Dáil debates

Tuesday, 9 November 2010

9:00 am

Photo of Martin ManserghMartin Mansergh (Tipperary South, Fianna Fail)

Public procurement in Ireland is governed by EU legislation and national rules developed by the Department of Finance. The most significant development in facilitating the SME sector has been the publication by the Minister for Finance in August 2010 of Circular 10/10, which sets out guidelines for public contracting authorities. The guidelines aim to ensure tendering processes are carried out in a manner that facilitates participation by SMEs and all procurement is carried out in a manner that is legal, transparent and secures optimal value for money for the taxpayer. They address the concerns of SMEs regarding access to public procurement opportunities and highlight practices to be avoided where they can unjustifiably hinder small businesses in competing for public contracts. The new arrangements include greater open advertising of opportunities, with a new threshold of €25,000; a reduced requirement for paperwork, such as accounts, at the early stages of tendering; an instruction that suppliers are not to be charged for access to tender opportunities; an assurance that all criteria used would be appropriate and proportionate; and an instruction that turnover and insurance levels would be set at proportionate levels.

All these actions are consistent with the recently published EU-commissioned research carried out by GHK on behalf of the European Commission enterprise and industry directorate general, entitled Evaluation of SMEs' Access to Public Procurement Markets in the EU September 2010, which recommends actions contained in circular 10/10 in support of SMEs and which notes in its executive summary that SMEs in Ireland secured greater access to public procurement than in other European countries.

The national procurement service, NPS, seeks to encourage participation by SMEs in the tender competitions it runs. SMEs that believe the scope of the NPS competitions that may be beyond their technical or business capacity are encouraged to explore the possibilities of forming relationships with other SMEs or with larger enterprises. It is envisaged that through such relationships they can participate and contribute to the successful implementation of any contracts, agreements or arrangements that result and therefore increase their social and economic benefits. Larger enterprises are also encouraged to consider the practical ways that SMEs can be included in their proposals to maximise the social and economic benefits of the contracts that result from this tendering exercise.

Before going to tender, the NPS strategically analyses each category of goods or services to determine the most effective approach to the market, including aspects such as achieving better value for money and SME participation. In some cases involving low risk, high demand categories of goods, economies of scale and better contracts management can be achieved through the use of a centralised contract, with a reduced administrative burden, which will in itself result in savings. In other categories of goods, dividing the contract into lots, taking on board our obligations under the procurement directives, is the appropriate process to follow.

Benchmarking from other jurisdictions confirms that using centralised competitions such as these can result in administrative savings of €6,000 to the contracting authorities availing of such contracts as a result of not having to administer the procurement themselves. The cost of putting a centralised contract in place is estimated to cost €25,000 but, clearly, the more organisations that avail of the centralised frameworks, the greater the administrative savings to those organisations will be.

In addition to the work being done by the NPS and the Department of Finance, Enterprise Ireland is running strategic workshops to assist companies, such as management development workshops and strategic and change management programmes. Enterprise Ireland also offers assistance with exports, management development, lean manufacturing, research and development and overseas offices programmes.

It needs to be understood clearly that we cannot revert, when it comes to public procurement, to a pre-1958 model of the economy, or a sort of covert under the table protectionism, which would infallibly lead in short order to expensive lawsuits or tribunals and to investigations by the European Commission. Neither can the State, when it has to cut expenditure, afford by such a method de facto to subsidise or prop up firms that find it difficult to compete unless the dice can be loaded in their favour.

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