Seanad debates

Wednesday, 18 November 2020

Nithe i dtosach suíonna - Commencement Matters

Public Procurement Contracts

10:30 am

Photo of Robbie GallagherRobbie Gallagher (Fianna Fail)
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Ar dtús by mhaith liom fáilte mhór a chur roimh an Aire Stáit chuig on Teach inniu. At the outset I welcome the Minister of State to the House and wish him every success in his role and portfolio.

I have been contacted by many people in County Monaghan and elsewhere who have voiced their annoyance, concern and anger at the number of substantial State contracts being awarded to contractors outside the State at the expense of local contractors. For example, from 2017 to 2020, Monaghan County Council awarded 22 State contracts of which ten were awarded to contractors outside the State. Upon further examination of the period 2019 to 2020, 13 contracts were awarded and eight of those were awarded to contractors outside the State. The total value of those eight contracts was €23,000,700. That is a substantial amount of money and a major potential loss to the local economy.

It is frustrating for a local contractor who tenders for such contracts to see businesses lose out and to see the business going outside the State. It is also frustrating when those same local contractors employ local people. Those same local contractors buy their materials from local suppliers and pay rates and taxes in this State. We all understand the State tendering process. However, local people in County Monaghan are asking questions about a tendering process that more often than not results in contracts being awarded to firms outside the State as opposed to contractors inside the State.

Many people are asking questions about the State tendering process that consistently results in local firms losing out. They seek some form of investigation into the awarding of substantial State contracts. All the contracts I mentioned are in excess of €1 million. We seek clarity that the process the State is currently undertaking is fair to everyone, that it is a level playing field and that there are no hidden areas that some people can take advantage of, especially from outside the State as opposed to contractors inside the State. I would like the State to carry out inspections before a contract is awarded, during the contract and at the end of the contract to ensure all areas of employment law and other areas are fully compliant and above board. Local contractors would like, where possible, to get work within their own county. It is extremely frustrating for them to see contracts being awarded to firms outside the State whose employees have to travel to the county in the first instance before they even start work and who also have that added expense.

I look forward to hearing the Minister of State's comments. In addition, what effect, if any, will Brexit have with respect to State contracts, particularly for people from outside the State?

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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The Senator acknowledged there are legal and regulatory hurdles to what we are trying to do here but I share his enthusiasm for what he is trying to achieve.

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. Public procurement procedures require all applicants to meet the standards set out in the tender documentation when applying for public contracts. The assessment of a tenderer's financial and economic standing, and professional and technical capacity is a key part of the procurement process. This is because the contracting authority must be satisfied that a tenderer has the necessary capacity to carry out a contract if awarded it.

Establishing the appropriate certifiable criteria that are relevant and appropriate to a particular contract is a matter for the contracting authority concerned. In this case it would be Monaghan County Council. This is because the contracting authority is in the best position to gauge the criteria that are appropriate to the needs of a proposed contract to ensure value for money and minimise risk to the Exchequer. The qualification criteria that are required by the contracting authority should be proportionate to the subject matter of the contract. Verification of compliance with the non-exclusionary grounds for selection is sought before the awarding of any contract and to ensure they meet the award criteria, whether they are inside or outside the State. A contracting authority should also ensure it has appropriate contract management mechanisms in place post award to ensure compliance by the contractor of its obligations under the contract.

The Office of Government Procurement, OGP, supports compliance by providing procurement solutions, advice, guidance and systems for public bodies promoting good practice and proactive engagement with our sourcing partners in health education, defence and local government sectors through the procurement executive. Furthermore, the OGP’s key account managers are in regular contact with the procurement officers in Departments and public bodies to help, support and remind them of their obligations regarding public procurement. It should be noted that it is the responsibility of each contracting authority to ensure it adheres to the policy framework and associated guidelines which have been developed to facilitate compliance with the public procurement rules. Public procurement practices are subject to audit and scrutiny under the Comptroller and Auditor General and Local Government Reform Acts.

There is a section in our programme for Government about procurement and several references to it. We refer to the fact we want to see green public procurement brought in and social considerations taken into account when bids are awarded. We are working on that and that must be done within three years, which is our commitment in the programme for Government. A local supplier may be bidding against an organisation on the other side of the world and that distant company would have a much larger carbon footprint in the delivery of its service and labour practices, and the amount of money it would be investing in employment and training may be much lower than is being done in the local firm. If we can find a mechanism to operate in that respect, that is certainly one of my objectives in this Ministry.

The Deputy asked about Brexit. The year 2020 has been the year of the pandemic and 2021 looks like it will be the year of Brexit. We do not know yet whether we will have a deal. The budget was formed on the assumption that we will not have a deal. I will come back to that issue in my response to follow-up questions.

Photo of Robbie GallagherRobbie Gallagher (Fianna Fail)
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I thank the Minister of State for his response. I am heartened by the fact that he is going to have a look at this whole area. As I said, it is deeply frustrating for local contractors, and indeed the local community, to see substantial contracts in excess of €1 million being awarded on such a frequent basis to contractors from outside the State and the huge loss that is to the local economy. All I am looking for here is a level playing field. I wish the contractors who are successful good luck and as long as we are all on the pitch at the same level, then I do not have a problem with that. I welcome the Minister of State's comments and look forward to more checks perhaps being carried out on successful companies to ensure that fairness and transparency exist at all times for everyone.

Photo of Ossian SmythOssian Smyth (Dún Laoghaire, Green Party)
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In 2017 the Office of Government Procurement, OGP, prepared an information note about how to deal with Brexit and what was ahead. It has updated that every year since then and is about to produce the latest version. Obviously events are changing very quickly and it is a huge challenge. We also have the Brexit funds coming in from Europe and there will be more news about that shortly.

On the awarding of tenders to foreign companies, the Senator may or may not be aware that 94% of public procurement spend is awarded to companies that are within Ireland and that a majority of public procurement spend goes to SMEs. That has been the case for a number of years, according to the latest data we have. I understand that has not been the Senator's experience in his particular area and absolutely accept that. I meet SMEs on a quarterly basis at the SME advisory group and ask them for any ways in which they want me to change public procurement policy; we have regular engagement with them. If there is anything else the Senator wants to talk to me about I am always available.

Sitting suspended at 11.42 a.m. and resumed at 12.04 p.m.