Patrick O'Donovan (Limerick County, Fine Gael) | Oireachtas source

I thank Senator Higgins in particular for her engagement with me and my Department over the past while, not only on procurement but on other issues. I will try to respond as best I can to some of the points that were made. Reference was made to the Government's lacklustre procurement policy. I remind Senator Conway-Walsh that I have never had a single proposal from her on anything to do with procurement. If the Government is lacklustre, we would welcome any suggestion that she has in the same spirit as we have welcomed Senator Higgins's proposal.

Public procurement is a key part of my portfolio and an integral part of the Government's overall reform agenda. The Government acknowledges that the Bill is well intentioned with many good points raised and we appreciate, in particular, that Senator Higgins has engaged with my officials and those of the Office of Government Procurement in the development of the Bill. However, as she will be aware, the Government has concerns regarding the Bill's impact on the ability of the State to seek value for money and the implications for Ireland with respect to EU public procurement directives. Several Senators referred to the issue of value for money and some railed against the issue it. I am sure the Comptroller and Auditor General would not support some of the comments made. I will address them shortly, but, first, I want to place the Bill and the Government's concern in the context of its public procurement reform programme. The reform of the public procurement programme is and remains driven by the need to obtain value for public money in procuring goods, services and works. The Office of Government Procurement and the procurement policy were put in place at a time when the country had literally run out of money and was banjaxed. It is essential that the achievement of value for money is not adversely affected by the inclusion of overly prescriptive requirements and increased administrative and reporting burdens, which I know is not Senator Higgins' intention. Public procurement is essential for the sustainable delivery of much needed public services. The State spends approximately €12 billion per annum on goods, services and works and procurement is a powerful tool in spending public money in an efficient and sustainable way. Contrary to some of the commentary to the effect that the Government is spending nothing in Ireland, 94% of the €12 billion is spent in the economy, of which approximately 54% is spent in the SME sector, to which the State is a large contributor. Better managed procurement can lead to significant savings in public budgets and more investment. How public authorities purchase directly affects an economy, through competitiveness, economic growth, levels of taxation and innovation, as indicated by Senator Ruane when she correctly said the State was the largest procurer in the country. Public procurement also represents a huge business opportunity for all businesses, large and small.

It is essential that the public service operate in a co-ordinated and effective way to deliver value for money and sustainable savings for taxpayers. Senator Norris who is not present questioned what is value for money. I am sure if he took down any report of the Comptroller and Auditor General, he would find a succinct definition of what it is and, more importantly, what it is not. Significant progress has been made since reform of the public procurement programme began and the Office of Government Procurement, OGP, commenced operations in 2014 under the then Minister, Deputy Brendan Howlin. Together with four key sectors – health, defence, education and local government - the OGP has been driving the achievement of value for money, enabling compliance, promoting business participation in procurement, increasing communication and guidance, professionalising the service and driving transparency. It is doing so in the context of the EU directives specifically set out for procurement.

While the OGP has made significant progress in driving implementation of the reform programme since 2014, this is an opportune time to reflect on the progress made and the challenges that remain and to consider the learnings, with a view to identifying the future direction and shape of public procurement and how best to achieve it. It is something I have asked my officials to initiate in conjunction with Government colleagues and others to see what suggestions can be made. I have said it previously in this and the other House. It is welcome that Senator Higgins has taken up the opportunity to do so. If there others who wish to do so to bring forward proposals without using words such as "lacklustre", I would welcome them. A consultation process is under way to ensure all elements of the reform programme will be aligned. I have sought the views of Ministers, their Departments and bodies under their aegis, as well as SME representative bodies via the SME advisory group. I chair the group which meets regularly and reflects the leadership of small and medium-sized enterprises across the country. All suggestions made in the group are considered and many of them have been implemented by the Government. The feedback from the consultation process will help to shape future public procurement policy and operations aimed at having a more efficient and accountable public procurement process. I do not think any Senator is suggesting it is anything other than accountable.

My Department recently launched a consultation process with construction industry stakeholders to develop the next generation of public capital works management framework, to which reference was made. Both the Minister, Deputy Donohoe, and I are very conscious of the construction industry specifically. While several references were made by Senators who are no longer present to the construction sector, not everything is falling down. Not every hospital is falling down and not every school project is over budget. Not every process is failing. The vast majority are totally within budget and of very good quality and we never hear about them. That is probably true in the case of 99% of them, but that is a separate issue.

