Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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8. To ask the Minister for Communications, Energy and Natural Resources the minimum turnover requested in respect of companies tendering for the post code project; the reasons for the minimum level of turnover requested; his views on whether the minimum level of turnover would have rendered many Irish companies ineligible to quote; and if he will make a statement on the matter. [24783/14]

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I have touched on this issue before concerning the postcode project and the minimum level of turnover that was requested of companies to tender for the contract. The last time we spoke, the Minister did not have the information to hand. Has he established since then the minimum level of turnover required? Why was that level required and does he believe that it was such that most Irish companies were not eligible to quote for the contract?

Pat Rabbitte (Dublin South West, Labour)
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My Department commenced the procurement process for a national postcode system in 2011. An open and competitive procurement process was conducted in accordance with Department of Finance and EU procurement frameworks. A pre-qualification questionnaire was issued on www.etenders.gov.ieon 17 January 2011. This invited interested parties to tender for the contract as a postcode management licence holder for a period of ten years to design, provide, disseminate and maintain a national postcode system. This procurement process followed the negotiated procedure under the relevant EU regulations. Given the technical complexity of the project, the Department ran the procurement following a competitive dialogue procedure provided for in the Public Supply and Works Directive.

There was an annual turnover threshold of €40 million applying to certain bidders for the postcode contract. The figure was arrived at by reference to the estimated cost of provision of the service in the initial stages of operation by the postcode management licence holder. The threshold set did not preclude Irish companies from participating in the procurement process. The tender documents permitted a partnership approach whereby entities could join together to submit a bid.

The inclusion of a turnover threshold is a standard feature of large-scale procurement tenders. As part of the tendering process it was important to ensure that the preferred bidder had the financial capacity to design successfully and implement the project. All entities that satisfied the tender requirements, either singly or as part of a consortium, were eligible to enter the process.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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There is something wrong here.

Pat Rabbitte (Dublin South West, Labour)
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I hope not.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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There is something badly wrong here. The Minister said that €40 million was set for seven companies but generally minimum turnover requirements are set before companies submit their tenders. Is the Minister saying that tenders came in and that because seven companies were over the €40 million limit, they were accepted or is he saying that whoever was doing the evaluation looked at them and decided that €40 million would be the minimum requirement in order to qualify those seven companies? There is something wrong here. The requirement for a minimum turnover of €40 million would certainly have excluded most, if not all, Irish companies tendering for the contract. There is something badly wrong here.

Pat Rabbitte (Dublin South West, Labour)
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No, in fairness, I know the Deputy is a glass-half-full man but there is nothing wrong. This has undergone very careful scrutiny right the way through. In fact, it is late. We ought to have done it before now. In its first year in office the Government could not do it because it did not have the money. It ought to have been done seven or eight years ago and it certainly must be done now because of the scale of the digital economy here. The digital economy is growing at a rate of approximately 16% per annum or eight times the rate of general economic growth. The digital economy and the demand for a postcode system is accelerating all of the time.

The inclusion of a turnover threshold is standard procedure in public procurement. It is very important that the company selected after a fair, transparent and open tendering process, has the financial capacity to do the business. If it was discovered halfway through the process that the company selected did not have the financial capacity and the process broke down, there would be a further inevitable, prolonged delay. The one thing this country cannot now take is a further prolonged delay.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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We are not debating the necessity of a national postcode system; I agree with the Minister that we need one.

What we are discussing is the process that was used to award the contract. If I understand what he said correctly, the Minister indicated that an annual turnover threshold of €40 million was set in respect of seven companies. This means that a process was used, after the tenders were received, to set the threshold in question.

Is there a person involved with the successful bidder who was also instrumental in designing the system in the first instance? I would regard it as very unusual business practice if an individual who was responsible for identifying the need that exists and designing the system to be used would be employed by the company to which the contract was awarded. Is this the case?

Pat Rabbitte (Dublin South West, Labour)
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That is the first I have heard of it. I do not know for sure - I will communicate further with the Deputy on the matter - but I am pretty certain that it is not true. I am aware that there is one individual who believes he is in possession of a better solution for a postcode system for Ireland and who has been discussing the matter with some Deputies and Senators. The individual in question was free to submit an application but he did not do so. It is not at all unusual that a consortium would apply for a contract such as that under discussion. The notion that the successful bidder - a company which already employs in the region of 1,000 people in Ireland and which has expertise and a proven track record in this area - had any prior involvement is complete news to me and I do not believe it is true. When the competitive process was in train, many people might have stated that An Post was going to be awarded the contract. That did not prove to be the case. The company to which it was awarded has a proven track record and is a major employer in the Irish economy.