Mick Wallace (Wexford, Independent)
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51. To ask the Minister for Public Expenditure and Reform ,with regard to the Office of Public Procurement, if products can be added to existing contracts without being subject to the tendering process; and if he will make a statement on the matter. [1945/16]

Mick Wallace (Wexford, Independent)
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In the 2011 programme for Government, the Government promised to reform public procurement to become a tool to support innovative Irish firms and allow greater access to Irish small and medium-sized businesses. I accept that the establishment of the Office of Government Procurement and the first chief procurement officer in 2013 was a positive step. Does the Minister not think that much more needs to be done for smaller indigenous Irish companies than is happening at present?

Brendan Howlin (Wexford, Labour)
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I again thank the Deputy for his question. As he knows, public procurement is governed by EU and national law. The aim of these rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. While it is preferable for a contracting authority to test the market by carrying out a procurement process, modifications of contracts during the term can be necessary because of changes in circumstances. There are many practical reasons non-material modifications are allowed without a tender process.

I will deal with the specific question the Deputy has asked me. I think he has agreed that the establishment of the Office of Government Procurement was a very good move. It has been one of the game changers in how the State transacts its business. Rather than having myriad different agencies and non-professional procurers buying the same goods and services at different costs, we now have a rational professional way of dealing with this. It is good for small and medium-sized companies, as the Deputy has said.

Obviously, we cannot discriminate one way or the other. However, 66% of the procurement we have done to date is with small and medium-sized companies. We are running a variety of meet-the-buyer programmes to strengthen the hand of small and medium-sized enterprises to better bid for public contracts, either as stand-alone entities or groups of SMEs working for the larger contracts.

However, it is a process. Last week I brought proposals to Government, which were confirmed today in the minutes, to establish the Office of Government Procurement on a statutory basis. When that Bill comes before the House, the Deputy, who I know will be here in the next Dáil, and I, if I am lucky enough to be here in the next Dáil, can have further debate.

Mick Wallace (Wexford, Independent)
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The Minister knows he will top the poll in Wexford. The Minister's 66% of public expenditure going to SMEs is a bit skewed in the sense that 97% of Ireland's 200,000 businesses have 50 employees or fewer and 84% of them having fewer than ten. The question arose from a business in Wexford town that both of us know. Jim Wallace the tailor contacted me to let me know that he is finding it more difficult to get work. He was recently taken aback when he found that for work he often supplied previously, this time he had to go through a bigger contractor.

There was not a normal tendering process and the contractor just charged 10% on top of his price. I do not believe the Minister would think that is a great idea because it is an extra cost to the State. Likewise, with eligibility for contracts, he is finding that it is becoming a little more difficult because the excessive turnover requirements rule him out of areas in which he was not ruled out of before. The Minister must agree that this has to be difficult for small businesses in Ireland but is to the benefit of larger companies, be they Irish or foreign. This matter needs to be addressed by the Government.

Brendan Howlin (Wexford, Labour)
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I hear what the Deputy is saying. The Minister of State, Deputy Harris, has taken a direct interest in all of these matters. He chairs the procurement function and has had a particular focus on ensuring that, in so far as it can happen in compliance with European law, contracts are awarded to Irish entities and, by and large, are given to small and medium-sized enterprises, SMEs. This is all in the context of getting the best deal for the taxpayer and complying fully with the law. This is an evolving process. As we bed down the Office of Government Procurement, if there are any particular issues, the Minister of State and I would be happy to have discussions with any individual or potential tenderer to see how their hand can be strengthened or the processes can be modified.

Mick Wallace (Wexford, Independent)
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We will certainly take up that offer. The Minister referred to the restrictions of European law. Recently, the European Commission ruled that the State wrongly excluded small and medium-sized enterprises from competing for the contracts to provide Ireland's new postcodes by imposing a turnover limit on companies eligible to tender for the project. Gary Delaney, the chief executive officer of Loc8 Code, pointed out the turnover limit as revealed by the Commission. Although it has not imposed restrictions or penalties on Ireland, the Commission has argued that Ireland's position on it was not good enough and that it needs to be addressed. What does the Minister have to say about that?

Brendan Howlin (Wexford, Labour)
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Three new European directives which were agreed during the last Irish EU Presidency need to be transposed into Irish law. Some of these will meet the very issues about which the Deputy is talking. We expect the transposition of these will be completed by April. The new directives are on the award of concession contracts, on public procurement, repealing EU Directive 2004/18/EC, and on procurement of entities operating in the water, energy, transport and postal services sector.

The issue of procurement is one at which we are taking a careful look. We want to ensure we construct procurement processes to the best advantage of Irish potential tenderers while, obviously, being cognisant of the regulations and the law I just mentioned.