Clare Daly (Dublin North, United Left)
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58. To ask the Minister for Public Expenditure and Reform the impact on Irish small and medium enterprises of the tendering process for Government contracts which favours big businesses; and if he will make a statement on the matter. [1940/16]

Clare Daly (Dublin North, United Left)
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This question follows on from points made by Deputies Wallace and McDonald earlier about the procurement process. The Government spends billions annually on goods and services and in capital expenditure. I note the Minister said in response to the other Deputies that he is aware there are problems and that he is working on the issues, but that will be too late for many small businesses because of the bias that exists currently towards big business. What assessment has the Minister carried out to look at the scale of this?

Brendan Howlin (Wexford, Labour)
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I reject that there is any bias towards big business. If there were, it would be unlawful under both domestic and European law.

I advise the Deputy, if she has any information relating to manifest bias in that regard, to notify the Garda as a matter of urgency.

As the Deputy knows, public procurement is governed by European and national rules. The aim of the system is to procure open, competitive and non-discriminatory procurement. Most Deputies in the House who spoke on this issue today indicated that the establishment of the Office of Government Procurement, OGP, is a breath of fresh air. It is the first time we have real data and that we know who is buying what and at what cost. We know the criteria in place. I have said to people who ask similar questions that of course there is room for improvement. For example, we are examining the entire procurement process all the time and the tender advisory service will be reviewed next month to ensure that any complaints that have been received will be fully acted on. As I indicated to the House previously, 27 complaints have been received to date. Concerns from any small firms will be addressed and real capacity will be given to the small and medium enterprise, SME, sector to ensure it can win public contracts. Two thirds of public contracts are already won by the SME sector and the overwhelming majority of contracts, in volume and in monetary value, are won by companies within this State.

That is all good but of course we can do better. Having a transparent and open State process with which people can interact will be an enormous step forward. As I stated to other Deputies, I hope to be in a position to bring legislation before the House to establish the OGP on a statutory basis. We can address these matters in some detail when we look at that.

Clare Daly (Dublin North, United Left)
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The Minister knows well there are major problems in this area and the bias, although not specific, comes from the manner in which the contracts are constructed and the reality, as a result, is that small and micro-businesses end up being unfairly disadvantaged. The proof is that Irish manufacturers which may have previously made uniforms for State services or provided school books and so on - businesses that have operated for decades - are no longer there. Much of the business has gone to international corporations.

The Minister is, frankly, wrong in saying that 66% of public service expenditure is with SMEs. That is not correct. The reality is that 97% of Ireland's small businesses have fewer than 40 employees. The Minister, for the purpose of this issue, counts an SME as a company with up to 250 employees. That is not a small or a medium-sized business. There are problems and small and medium-sized businesses have indicated that these relate to the manner in which contracts are constructed. The idea of saying to companies to get together and pretend they are one big company will not work for companies that naturally compete with each other. How come other countries can organise contracts to benefit their own types of businesses? For example, in Germany, all their trains are made by Siemens. Why is it that we cannot organise our contracts in Ireland to benefit the types of companies that are predominant here, which are small and medium businesses?

Brendan Howlin (Wexford, Labour)
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I do not believe we build trains in Ireland. There is a European definition for SMEs and for comparative reasons, we subscribe to that. Micro-businesses have up to ten employees, small businesses have up to 50 employees, medium-sized businesses have up to 250 employees and larger companies have more than 250 people. Under the SME definition, two thirds of the goods and services tendered for are won by SMEs in the State. We cannot discriminate against larger companies. If a company in Ireland employs 200 or 250 people, should it be excluded from potentially winning State contracts? Is there some sort of magic number? Is it 50, so if a company has 51 employees, it cannot get a State contract? That would be a ludicrous proposal.

The Deputy referred to the publication of books. I looked at what happened before we had the centralised Office of Government Procurement and individual schools were tendering for books. The same company was supplying the same products to a variety of schools at different costs. We must have some regard to value for money for the taxpayer; that discipline must be brought to play in a transparent fashion in the OGP process. I have said that of course there is room for improvement and it is something on which we will continue to work.

Clare Daly (Dublin North, United Left)
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What we see is really neoliberalism unleashed. The centralisation of these-----

Brendan Howlin (Wexford, Labour)
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That is meaningless gobbledygook.

Clare Daly (Dublin North, United Left)
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If the Minister buttoned it for a bit, he might listen. The centralisation of these contracts has resulted in the de factoexclusion of small and medium-sized businesses. That is a fact. These are the employers that make up the majority of employment prospects for Irish citizens. The point I am making is that other EU countries have managed EU rules to protect their own employers.

Brendan Howlin (Wexford, Labour)
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Like that small company called Siemens.

Clare Daly (Dublin North, United Left)
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The Minister has been found wanting and with the Government imposing a turnover limit on companies, the European Commission has found that it wrongly excluded SMEs from competing, for example, for the Eircom contract. Businesses are arguing that many of them cannot tender for the work; large companies are tendering but the actual work is contracted out afterwards. That the Government has not carried out a comprehensive analysis on the companies that were there before it came to office but which are no longer there is a failure to inform the debate.

Brendan Howlin (Wexford, Labour)
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I notice that the SME the Deputy instances in Germany is Siemens, a tiny little company with hundreds of thousands of employees. It is hardly the typical SME-----

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Just answer the question.

Brendan Howlin (Wexford, Labour)
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-----that we want to win contracts. As I have stated, we have facilitated all SMEs in the State in fully involving themselves in the tendering process. We have "meet the buyers" processes and there are seminars with potential employers. There is a website and we give training on tendering. That is absolutely new and it never before happened with State procurement until the Office of Government Procurement was established. Virtually everybody in the House, except the Deputy asking the current question, has welcomed the OGP. She probably wants to go back to the position where we did not know who was buying what or at what cost.