Paul Gavan (Sinn Fein) | Oireachtas source

I welcome the Minister of State. The focus of Sinn Fein with regard to public procurement can be summarised under two broad headings: increasing opportunities for SMEs; and, most importantly, supporting sustainable secure employment.

Chambers Ireland has described a continued sense of frustration among those in the SME community that issues such as the Government's limited focus on the lowest tender price above wider social and economic benefits continue to be raised and continue to be ignored. Since highlighting the need to open up procurement to SMEs and micro-businesses in our policy paper, Putting SMEs First, there has been some movement on the part of the Government to acknowledge the problems facing small businesses. We welcome that.

Since the establishment of the Office of Government Procurement, OGP, in July 2013, changes to the public procurement system have taken place. Some of the OPG's work has been positive. Procurement has been professionalised and is becoming more streamlined. For the first time, real data on public procurement is now available and the OGP has committed to producing an annual report of analysed expenditure and tendering activity. However, problems remain. The Government's policy of prioritising the cheapest price over and above the wider economic and social value of contracts is damaging the economy and denying small companies of much needed business opportunities. Equally worrying are the ongoing changes to local authority procurement, which have centralised procurement contracts worth millions of euro. The latter has the potential to deprive local economies of long-established income.

The Public Service Spend and Tendering Analysis for 2013, compiled by the OGP, found that 66% of public service expenditure is with SMEs. I think the Minister quoted the higher figures for the more recent data. It is important to note the OGP uses the traditional definition of SMEs, namely, enterprises with fewer than 250 employees. In truth, we know the composition of SMEs in Ireland is very different. This is further complicated by the fact that there is no differentiation between homegrown small businesses and Irish subsidiaries of large multinational corporations. The Small Firms Association, SFA, has correctly described Ireland as a nation of small businesses, with 97% of the 200,000 businesses with 50 employees or fewer and 84% with fewer than ten employees. Until the OGP data collation accurately categorises micro, small and medium enterprises, the policy solutions put in place will continue to be deficient and the analysis relating to them unreliable.

I will run through our key recommendations. Our first is thatInterTradeIreland and the OGP develop a "Meet the Supplier" event programme in consultation with the SFA, ISME and micro-business representatives.This should be rolled out for all public servants engaged in all levels of awarding public procurement contracts. The OGP should put in place robust predatory pricing safeguards at the mini competition stage of the tendering process, following consultation with micro and small business representatives. The OGP should clearly define micro, small and medium-sized organisations and collect and disseminate procurement data that pertains accurately to each category. The OGP should set performance indicators for micro, small and medium-sized enterprise participation for all public procurers and ensure these performance indicators are monitored and met. The OGP should reduce the size of tenders to make them accessible to the relevant enterprise size. The OGP, in consultation with all relevant stakeholders, should review the current centralised tendering model to provide an alternative approach that better marries cost benefits with wider regional economic and social policy objectives. The OGP should also extend the categorising of suppliers by the number of employees, and also a subsidiary classification for companies who are Irish subsidiaries of multinational companies. Finally, I would like the Department of Public Expenditure and Reform to conduct a study on the impact on local economies and micro or small businesses of public procurement centralisation. That is my list of key recommendations.

In 2014, the Sinn Féin spokesperson on public expenditure and reform, Deputy Mary Lou McDonald, introduced a Private Members' Bill for debate that legislates for the mandatory inclusion of social clauses in all public contracts worth in excess of €1 million. Social clauses are not rocket science nor are they new. As the Deputy highlighted at the time, Italian clauses favour bidders from less developed regions of the country. Dutch and Danish local government laws provide for requirements to create jobs for the long-term unemployed. German rules allow favourable terms for bidders with a background in the former German lands in Poland, the Soviet Union and Czechoslovakia and community benefit clauses have been used in Scotland. All of this shows that social clauses can be introduced.

Recent procurement reform legislation introduced in Scotland has sought to establish a national legislative framework for public procurement that supports economic growth by delivering social and environmental benefits, supports innovation and promotes procurement processes and systems that are transparent, streamlined, standardised, proportionate, fair and business-friendly. It is worth noting that the Scottish model of procurement defines value for money in procurement as not just being about cost and quality but about the best balance of cost, quality and sustainability. In addition, the Public Services (Social Value) Act 2012 for England and Wales requires public authorities to have regard to economic, social and environmental well-being in connection with public services contracts and for connected purposes.

I want to briefly talk about the new EU procurement directives. As Members will know, three new directives came into effect in 2014 and they should all have been transposed into Irish law by April of this year. The Irish Congress of Trade Unions, ICTU, has, as part of its charter for fair conditions at work, included fair public procurement as one of the campaign's five demands. It has called for a fair transposition of the directives so that the aims of the charter are supported and secured. Article 18(2), the directive that we are waiting on the Minister to transpose, states:

Member States shall take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by union law, national law, collective agreements or by International, environmental, social and labour law provisions listed in Annex X.

Has the Minister of State read ICTU's campaign in terms of public procurement? To be honest, having looked at his speech I do not believe that he has read it because there was no mention of fair wages and the urgent need to transpose the directive into law. I am very concerned. It looks to me as though he will take a minimalist approach when transposing the directive. Frankly, that is not good enough for the thousands of people and the small and medium-sized enterprises that depend on him to take a broader view and ensure that robust social clauses are put in place.

I am amazed that the Minister of State mentioned the devolved schools programme. In my previous job I was a trade union official. Does the name Rhatigans ring a bell? Some of the standards of labour, particularly the forcing of people, from employees to the self-employed, took place under the schools programme. My colleagues and I in SIPTU spent five years talking to various Ministers highlighting the abuses and got nowhere. Yet, here the Minister of State has said that the programme is a good example of a social clause. Is he serious? Obviously a lot of work needs to be done.

We want the Minister of State to do the following - transpose the public procurement directive into Irish law as soon as possible; take a maximalist approach in these areas; provide for fairer procurement rules for micro and small enterprises and environmental, social and employment rights; review compliance and enforcement of labour and employment legal obligations by public contractors and suppliers to be jointly undertaken by the Departments of Public Expenditure and Reform, Jobs, Enterprise and Innovation and Social Protection, and, most important, in consultation with ICTU, and I ask him to confirm that consultation will take place; and, the implementation of all of the demands listed in ICTU's charter for fair conditions at work. This is an opportunity for him to make a difference but, unfortunately, his speech suggests otherwise.