Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

I thank Senator Higgins for her detailed engagement with me and my office over recent months on this legislation. I also thank all Senators here today. I found that the contributions were instructive, thoughtful and constructive, and I am delighted to see a consensus emerging across all parties.

I will explain the reasons the Government has tabled a time-limited amendment of 12 months to allow for comprehensive consideration of the implications of the Bill. Strategic spending should play a key role in responding to societal, environmental and economic challenges. Sustainable procurement practices with a continued focus on qualitative criteria in line with the national procurement guidelines represents the future of public procurement in Ireland. The Government has set out a number of commitments in the programme for Government in relation to public procurement, including evaluating and managing the environmental, economic and social impacts of procurement strategies in the State. The intentions behind this Bill are well considered. The practical implications require comprehensive consideration, particularly the ability of the State to seek value for money, the potential impact on businesses and the legal implications for Ireland with respect to EU public procurement directives.

The proposed legislation goes beyond the minimum obligations under the procurement regulations. The Bill would add an overhead of additional procedures to the sourcing of vital goods and services. It is my duty as Minister of State responsible for public procurement to accurately weigh up the costs of this additional administration against the probable benefits. I will not prejudge this exercise. The national public procurement policy framework provides the framework to allow more sustainable and better public procurement practices and significant work has already been undertaken by the Office of Government Procurement, OGP, in this regard. The implications of this Bill need to be thoroughly thought through. Previous generations of EU directives were criticised for their lack of flexibility. The 2014 directives, transposed into the 2016 regulations, afforded flexibility to public buyers to obtain procurement that fits their individual needs. Government policy has not changed in this regard. The aim and the challenge is to leverage public procurement to achieve wider societal benefits while retaining the flexibility afforded by the regulations.

The method by which we deliver change must also be fully considered. While it is essential that the State achieve quality outcomes for citizens through public procurement, I wish to point out that the reform of the public procurement function remains driven by the need to obtain value for public money in procuring goods, services and works. It is essential that value for money is not adversely affected by the inclusion of overly prescriptive quality-price balance requirements and administrative and reporting procedures. I know that is not the intention of Senator Higgins's Bill.

The OGP has been actively engaged and proactive on environmental and social issues. It published its circular 20 of 2019 promoting the use of environmental and social considerations in public procurement in October 2019. The circular highlights the potential for Departments to deliver wider social and environmental aims through public procurement, including in relation to employment and training opportunities for disadvantaged groups, disability access, promoting social inclusion and social enterprises. This circular was the latest in a series of measures following publication of the information note on incorporating social considerations into public procurement in December 2018. That information note assists policymakers and practitioners in understanding how public procurement can be used to facilitate the advancement of existing social policy objectives as well as the wider context and implications of including them in particular public procurement projects.

The OGP has also established the cross-departmental strategic procurement advisory group, bringing together officials from policy Departments with procurement practitioners to share best practices and to facilitate the process of incorporating social and environmental considerations into public procurement. These developments promote and facilitate the inclusion of social considerations in a structured manner and are aimed at helping policymakers and procurement practitioners to understand how procurement can be used to support advancement of existing social policy, the wider context and implications of including them in procurement projects.

By way of context, I will outline the significant successes in the area of public procurement that have been achieved so far. In particular, I highlight circular 10/14, an administrative means of implementing Government policy that has had a significant impact on facilitating SME participation in public procurement. I recently chaired a meeting of the SME advisory group where industry representatives complimented the impact that circular 10/14 has had on facilitating and promoting the participation of SMEs in public procurement.That circular, which was developed in consultation with SME representative bodies, sets out a number of measures that contracting authorities should implement to assist SMEs in competing for public contracts. Major successes included improved market analysis to understand the specific capabilities of SMEs; the subdivision of contracts to facilitate access of SMEs; encouragement to SMEs to avail of consortium bidding; more use of open rather than restricted tendering; the use of proportionate capacity, turnover and insurance requirements; and a requirement for public bodies to advertise contracts for goods and services valued above €25,000 and work-related services worth above €50,000 on e-tenders.

The circular also recommends that the buyer, where appropriate, take into account not just the current but also the whole life cycle costs. The term "where appropriate" is key. The circular recognises that public buyers need to retain an element of flexibility to make decisions at the coalface. It is this flexibility that this Bill will have the consequence of limiting. The feedback from the SME advisory group is that Circular 10/14 had a tangible and immediate impact of removing the primary barriers to SME participation in public procurement. Improving access for SMEs to public procurement opportunities, which was achieved without the need for legislation, remains a priority. The Government and the OGP continue to work with industry and public buyers to enhance our suite of support measures through non-administrative means. I will liaise with my officials in the OGP and will engage with SME representatives further in this regard.

