Seán Fleming (Laois-Offaly, Fianna Fail)
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8. To ask the Minister for Public Expenditure and Reform the cost of the operation of the national procurement office in 2014; the estimated cost in 2015 and for 2016, his views on its operation; and if he will make a statement on the matter. [33417/15]

Seán Fleming (Laois-Offaly, Fianna Fail)
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I ask the Minister to give us an indication of the cost of the operation of the national procurement office in 2014, 2015 and 2016, and his views on how that office is operating.

Brendan Howlin (Wexford, Labour)
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The Office of Government Procurement, OGP, is the office responsible for public procurement.

The OGP Vote for 2014 was €12.4 million, of which €6.7 million was transferred from the Office of Public Works, OPW, for the national procurement service and the Department of Public Expenditure and Reform's, DPER's, national public procurement policy unit.

Actual spend in 2014 was €6.1 million; we allocated €12.4 million but actually spent €6.1 million. A total of €6.3 million returned to the Exchequer, which was mainly due to the delays in recruitment of staff to the OGP, which impacted the pay bill. The total allocated for 2015 is €18.9 million. Expenditure for next year will be a matter for the Estimates process.

The OGP is still at an early stage of operation, having recruited the majority of its resources through 2015. Setting up the OGP will develop capacity to enable better value for taxpayers, better management of risk for the State and better management of suppliers. The OGP sourcing teams have completed 68 projects this year to date capturing an estimated annual spend of €1.3 billion. They are currently working on 187 active projects across all eight categories with an estimated value of €720 million.

In July, the OGP published an updated target schedule of contracts and frameworks giving public sector bodies and the markets a nine month horizon of planned OGP sourcing activity from the third quarter this year to quarter 1 next year.  This enables the markets to plan their bidding in a much more structured way. Savings enabled this year by the OGP and sector sourcing organisations are estimated at €66 million, with a balance of €58 million savings being enabled next year.

In March 2015, I launched a report entitled Public Service Spend and Tendering Analysis for 2013, which provided, for the first time, an examination of detailed non-pay expenditure for a large portion of the public service.  This has brought much needed data to policymakers and to the markets. It is planned to issue a similar report for 2014 before the end of this year.

Seán Fleming (Laois-Offaly, Fianna Fail)
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They all seem to be very busy but I do not get the impression they are achieving very much. I was a supporter of this office but I am disappointed not just with what the Minister said but, specifically, what he did not say in his response. I refer to the Revised Estimates for the Public Services 2015, and Vote 39 is the Vote we discussed in committee. The Minister came into the committee earlier this year and said that these were the 2015 output targets for this new office to complete the recruitment of all staff. He has said now that has not happened. The Minister said he would secure Cabinet agreement to put the office on a legislative basis, but there was no mention of that.

In terms of how the office is operating, the Aer Arann fiasco in which it had an involvement clearly shows it is out of touch. Sometimes centralisation can be a good move and achieve efficiencies. I will not go into describing how it is excluding many small businesses from being involved in the procurement process but the way it handled the Aer Arann air service is an example of how much it is out of touch.

The Minister might give us an update on the service level agreements between the Office of Government Procurement and the various public bodies, in terms of the number that have been completed, and between the office and the various designated lead buyers.

Brendan Howlin (Wexford, Labour)
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I am disappointed in the attitude of the Deputy to the modernisation of procurement. The Deputy is quite content to have a dysfunctional procurement operation that was the hallmark of his own time in Government when nobody knew the price of goods and services and every State agency was buying the same products from the same suppliers at different prices. We professionalised that system but it cannot be professionalised in an instant. The recruitment process has been slower than we expected but I can tell the House now that as of 11 September there were some 178 of the expected 231 people recruited. There are some vacancies still in the process. Obviously, appointments have been made and people waiting to take up those appointment. When we have recruited the full cohort of people, we will have a professional procurement system for the public service for the first time in our history.

It will give transparency to the way we buy goods and services that will be analogous to best commercial practices that we would expect of very large companies. The State and taxpayer deserve and expect nothing less.

Seán Fleming (Laois-Offaly, Fianna Fail)
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When this office was set up I supported it, but I am disappointed at the rate of implementation. I said they seemed very busy. I said I supported the principle of centralisation, but I want it to be in touch. The Minister has said he is still waiting to recruit 60 staff into that organisation. It has been in operation for two years and the full complement of staff still has not been recruited. It was one thing last year to claim we had a plan of expenditure of €12.5 million and we spent less than half of it. I hope that was a lesson to the people involved to get on with the job. This House of the Oireachtas voted substantial funding for it this year, €18.9 million.

How many public bodies does it deal with? How many service level agreements are expected to be in place ultimately? How many are already in place especially for the organisations that are the lead buyers? How many service level agreements are in place for bodies such as Kerry County Council for local authority purchasing, the HSE which is still the lead buyer for other services, and the Department of Defence which still does its own work?

Brendan Howlin (Wexford, Labour)
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Reformed procurement activities have saved approximately €100 million over the past two years. In the embryonic stage of the OGP we have saved €100 million in direct savings and an additional €16.5 million in utility savings. This is before we really get operational to invigilate a proper professional procurement regime.

The Deputy asked about service level agreements. I do not have those data before me, but I will ask the OGP to forward them directly to him.

Every agency of State and every Department is transforming how they do their business in a professional way. It takes a while to recruit the professionals we need. We want to get the right people in place and we have largely done that. There are still a few more we need to recruit, but largely all the key people are in place. It will have a transformative impact on how the State operates in the right way so that all goods and services can be bought in a transparent way. There are no side deals or local deals that, unfortunately, used to be a feature of how the State operated in the past.