John McGuinness (Carlow-Kilkenny, Fianna Fail)
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12. To ask the Minister for Public Expenditure and Reform the savings that will be achieved from procurement efficiencies in 2013 and 2014; and if he will make a statement on the matter. [42497/13]

Brendan Howlin (Wexford, Labour)
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Reform of public procurement is one of the main projects of key strategic importance in the Government's public service reform plan. Procurement of supplies and services accounts for approximately €9 billion of current spending by the State per annum. This represents a significant portion of overall spending and, therefore, it is essential that the public service achieve maximum value for money and operational efficiency in its approach to public procurement.

In this regard, an external review of the central procurement function was commissioned by my Department last year. The report of the review, which was published on the Department's website last year, found that significant savings could be achieved through the implementation of a transformational change to the central procurement model. In order to realise these benefits, the National Procurement Service has put in place a number of national arrangements designed to secure better value for money from leveraging the public service's buying power in respect of a range of goods and services that are commonly purchased across the public service. These national arrangements have benefits that include cash savings, administrative savings from reduced duplication of tendering, greater purchasing expertise, improved consistency and enhanced service levels.

Earlier this year, I announced the appointment of a chief procurement officer to lead a key element of the Government's public service reform agenda. The new approach to public procurement will involve integrating procurement policy, strategy and sourcing in one office, namely, the Office of Government Procurement; strengthening spend analytics and management; a much greater aggregation of purchasing across the public service to achieve better value for money; examining the specifications set out for goods and services; evaluating demand levels to assess how demand and volume can be reduced; and strengthening supplier and category management.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I table this question because I am generally supportive of the concept of the national procurement office located in the Minister's Department. Last Thursday, the Committee of Public Accounts met his officials.

The Minister mentioned that procurement was valued at approximately €9 billion per annum. Added to capital expenditure, the figure is €12 billion or €13 billion. In Ireland, approximately 90% of Government procurement contracts end up with Irish companies.

Brendan Howlin (Wexford, Labour)
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That is right.

Seán Fleming (Laois-Offaly, Fianna Fail)
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The European average is 97% or 98%. The Minister should undertake measures within the EU guidelines to increase our rate to 95% in the next year or so, yet with the same prices. This would result in an extra €600 million or €700 million for the domestic economy. It is a tragedy that €1.3 billion of Government procurement goes to companies outside the country when that rate is not the norm across the EU. Will the Minister ensure that Ireland falls in line with the EU norm? It would lead to more spending in the domestic economy.

I compliment the Minister's office. I hope that it is making good progress. Will the Minister's Department take over the procurement of drugs and medicines from the Department of Health, which has shown its incapability in this regard? Remove that function from the Department of Health. Perhaps the Minister's office could do a better job and achieve some savings.

Brendan Howlin (Wexford, Labour)
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I thank the Deputy for his complimentary observations about the new office of Government procurement. He has met Mr. Paul Quinn, who attended the committee last week. His value is obvious.

A number of the new appointments that I have made in my Department are on a contract basis and the people in question have specific skill sets. This is a good model for public sector recruitment.

I will bear in mind the Deputy's comments on our common objective of maximising procurement within the State and determine whether there are mechanisms. I will speak with Mr. Quinn about this matter.

The issue of procurement in general is one on which we must have a view and must debate at Cabinet and committee levels. We must get the best possible value for all goods and services that the State and all of its agencies procure.

Seán Fleming (Laois-Offaly, Fianna Fail)
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Most Irish companies agree that some tender documents are constructed in such a way that Irish businesses cannot win them, as they are so large. The Minister stated that there could be scope, but he should consider the overall impact. While a line Department might save €1 million on a contract, the loss of employment locally must be included in the broader perspective. The gains in one Department should not directly result in losses in local businesses.

Ann Phelan (Carlow-Kilkenny, Labour)
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I will allow Deputy McDonald to contribute before the Minister replies.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I support Deputy Sean Fleming. In fairness to the Government, it has rightly prioritised this issue. However, we must not only consider the value for money aspect, but also the local employment element. I am sure that the Minister and his colleagues are aware of the significant alarm in the stationery sector. There is a belief among long-established domestic companies that jobs will be lost. We must examine mechanisms for unbundling contracts so that we can have a win-win situation, a reduction in costs and better efficiencies while growing jobs within the sector.

Brendan Howlin (Wexford, Labour)
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I thank the Deputies opposite for their observations. Sometimes, there is a dichotomy between maximising the benefit to the State and ensuring that we do not impact negatively on local jobs. We are considering how the small to medium-sized enterprise, SME, sector can tender for jobs. We have run training programmes for SMEs and discussed bundling for them. Mr. Quinn, the State's new procurement officer, will be able to give the Deputies chapter and verse on this matter.

I will make a final remark to Deputy Sean Fleming, as I am conscious that I am in the presence of the Minister for Jobs, Enterprise and Innovation. This morning, I opened a conference of a range of construction companies in the State. There is a feeling that the situation in that sector is beginning to move again. One of the fears presented to me was that, due to the downscaling of construction companies, we do not have large companies to tender for some of the larger contracts. At least one situation was instanced to me in which a tender was lost to a non-national company. This is an issue about which we must be careful. We must ensure that we have sufficient scale to win all public contracts, but also international contracts, by equipping domestic suppliers to tender for same.