Peadar Tóibín (Meath West, Sinn Fein)
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Question 5: To ask the Minister for Jobs; Enterprise and Innovation the steps he has taken to reform the public procurement process in order to allow Irish business a better opportunity at successfully applying for public contracts. [28929/11]

John Perry (Sligo-North Leitrim, Fine Gael)
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Last July, the Minister, Deputy Bruton, established a steering group on SME access to public procurement, to examine what more can be done to improve SME participation in tendering for public contracts. The steering group comprises the key players in the public procurement arena, including the Department of Public Expenditure and Reform, the National Procurement Service, Enterprise Ireland, InterTradeIreland, and the Department. It is tasked with identifying the failings in the current system and driving changes that will further open up the process and provide a level playing field for SMEs.

The group is examining concerns from the SME sector which points out the procurement process has been shown to impose unnecessary or disproportionate obligations on tendering companies that can see them fail at the first hurdle, when a more pragmatic approach on the part of the contracting authority might allow an experienced company to tender. Sometimes the tendering companies are disqualified on the basis of a very rigid application of criteria, with little hope of having the buyer's decision overturned. Indeed, no formal appeals mechanism is in place in the public procurement system, although this is now being addressed.

The high level group on business regulation, which I chair, has also been examining barriers - of which there are many - to participation by SMEs in public procurement and has provided direct input from the SME sector to the deliberations of the steering group.

On receipt of the steering group's initial report, the Minister, Deputy Bruton, asked my officials to develop a number of actions for implementation which could improve SME access to procurement in the short term. These include the identification of specific areas in the public procurement guidelines which continue to present difficulties for SMEs, the strengthening of Enterprise Ireland's engagement with procuring authorities, and the identification of areas where collaboration between tier 1 principal contractors and pre-qualified tier 2 SMEs could be developed in the procurement process.

Initiatives already in place to help SMEs get more opportunities in public procurement include guidelines from the Department of Public Expenditure and Reform for procurement with practical suggestions and a ten step guide, a dedicated procurement team in Enterprise Ireland, the website www.procurement.ie and a standardised suite of procurement documents. I hope these allay concerns.

Peadar Tóibín (Meath West, Sinn Fein)
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It is often stated the Government does not create jobs. However, it does, and €16 billion worth of public contracts in the previous year created tens of thousands of jobs in the market.

This had a multiplier effect of approximately one to three. Some 25% of State contracts are awarded to small and medium enterprises whereas the European average is 38%. With all due respects to the Minister of State, I heard much about the existing problems, the reasons for them and the steps that are to be taken to ameliorate them, including trading supports. Will he consider creating a key performance indicator for public procurement organisations to ensure that 40% of all contracts are awarded to small and medium business?

John Perry (Sligo-North Leitrim, Fine Gael)
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In 2008 a total of 70% of Irish public procurement contracts were awarded to foreign companies. A significant number of contracts which are below the EU threshold are advertised at national level and notice of contracts worth €25,000 or more are placed on the Government's e-tender website. A multiple of further contracts worth less than €25,000 are advertised more locally and this provides opportunities for small and medium enterprises. I acknowledge the significant difficulties. A majority of contracts are in the health sector.

I refer to the issue of opening up access to contracts to small companies. Of the total of 65,000 companies registered on the e-tender portal, 75% are Irish small and medium enterprises. The perception is that they are not winning contracts and much needs to be done to open up access to the contracts worth €15 billion and to allow sub-contractors to qualify. It is to be hoped that the criteria which includes a pre-qualification of having done work with the main supplier can be removed. There are significant opportunities for small and medium business. The Minister, Deputy Bruton, is working closely on this issue of opening up opportunities to enable the participation of small companies.

Peadar Tóibín (Meath West, Sinn Fein)
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The EU has stated that 25% of public procurement contracts should be awarded to small Irish business with 38% being the EU average. In the North of Ireland, Conor Murphy, MLA, stipulated that a certain number of local apprentices should be employed on such contracts and in Scotland it is stipulated that a certain amount of the contract must be sub-contracted to social enterprise. It is in the gift of the Government to decide that a certain percentage of contracts are given to SMEs. Since our percentage figure is so low as against the European average of 38%, the Government should stipulate that 40% of all public procurement contracts go to SMEs.

John Perry (Sligo-North Leitrim, Fine Gael)
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Deputy Tóibín is correct. Many issues will have to be dealt with such as, risk aversion of contracting bodies, buyers committed to procurement processes, focus on the lowest cost and the long-term value, overly restrictive pre-qualifying criteria, no policing of guidelines and further training requirement for procurement officers. The Government is aware of the issues that have prevented that important EU average figure being achieved and is working decisively to address the issue. I chair the high level group on business regulation and the Minister, Deputy Bruton, has a task force working on reducing the restrictions. I assure the Deputy there will be dramatic changes and his concerns will be taken on board.