Paul Gavan (Sinn Fein)
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I welcome the Minister of State. Public procurement accounts for 18% of gross domestic product in Europe, and the State spends €8.5 billion every year on goods and services. There is a growing interest in finding ways for this expenditure to be used to deliver wider social, environmental and economic benefits.

In March 2014, the then Minister for Public Expenditure and Reform, Deputy Howlin stated:

The use of social clauses in public procurement is limited to instances where they are targeted at factoring into the procurement process consideration of social issues such as employment opportunities, equal opportunities and social inclusion. In order to be compatible with EU law, they must be made known to all interested parties and must not restrict participation by contractors from other member states.

He then went on to confirm that a pilot project had been initiated under the devolved schools building programme.

Social clauses are provided for in European directives, regulation and case law. They can ensure local hiring clauses and apprenticeship clauses are stitched into public procurement contracts. The clauses originated in national law across a number of European states. They fell foul of European competition law, but then a special directive was passed to allow for them with appropriate caveats attached. The reason these social clauses are so important is that without them there is an increasing tendency for contractors to bring their own mobile workforce with them, which means that when public contracts are issued, there is no local dividend in terms of jobs and training for the local community. The contracts operate very successfully in many EU states. I refer to the social clauses in operation in the North, which were introduced by my party. For every €1 million of contract value, the successful bidder has to hire a local unemployed qualified person and a local apprentice. This is working well and the Peace Bridge in Derry is one example of a major project that produced a very good local dividend in employment and training.

Unfortunately, local authorities in Ireland are telling councillors that they cannot include social clauses in procurement contracts as they are awaiting the issuing of guidelines from the Office of Government Procurement, OGP, with regard to the operation of social clauses. A year ago, I understand former Labour Deputy, Derek Nolan, asked the OGP about this topic and was told that it was finalising guidelines and that local authorities could expect to see them the following spring. The difficult is a number of local authorities are still telling us that they have not received the guidelines. There are hard pressed communities up and down the country, which are major unemployment blackspots. Implementation of these clauses could make a major contribution to providing work and opportunities for training. We should not have to wait this long. I hope the Minister of State can confirm that these guidelines have issued, or a date on which they will.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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Public procurement is governed by the EU treaty, EU directives, regulations and national guidelines. These set down rules whereby contracting authorities must award contracts under procedures designed to achieve value for public money in an open, transparent and non-discriminatory competitive process. The rules recognise that public procurement can be used to promote wider economic, social and environmental issues and further legal clarity in respect of the use of social clauses has been provided in the new EU directives on public procurement, which were transposed into Irish law last May. The general position is that social criteria can be included at various stages of the procurement process from business case, through to specification, selection and award stages through to the contract performance stage provided that they are linked to the subject matter of the contract and are contract specific. In respect to the latter, it is important that contracting authorities have in place procedures to effectively monitor compliance with the conditions of the social clause.

For example, social clauses have been successfully piloted in the devolved schools building programme where a clause was included in the public works contracts which required that 10% of the aggregate time worked on site to have been undertaken by individuals who have been registered on a national unemployment register within the EU for a continuous period of at least 12 months immediately prior to their employment on the project, and 2.5% of the aggregate time worked on site to have been undertaken by individuals who are employed under a registered scheme of apprenticeship or other similar national, accredited training or educational work placement arrangement. The Department of Social Protection, through its Intreo offices, has provided support to the contracting authority in monitoring compliance with the conditions of these social clauses and also to contractors in meeting their obligations under the contract by providing suitable candidates to match the skills requirements from long-term unemployed construction workers. Approximately 48 long-term unemployed persons have been hired across the 15 sites in question out of a total workforce of approximately 440. The appropriateness of social clauses In procurement projects will vary from contract to contract.

Experience in other jurisdictions suggest that they are most successfully employed in large scale works contracts as opposed to contracts for goods and services. There are also other important considerations. Account needs to be taken to ensure that value for money is not adversely affected, additional costs are not placed on domestic suppliers relative to other potential suppliers, contracts are of a minimum scale to absorb the increased administrative requirements, and the targeted benefit is capable of being measured and monitored during the execution of the contract. Where recruitment and training clauses are used the contracting authority needs to have a good understanding of supply side issues such as for example in the area of training supports. It is important that contracting authorities are not compelled to use social clauses on every contract, particularly where their deployment may disproportionately impact on SMEs bidding for public contracts. Notwithstanding these concerns, the Government sees merit in developing a social clauses framework.The OGP is currently developing practical guidance aimed at providing assistance to contracting authorities in the use of social clauses across the public sector. These will reflect the new EU procurement directives. In the interim period, there is no impediment preventing contracting authorities in the local authority area from inserting social clauses in their contracts. There is sufficient information available from their use in the pilot projects already referred to and other PPP projects to allow local authorities to devise suitable clauses for inclusion in works and capital projects if they so wish.

Overall, it is important that social clauses should be implemented in a targeted manner as opposed to any blanket or across-the-board approach, which may cause more difficulties than it solves.

Paul Gavan (Sinn Fein)
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I thank the Minister of State for his reply. It is helpful, in that he states there is sufficient information available for local authorities. The problem in practical terms is that local authorities are using the lack of guidelines as an excuse not to engage. I have concrete examples, Galway County Council being one, as it states it does not have the guidelines and so cannot include the social clause.

The other big problem, which I mentioned in my initial remarks, is that 12 months ago the OGP told us it was preparing guidelines. Is this another example of this Government not being able to do or deliver anything because the OGP is still saying it is working on the guidelines? It does not take 12 months to produce guidelines for social clauses. The Minister of State's example shows that these clauses can have a significant impact on the unemployed and apprenticeships and I can see no excuse for the OGP to be still working on guidelines. Will the Minister of State give a commitment on the date the guidelines will issue?

Eoghan Murphy (Dublin Bay South, Fine Gael)
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There is nothing standing in the way of a local authority introducing social clauses into its procurement contracts. Local authorities procure a significant amount of goods, services and capital works and have been doing so for decades. They have the resources where they want to or should introduce a social clause based on the information already in the public domain and on what the OGP has put into the public domain and the work it has already done. While it is important that the OGP issue guidelines, and it will shortly, that should not be used as an excuse for local authorities to delay introducing social clauses.

Paul Gavan (Sinn Fein)
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I am talking about 12 months ago. Can the Minister of State give me any specific information?

Eoghan Murphy (Dublin Bay South, Fine Gael)
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I cannot now but centralising the procurement function in government is a relatively new enterprise undertaken by the last Government. It is doing incredible work in finding value for money, making sure we are not just chasing the bottom line when we procure but that we take into account other factors in procurement contracts and in rolling out pilot projects under social clauses. As the Senator is probably aware, the OGP and I are making a public presentation for Senators and Deputies tomorrow to go through and discuss several issues. If we can give a firm commitment on a date tomorrow we will do that then.