Paddy Burke (Fine Gael)
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I welcome the Minister of State, Deputy O'Dowd, to the House.

John Whelan (Labour)
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I am grateful to the Minister of State for coming to the Seanad this afternoon to respond to what I have to say about local authorities being allowed to put out to tender the contracts to stock Irish libraries. I was appalled to learn that many similar contracts are being farmed out to overseas companies and multinationals at a time when we should be taking all opportunities to sustain and support Irish small businesses and jobs. While the problem I am highlighting is particularly apparent in that instance, it applies to all other businesses. This issue has been raised time and time again by Chambers Ireland, the Small Firms Association and the Irish Booksellers Association. I will refer to a case in point. Large UK-based multinationals are undermining Irish publishers, which are small businesses, by virtue of being able to tender in a fashion that puts Irish businesses at a distinct disadvantage. For example, they use wholesale discounting that cannot be matched in any sustainable way by Irish businesses in the short term.

The Small Firms Association, in conjunction with other stakeholders in the Irish small business sector, recently published alarming data which illustrate that 28% of Government contracts under procurement and tendering procedures are now being awarded to overseas companies. That is the equivalent of business worth €3.5 billion, which translates into the sustainability of 42,000 jobs. I know the Government is putting all its energies into the Action Plan for Jobs and its job creation efforts. I put it to the Minister of State that, in the first instance, the Government must at all times try to support and sustain existing jobs as a priority. Once they are lost, it is hard to get them back.

There are some really harrowing personal stories behind what is happening in the whole procurement and tendering sector. As we speak, people are losing their jobs because Irish firms cannot compete with the multinationals under the procurement and tendering criteria that are applied. I know we cannot go back to the age of protectionism. I know we must comply with EU regulations. It was suggested to me that one never sees an Italian policeman driving a Peugeot or a French policeman driving down the street in a Fiat. Ireland seems to be far more zealous and vigorous when it comes to embracing EU rules and regulations, to our own disadvantage and to the disadvantage of Irish businesses. I appeal to the Minister of State to impress on the Government the need to examine why this is the case. Why can we not adopt a far simpler system of procurement and tendering which is more compatible with the Irish small business sector and more conducive and strategic in terms of supporting Irish jobs?

Fergus O'Dowd (Louth, Fine Gael)
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I am responding on behalf of my colleague, the Minister for Public Expenditure and Reform, Deputy Howlin, who cannot be here, unfortunately. I understand this question arises in the context of a procurement process that is currently being undertaken by local authorities. Activity being undertaken in that sector is a matter in the first instance for the Minister for the Environment, Community and Local Government. In addition, it would not be appropriate to comment on a live procurement process that is under way. In December 2013, the Department of the Environment, Community and Local Government launched its libraries policy, Opportunities for All, which set out a shared procurement policy in relation to the procurement of library materials. The current debate has been prompted by a competition being run by the Dublin local authorities for books. Under circular 10/14, Departments and agencies conducting procurement must perform market analysis.

I would like to comment on the broader procurement landscape. The reform of procurement across the public service is a key element of the reform programme. Public procurement savings enable public service organisations to deliver much-needed services from the tighter budgets within which they are now required to operate. Reforms are being carried out in a manner that recognises the clear importance of small and medium-sized enterprises in this country's economic recovery. The establishment of the Office of Government Procurement was a key part of the efforts to bring a more professional, whole-of-Government approach to procurement. It is driving fair, transparent and open competition in the marketplace, as well as providing better value.

Figures indicate that Irish businesses, particularly small and medium-sized enterprises, do well in winning Government business. The Office of Government Procurement estimates that more than 95% of the Government's total expenditure of approximately €31.1 billion on goods, services and works is spent within the State. In addition, an analysis by the Office of Government Procurement indicates that 75% of the 2013 spend with Irish business was with small and medium-sized enterprises. This represents an increase on 2012 levels. We want small and medium-sized businesses to be successful in public procurement. We also have to ensure there is fair, open and transparent competition. Strong small and medium-sized enterprises that have won Government business here have gone on to win business in other jurisdictions.

The recent circular 10/14 introduced business-friendly obligations on public procurers in areas like open tendering, breaking contracts into lots, lower financial qualification criteria, supporting consortia bids and requiring lower insurance, etc. The circular sets out the guidelines to be followed by public procurers when performing market analysis to ensure businesses remain competitive in the long term. We do not want to distort markets. The Office of Government Procurement continues to work closely with industry bodies like the Irish Small and Medium Enterprises Association, the Irish Business and Employers Confederation, the Small Firms Association, the Construction Industry Federation and Chambers Ireland to reduce barriers. The Office of Government Procurement continues to support supplier engagement in education through its successful Meet the Buyer events and Go-2-Tender programmes, which are run in conjunction with InterTradeIreland.

John Whelan (Labour)
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I thank the Minister of State. I am glad the Government realises there is an issue at stake here. I am pleased it is embarking on a range of positive and constructive initiatives to address the problem. While I accept that we need open, transparent and fair tendering and procurement processes, I do not think it is fair for multinationals to be able to undercut and underbid Irish firms. I refer to small family-run businesses. That has to be taken into consideration. While we have to get best value for the taxpayer when money is being spent, the lowest bid is not necessarily always the best bid. All factors, such as the social and employment implications and the quality of service provision, should be taken into account. These things must also be factored into the scheme. I urge the Minister of State to continue to press for ongoing engagement with stakeholders across the small firms and small business sector. This is necessary to ensure Irish firms get the maximum benefit from any Government tendering and procurement opportunities.

Fergus O'Dowd (Louth, Fine Gael)
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I will bring Senator Whelan's comments to the attention of both Ministers. It might be important for them to be sent to the Minister for the Environment, Community and Local Government, Deputy Hogan, if that is okay.