The Environmental Protection Agency will shortly publish guidance on green procurement. This will focus on a number of sectors. It updates its previously published green procurement guidelines from 2014. I am looking forward to reading those.

I will take the opportunity to discuss the merits of some proposals in the Bill and those proposals which the Government has concerns with, which we think need further work. The European directives give member states discretion in specific circumstances not to use price or cost only as the sole award criterion. This provision was not transposed into the national regulations to avail of and support a degree of flexibility in tendering procedures for contracting authorities. Accordingly, it remains open to contracting authorities to decide themselves as to which categorisation of award criteria best supports the effectiveness of their tendering process in pursuance value for money in public contracts.

The directives allow member states to prevent the use of price-only or cost-only criteria where particular national agencies or market conditions would require or merit such a provision. A consultation taken in advance of the public procurement directives did not identify any significant demand within the public procurement community, including from economic operators, to apply such a restriction. Additionally, in 2018, the European Commission found that the majority of member states opted not to transpose this provision, in line with the approach which was adopted in Ireland. Of the remaining states, the prohibition was limited to specific categories of public bodies or contract types. There are many stages before award criteria in the procurement processes where contracting authorities may gauge the merit of a tender on characteristics other than price. In the case of generic or commonly-acquired goods or services, this reasonably leaves the contracting authority in a position to decide to award based on price in cases where all other conditions provided for in earlier stages of the process have been met.

The provisions in section 3(4)(b) and 3(4)(c), prohibiting the use of price criteria accounting for greater than 50% of the criteria for contracts above the European threshold for works may be inconsistent with the provisions of the directives. This provision could increase the administrative burden on suppliers to satisfy the responses to qualitative criteria. It also introduces a quality weighting that might be disproportionate to the added value that the tendering field can bring to the contract. For example, in the case of a construction project that is comprehensively defined, with high performance standards already set as a minimum requirement, so I will seek legal advice on this issue.

Since an extension of the procurement provisions in national regulations could require consultation with the European Commission to assess whether such national provisions are consistent with the directives. The potential impact of this Bill on the remedies regulation will also require consideration by the Office of the Attorney General.

The medium-term strategy for the procurement of public works projects includes a review of the capital works management framework. This review involves, among other things, consideration and consultation on the creation of a best price:quality ratio in the awarded contracts. The outcome of the review process should be known before considering any prescriptive legislation in the area. The proposal to require an Accounting Officer or chief executive officer to make a declaration on every procurement procedure where price is the only award criterion has a cost in time and money. We would need to ensure that it does not delay the award of contracts. Any potential impact of this Bill on the remedies regulation will be considered by the Office of the Attorney General.There are over 7,000 contracting authorities in Ireland, as several Senators have mentioned, including schools, health agencies and so on. Having up to 7,000 contracting authorities reporting to the Houses of the Oireachtas each year at the scale outlined in section 7(2)(a)to (f)would have an administrative cost. This cost would need to be weighed up against the possible benefits and whether alternative methods of achieving the same goals could be deployed.

The Bill requires the Minister to issue guidelines concerning qualitative, environmental, social, human rights and equality considerations that may arise in contracts governed by the public authority contracts regulation. The necessity of this proposal will have to be assessed in view of the fact that guidance in this area is progressing without the need for legislation in line with the programme for Government commitment to evaluate and manage the environmental, economic and social impacts of procurement strategies within the State.

As part of the national procurement policy framework, the Office of Government Procurement has developed the national procurement guidelines, which are intended as a toolkit for public buyers and a reference guide for economic operators. The guidelines will be updated to give further prominence to strategic procurement that includes environmental and social considerations.

The Government considers that this Bill may require a money message. The Bill, which deals with the fundamental aspects of how the State procures, has not undergone a regulatory impact assessment yet. It places an additional administrative overhead on contracting authorities.

The Government appreciates the intention behind the Bill. However, it is important to take the time to ensure that the legislation is workable and sound, and that procurement policies in the programme for Government are included where appropriate. Accordingly, the Government has tabled a time-limited amendment for 12 months to allow sufficient time for legal advice to be provided by the Office of the Attorney General and for full financial consideration of the implications of the Bill to be considered. I thank Senators and I thank Senator Higgins in particular for all her detailed work on the Bill.