Alice-Mary Higgins (Independent) | Oireachtas source

I welcome the Minister of State, Deputy Higgins to the Seanad. Public procurement is a topic I have been very passionate about for a long time, and I thank the Minister of State for the kind comments in her own speech with regard to some of the work I have been doing, and some of the very positive engagement I have had with the Office of Government Procurement, including on my quality in public procurement legislation. I thank the Minister of State for her comments on that.

With regard to this very important new strategy, it is trying to encourage engagement and create excitement around the development of a new national public procurement strategy. Public procurement is one of the most powerful tools we have as a State. On the money spent, my figures were €12 billion in 2019 and it is obviously more than that now. We are looking at more than €100 billion. It was €120 billion, I believe, in the context of the national development plan. This is an extremely powerful lever within any economy, and within the Irish economy the Government is one of the main actors. It can have an extraordinarily significant impact, not just on one those who are awarded contracts or who will use and benefit from the goods the State is purchasing, but also by creating, setting and raising standards in the culture more widely.

There has been and tends to be a lot of focus in the media on examples of bad public procurement. We know that, when it goes wrong, there are very significant financial and personal costs. I will come to some of those which I specifically sought to address in my own legislation. The CervicalCheck scandal is one that jumps to mind because that was one where the Scally report identified the issue of contracts being awarded on a lowest cost only basis, and lowest cost being the priority factor in the awarding of contracts in that example.

When done well, public procurement has extraordinary impact in terms of social, environmental, economic and sustainable benefits for society. For too long, we have not really leveraged it. It is simply seen as how we buy the things, how we pay for the things and how the contracts go out rather than recognising it as the policy lever and the tool that it is. Sometimes we talk about how the EU rules will not let us do this or that. In fact, those EU directives are quite wide and offer quite a huge scope for action.

There are times when we should be doing less bundling, and sometimes operating smaller grant mechanisms at community levels is more appropriate. Sometimes debundled and local purchasing, when it comes to small and specific purchases, is actually more effective. When we look within the EU rules, recital 91 of the public procurement directive in 2014 states, "This Directive clarifies how the contracting authorities can contribute to the protection of the environment and the promotion of sustainable development, whilst ensuring that they can obtain the best value for money for their contracts." This is part of the original vision, even from the European Union, of how we are meant to be using it, and that is as a tool, in this case specifically with regard to the environment and sustainable development. That is why I really welcome that when the Minister of State talked about value for money, she did so in that wider frame. Value for money is not simply what is cheapest. It is not even what is cheapest and quickest. It is about sometimes asking what is the optimal use of our resources, human and financial, in terms of delivering on time, quality, value for money and the wider societal, economic and environmental benefits that can come from an act of procurement. That is what value for money is in a really meaningful sense.

The Minister of State will be aware of my Quality in Public Procurement (Contract Preparation and Award Criteria) Bill, which looked to that question of the options we were given by the European Union. There is a new debate on enhancing that social component in the next round of discussions on the new directives from Europe. On value for money, or "most economically advantageous tender" as it is worded there, there are options within it. There is lowest cost; price-quality ratio, where you look to what is the best balance and where a proposal is tested on both price and quality; and the life-cycle costing, which is very important in an environmental context, where we look at what the life-cycle cost is over a wider frame with respect to supply of materials, etc. My legislation, as the Minister of State will be aware, seeks to make price-quality ratio the default rather than lowest cost, which is still used for approximately one third of contracts in Ireland, so that the norm would be that we would always apply quality criteriaWe would also bring a more thoughtful approach. If we were not to do so, we would have to explain why we have not chosen to apply a price quality approach. One of the previous speakers referenced social clauses and other clauses attached to legislation. They are very important. It was a notable point that it is not enough to suggest it; we need to require it for it to really happen in terms of a culture shift. Similarly, we need a legislative push to ensure that culture shift relating to the quality and price quality approach. In the excellent green public procurement policy, which was developed under the previous Government, there is a recommendation for legislative measures relating to green public procurement. Individually when we look to those who are making the choices, it can often seem that the simplest quickest thing is the cheapest bid. There needs to be that culture shift whereby we still have the discretion whereby we are not attaching a social clause or environmental clause in terms of the points that Senator Murphy was making, or in terms of my Bill if we are not applying quality, we would explain why. We should think about quality or think about why we are not thinking about quality. That thought early on can develop huge benefits.

Some of the questions that should be thought about at the contract design point are: how we deliver social benefits and social values through procurement? How do we promote sustainability? How will it support or potentially damage the delivering of our climate targets? How will it work in terms of our objectives on the circular economy? These are all real policies that we have that we should further each time. How will it support the participation of SMEs? How will it support innovation? How will it support inclusion? There are simple things in the design of contracts. One example that has been given often is, rather than just looking at procuring playgrounds, if we procure playgrounds that are inclusive and support biodiversity, we get better playgrounds that work for everybody. This is one component of my legislation; the other legislation comes to big purchases or the once in a generation purchases. It provides for a minimum of 50% quality when it comes to purchases that are over the large thresholds. Sadly, an example of this is the children's hospital where only a 70% weighting was given to price and a 30% weighting given to quality, which meant the lowest bid automatically had the advantage, although we have seen, which is often the case, when lowest bids are successful, there are supplementary claims again and again in a drip-feed and the price escalates.

The Netherlands has been using a quality approach since 2016. It requires a social return relating to contracts. Officials there have found a 0.3% increase in costs at the design point when it comes to contracts. Most contracts are still at the lowest price but it just means that those who submit the lowest price also have proven themselves on quality and the returns in terms of benefits are multifold. They get far more for their expenditure.

It is important that SMEs and social enterprise are supported. We should maybe look to community wealth building initiatives. We have seen a strong initiative from Dublin City Council in terms of community wealth building as a core economic strategy. We also see the role of co-operatives.

There is an obligation on every public body to reflect human rights and equality in their public procurement. My legislation would look for the reporting relating to that. Before I came to the Chamber, I met with Colombian human rights river defenders, who have done extraordinary work in tackling illegal mining. That is why I was a little late for which I apologise. They secured constitutional measures in the Colombian courts that talked to the rights of the river and talked to the rights of communities in respect of illegal mining. It is important is that in our supply chains, those of us who are purchasing the gold from illegal mining for example is something we address. It is a reminder of how crucial the human rights component in public procurement is, especially at a time, worryingly, the EU has paused the implementation of the due diligence directive on supply chains. In our public procurement, we can raise the highest standards and we should.