Gerry Horkan (Fianna Fail) | Oireachtas source

I welcome the Minister of State to the Chamber and thank him for his contribution. I also congratulate him on his appointment as Minister of State with responsibility for financial services and e-government. I have no doubt that he will be an excellent Minister of State in that remit.

Ireland's public procurement market, which is worth an estimated €8.5 billion per annum, represents an enormous market opportunity for Irish SMEs. However, in many cases SMEs are at a serious disadvantage in competing for contracts because the criteria include minimum turnover levels far in excess of what many Irish companies can achieve. SMEs are the backbone of the Irish economy. They make up over 99% of businesses in the enterprise economy in Ireland and account for almost 70% of people employed. They must be allowed to compete for a greater share of public service contracts. It is quite right that everything be done to facilitate multinationals in coming into the State, but SMEs and indigenous industries are not necessarily given the same momentum. In the long term, the competitiveness of the procurement process is damaged by the narrow range of businesses that are eligible to compete. Facilitating greater access to such public contracts will support the growth of small indigenous suppliers while promoting entrepreneurship and business risk-taking across society.

Fianna Fáil supports opening up the procurement process to ensure all businesses can benefit. We support working within EU rules to ensure that Irish SMEs are not disadvantaged in tendering for public service contracts. In our recent manifesto we put forward the innovative policy suggestion of creating a procurement ombudsman to ensure SMEs are facilitated in competing for contracts. This would eliminate discriminatory requirements which effectively exclude fair competition in many cases. Fianna Fáil proposes the following measures: key performance indicators for SME uptake should be fixed for all public procurers; procurers should be obliged to set targets in relation to their collaborative efforts as the first step in each procurement; specific training must be provided to public procurers in order to boost the skills needed in procuring; procurement should be facilitated on a regional basis; and contracting authorities must add provisions in public contracts so that payments are made rapidly to suppliers, ensuring small businesses are paid more quickly for work that has been satisfactorily performed.

We need to build an SME objective into procurement procedures. Any Government contract given to large suppliers should be conditioned by the requirement to deliver contracts, where possible, with a substantial SME component. Government monitoring would ensure that these obligations are being met. Building an SME objective into these Government contracts would be beneficial in connecting the procurement and contract management skills of these big businesses, thereby benefitting the public sector. While this could result in higher prices than could be attained via offshore outsourcing, it guarantees that Government money is being directed into the heart of the domestic economy and the SME sector.

The Government is by far Ireland's largest consumer, yet too often this consumer power is not put to strategic use. This is in stark contrast to other governments such as those of the United States, Germany and France, which use procurement more strategically to support SMEs and industry and to increase innovation and growth. The Government is not taking advantage of provisions under existing EU procurement law.

In 2015, Fianna Fáil prioritised incorporating social elements in procurement processes by introducing the Public Services and Procurement (Social Value) Bill 2015, which required that public bodies observe the economic, social and environmental well-being associated with the tendering of public service contracts. Greater consideration should be given to incorporating social elements in procurement processes. For example, a community benefit clause could be considered in the development of guidance for contracting public authorities across the State. This is a standard feature in many other countries, and EU procurement law makes provision for public authorities to introduce social or community clauses in their procurement procedures.

A social clause requiring compliance with all aspects of employment law has been incorporated into the suite of Irish public works contracts since their introduction in 2007. The clause permits deductions from the interim payments scheduled under the contract for non-compliance and places a considerable burden on both the contracting authority and contractor in demonstrating and verifying compliance. The social clause provisions most commonly adopted by countries include reservations for social enterprises and SMEs, along with social inclusion and equal opportunity clauses. In essence, these require that contracting authorities ensure that environmental, social and labour law obligations are complied with in public contracts.

The 2016 programme for a partnership Government must commit to facilitating quarterly meetings of the SME advisory group, chaired by a Minister of State at the Department of Finance or the Department of Public Expenditure and Reform, so that the voice of Irish SMEs can be heard by Government and by the Office of Government Procurement. It must also continue to develop measures to support SMEs in accessing the public procurement market and refine the new procurement structures, such as the OGP, as they bed down and make adjustments according to best international practice and in conjunction with Irish businesses. We need to ensure the Oireachtas takes concrete action on the issue of procurement so that we do not put ourselves at a competitive and social disadvantage.

I thank the Minister of State again for his contribution. I believe it would be helpful if Members could receive copies of Ministers' speeches a little bit earlier. We might then be able to incorporate the contents a little bit into our own thoughts. If that were possible it might be helpful in the future, but I am certainly not holding it against this Minister of State. However, it would be helpful for Senators to know what Ministers are going to cover so that we would have time to reflect. My party and I look forward to working with the Government in ensuring, where possible, that public procurement delivers value for the State and for businesses within the State.