A specific issue to be addressed in the consultation process is the consideration of creating a revised quality to price balance in the award of public works contracts. It will address the use of MEAT, most economically advantageous tender, an unfortunate acronym that I do not particularly like to use, and the words "lowest price" in contract evaluation. It would not be appropriate to be prescriptive in primary legislation in that regard. The Bill proposes that contracting authorities should award contracts on the basis of the most economically advantageous tender, rather than price only, unless sanctioned by a Minister or the Accounting Officer. While I appreciate the concerns raised by Senators about the use of price only in procurement processes, such a provision would be disproportionate and add to the administrative burden in buying generic, commonly acquired goods and services. I think the Senator also acknowledged this.

When debating the issue of procurement, a lot of attention is focused on the award stage of public procurement processes. What many do not realise is that there are a number of stages in the process that can be used to develop and assess the quality of commonly acquired goods or services that make them suitable to be assessed on a price only basis. A lot of work goes on in the Office of Government Procurement specifically on this issue in the development of frameworks that can be used in the procurement of individual products. For example, the specifications and requirements in the procurement of office supplies, books, electricity, fuel, consultancy and recruitment services and a range of other products can be set out clearly in tender documentation, leaving the buyer room to judge the primary difference between suppliers, which is the price. It has to be acknowledged that public procurement facilitates the State in being in a position to provide much needed public services in a sustainable manner. Therefore, reducing the public buyers’ choices in assessing tenders could impact on the sustainability of such service provision. The existing model reduces considerably the burden that would otherwise be carried, for instance, in respect of bureaucracy, if we had to treat each procurement process as separate.

Under EU law, the method used in evaluating tenders must be set out clearly at the start of the process. The proposed legislation would, therefore, require a Minister or an Accounting Officer to become directly involved in developing the strategy for numerous procurement processes. This would not be practical, as the Senator said. It would not be possible to intervene at award stage because the methodology to be used in marking would have been decided and published as part of the tender documentation. I think everybody accepts that if a Minister or an Accounting Officer was directly involved, it could lead to a situation where he or she would be wide open to allegations of improper interference in the procurement process. While I know that is not the intention, it could, as Senator Horkan noted, be an unintended consequence. It would be not be realistic to expect a Minister or an Accounting Officer to be in a position to develop detailed award criteria for all processes. It would invariably lead to questions about the integrity of the process and political interference, perceived or otherwise, in individual spending decisions. Therefore, a Minister should not be involved, as proposed in the Bill. While I understand and appreciate the Senator intends to remove that provision on later Stages of the Bill, having Accounting Officers or accountable persons involved in the development and sanctioning of individual procurement processes raises similar issues. These posts require a level of independence in order to be able to gauge and question the activities of officials reporting to them. Everybody accepts that they have to be above reproach. If they were required by law to be directly involved in procurement processes, this reporting line would be broken, creating a potential gap in accountability. The legislation is not entirely clear on the reporting or declaration arrangements for the utilities sector which is largely privatised.

The Government is exploring the scope for the inclusion of social considerations in public contracts such as environmental sustainability, disability access and training for young or disadvantaged persons. This arises specifically from an issue that was raised with me a number of months ago by former Senator Kathleen O'Meara which I took on board. It is because of that very positive engagement with the former Senator that we have started to explore the inclusion of social considerations. There might be an opportunity for me to update the House on what we are doing in that regard. A cross-departmental social considerations advisory group has been established. It brings together relevant officials from policy departments and procurement practitioners to promote and facilitate the incorporation of social considerations into public procurement projects.This was done with the support and leadership of three Ministers of State, Deputy David Stanton, Deputy Finian McGrath and myself. The group will give practical assistance to public buyers that wish to use public procurement to enable wider public policy considerations. It held its first meeting on 12 March 2019. Membership of the group is drawn from the Departments of Employment Affairs and Social Protection, Communications, Climate Action and Environment, Rural and Community Development, Justice and Equality, Health, Business, Enterprise and Innovation, Housing, Planning and Local Government, Transport, Tourism and Sport and Education and Skills for guidance on training issues. The group's functions include the identification of social policy objectives that could be advanced through public procurement; matching some of those identified social objectives with suitable procurement opportunities, to be trialled on a pilot basis; and advising on the appropriate method for incorporating social considerations into frameworks and contracts.

