Denis Naughten (Roscommon-Galway, Independent)
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17. To ask the Minister for Public Expenditure and Reform if the public procurement threshold will be increased from €25,000 in view of the impact it is having on SMEs; and if he will make a statement on the matter. [16823/20]

Alan Farrell (Dublin Fingal, Fine Gael)
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I understand Deputy Grealish is taking Question No. 17 on behalf of Deputy Denis Naughten.

Noel Grealish (Galway West, Independent)
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I congratulate the Minister and Ministers of State on their appointments.

Will the public procurement threshold be increased from €25,000 to help kick-start the SME sector?

Ossian Smyth (Dún Laoghaire, Green Party)
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I thank Deputy Grealish. Strategic public procurement can play a key role in responding to societal, environmental and economic challenges. Therefore, the inclusion of strategic public policy considerations in procurement processes is a key feature of the programme for Government.

The Office of Government Procurement, OGP, has been actively engaged in putting in place the necessary process and policies that are designed to encourage SME access to public procurement opportunities. In this regard, the OGP developed circular 10/14, entitled "Initiatives to Assist SMEs in Public Procurement". Under the circular, public bodies are required to advertise all contracts for supplies and services with an estimated value of €25,000, exclusive of VAT, and upwards on eTenders, the national tendering platform. This means that as many businesses and SMEs as possible are aware of tendering opportunities. Indeed, the latest analysis carried out by the OGP indicates that 94% of procurement opportunities are secured by Irish businesses, with more than 50% of those being classified as SMEs.

I understand that an increase in the public procurement threshold was considered by the SME advisory group. The group meets on a quarterly basis so that the voice of SMEs can be heard by the Government and the OGP. The group's membership consists of officials from the OGP, the Department of Business, Enterprise and Innovation, Enterprise Ireland, InterTradeIreland, IBEC, the Small Firms Association, the Construction Industry Federation, the Irish Small and Medium Enterprises Association and Chambers Ireland. The issue was discussed, with members being invited to submit their views to the OGP. It was clear from the discussion and the formal views expressed that the majority of members were against increasing the advertising threshold. The OGP also took account of analysis of data on eTenders in its findings and decided in June 2018 that, taking openness and transparency into consideration, the current advertising threshold of €25,000, exclusive of VAT, should be maintained.

The thresholds for advertising on eTenders will be kept under review in light of the impact on operational efficiency, value for money and accessibility to business opportunities, particularly for the SME sector. The OGP is continuing to monitor the issue in consultation with the SME advisory group and will continue to engage with business proactively in order to enhance the significant measures and strategies already in place to support SME access to public procurement opportunities.

Noel Grealish (Galway West, Independent)
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I thank the Minister of State for his reply. The threshold of €25,000 has not been increased for at least ten years. In 2011, Deputies from all parties, including Government ones, set up a group in the House to see whether something could be done to increase the public procurement threshold. We spoke to the Minister of State, Deputy O'Donovan, who had responsibility for this matter at one time. The issue mostly had to do with supplying services to schools. The Minister of State, Deputy Ossian Smyth, referred to 94% of opportunities going to Ireland-based companies, but many of those could be internationals with offices in Ireland. That is what was happening.

The main issue facing small businesses is the rates they pay local authorities, but they cannot sell so much as a biro to those authorities. Instead, we often see large container lorries coming along to supply local authorities, the HSE and other public offices. The local shop in the town or village cannot supply them. The same issue obtains in respect of schools. As far as I am aware, one company is supplying most schools. There are small companies trying to sell little bits to schools, for example, chalk and cardboard. They are the ones being asked to sponsor various events in schools and the big multinationals get away without doing that. The whole issue needs to be examined.

Ossian Smyth (Dún Laoghaire, Green Party)
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I take the Deputy's concerns on board. I met the Minister of State, Deputy O'Donovan, at the start of my tenure and discussed this issue with him. He impressed on me the importance of the SME advisory group and that there was a perception that it was difficult for SMEs to get contracts despite the fact that 54% of the contract value awarded by the OGP went to SMEs. We must keep engaging with SME representatives and ask them what we need to change. I am told that, from the previous engagement, it was clear that they did not want to change the €25,000 threshold.

There may be other measures that can be taken. I intend to maintain the engagement that the Minister of State had with SMEs. The next time we convene the advisory group, I would be happy to take Deputy Grealish's concerns to it for discussion. With businesses under so much stress after the pandemic in particular, they need new contracts. There is a large amount of Government spending occurring at the moment, and it is important that those businesses have a fair shot at getting those contracts.

Noel Grealish (Galway West, Independent)
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I welcome the opportunity to engage. During one of our committee meetings on this issue at which officials from the office of the Minister of State, Deputy O'Donovan, were in attendance, it was put to us and the groups appearing before us that four or five businesses should get together and tender as group. That would not work, though. There could not be four or five businesses in the same town tendering for something. How would the contract be divided between them?

The SME sector is responsible for employing more than 1 million people and it is important that we afford SMEs every opportunity and Government support possible. Reviewing the threshold could be of help to many SMEs in getting back up and running.

Ossian Smyth (Dún Laoghaire, Green Party)
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I have an open mind. I am new to this position and am willing to review with the OGP the €25,000 threshold and any other existing condition to ensure that SMEs have a fair opportunity to win contracts. I want to engage in communication, education and anything that we need to do in order to train people up, advise them on why they are not winning contracts, and ensure that the process is fair across the country and SMEs have a fair shot in competitions with larger companies and internationals. If there is any way that I can co-operate with Deputy Grealish or any other Deputy, I intend to do so.