the way.

I thank the witnesses for today. It was an interesting and valuable session for the committee. On behalf of the committee, I thank the OGP and Dr. Davis for their time and engagement this morning. We will now suspend briefly to allow the witnesses to exit and the committee will then go into private session.