The group will consider monitoring and reporting arrangements, which can be applied to future projects where social considerations are to be incorporated. It will also advise on the development and implementation of strategies to communicate its work across the public sector, including any policy and training implications therefor. If opportunities arise this framework and group provide a means of exploring them.

Public procurement in Ireland is governed by EU and national law and national guidelines. The EU treaty principles of equal treatment and non-discrimination, transparency, mutual recognition, proportionality, free movement of goods and services and the right of establishment must be observed on all tenders. All public procurement processes must comply with national legislation. There is, therefore, no need to restate the requirement to comply with the European Convention on Human Rights Act 2003 as this is already the case.

Two articles in the directives also cover human rights issues. Article 18 of the public procurement directive provides:

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 the international environmental, social and labour law provisions listed in Annex X.

Senator Nash rightly referred to this provision in his contribution. He legitimately raised cases where people have been unfortunately mistreated in the public sector. This is not unique to the public sector or to Ireland. We must all work collectively to stamp this out.

In addition, Article 57 gives contracting authorities the right to exclude an economic operator where it has been the subject of a conviction by final judgment in a number of areas, including child labour and other forms of trafficking in human beings as defined in Article 2 of directive No. 2011/36/EU. Extensive general guidance on conducting procurement in line with legal requirements is available to public authorities on the Irish portal for public procurement and the website of the OGP.

Staff involved in public procurement processes are required to be aware of the provisions of the various Acts, directives, regulations, policies and procedures that relate to their procurement area.Moreover, the OGP has developed standard template tender documentation which sets out obligations for the successful tenderer. This strong regulatory regime, combined with a consistent application of procurement practices through the use of standard template documents, ensures that human rights are fully considered in a public procurement process. That is notwithstanding the concerns that Senator Higgins raises. However, I am sure she will accept that a lot of what she has raised could be covered in other legislation.

I understand that the Bill, which deals with the fundamental aspects of how the State procures, has not undergone a regulatory impact assessment. In answer to Senator Hopkins' query, the Government's view is that this Bill would require a money message. The Bill places an additional administrative burden on contracting authorities and limits options open to the State in seeking value for money on commonly acquired goods and services. The measures proposed in it would call into question the audit trail of individual procurement processes and restrict the State's ability to provide services that represent value for money.

The Government appreciates the intention behind the Bill. We have discussed it at length. However, for the reasons I have set, it will abstain in the vote on the Bill. This allows an opportunity to examine other options. We appreciate the work that the Senator and her colleagues have done and the genuine and significant concerns that have been raised. However, we have raised issues that could prevent the passage of the Bill. I will abstain on it. When it proceeds to further Stages, there will be an opportunity for us to have a discussion on it line by line.

Many of the contributions rightly stemmed from some procurement processes have gone pear-shaped. People often form their own analyses, thoughts and reflections on things that go wrong. There is an awful lot about the current processes that goes right, particularly our engagement with representative organisations of the small and medium enterprises, SMEs, that are doing this work throughout the country on a daily basis.

Issues pertaining to construction have recently been raised. The Minister for Finance, Deputy Donohoe, and I are acutely aware of that. We are working on the medium-term review of the construction works management framework. Reference has also been made to costs arising from the national children's hospital. I accept that point. However, nobody is suggesting an issue concerning quality. Quality was referred to in one of the contributions.

The Government will abstain on the Bill so it will probably proceed to Committee Stage, which will give us an opportunity to discuss it further. As I outlined earlier, we are in the middle of a review of procurement processes in a range of areas. We have sought the views of Departments and State agencies. We are going to engage with the lead spokespersons of the Opposition as part of that. Anybody is free at any stage to bring forward a detailed Bill on these issues, as Senator Higgins has done. Not everything we do is wrong. Throwing glib comments around in the Seanad or the Dáil about how the Government spends money on behalf of the taxpayer will not get us anywhere.