Victor Boyhan (Independent)
Link to this: Individually | In context | Oireachtas source

I welcome the Minister of State, Deputy Feighan, to the House.

Linda Nelson Murray (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for coming to the House and congratulate him on his new role. It is great to have the Minister of State here to debate this matter.

I would like to explore the difficulties smaller firms have in putting themselves forward in the tendering process, particularly for Government projects.In a rapidly changing world, the real technical, strategic and innovative expertise is often in smaller companies and we are missing a trick here. The Government should be able to benefit from that expertise. I am going to use a recent example of a tender for a €60,000 contract in my own county of Meath and outline the criteria involved. The first requirement is confirmation of tax compliance, which is fair enough. We all need to be tax compliant. The second is confirmation that the tendering party's turnover exceeded over €200,000 for the last three years. That would probably cut a lot of businesses out of being able to do anything. The third is confirmation that the following insurance is in place: employer's liability of €13 million and public liability of €6.5 million. There are plenty of small businesses that could not afford that type of insurance and that do not have a turnover of €200,000. They are probably dying to grow their businesses by being able to get some of these contracts but they cannot do so.

I am doing a lot of work at the moment on the hot school meals programme. I had a look at the insurance conditions in the supplier tenders. A supplier needs employer's liability insurance of €13 million, public liability insurance of €6.5 million, product liability insurance of €6.5 million, motor insurance of €1.3 million, crime insurance of €100,000 on any one claim, and cyber insurance of €1 million. That is for a €50,000 contract. How are companies supposed to have that level of cover and pay those extortionate insurance costs to be able to get into the tender process?

I am going to let some small Irish business owners speak for themselves. One business told me they had this exact problem during the summer. They put the effort in to win a particularly good and large tender but were then forced to accept terms and conditions that were written for a very large business, not a small one. Another told me that the employer liability and public liability insurance requirements eliminate SMEs and microenterprises. The business owner suggested that those values are boilerplate requirements and suspected they are copied and pasted from tender to tender without question. Another business owner said that they had been there, done the tenders but had effectively given up on public procurement in Ireland and the UK. Similarly, another business owner referred to expected turnovers of €250,000 and expected levels of insurance that were too high and argued that businesses would not be looking for new tenders if they were turning over more than €250,000. Plenty of projects for tender are highly suited to small and more agile SMEs. Projects could be completed on time and to better standards, thus saving money. There needs to be different levels of tendering that are more accessible to different sized companies. Another business owner told me that in the early days of their business they tried to tender as a consortium for some work with Enterprise Ireland. Their partners in another European country saw the insurance requirements and said that that type of insurance cover simply did not exist in their country. This morning I spoke to a friend who is in the furniture business. I asked how they were getting on with tendering for Government contracts and was told that they spent ten years applying for tenders but not only did they not win any, they did not even get an inquiry or anything to encourage them to keep going. They said it was such a disheartening process. The irony is that they are now actually supplying Government projects, but as a subcontractor because the bigger firms have won the tenders. Another business owner had the exact same experience, where they were trying to get into a Government contract, were not successful but are now subcontracting. The main contractors get paid within 15 to 30 days but subcontractors have to wait 60 to 90 days to be paid. If they cannot win some of these bigger contracts, how are they going to buy the machinery and products to enable them to go for other contracts in the future?

The expertise in smaller, growing firms can sometimes be greater than in larger firms. Larger firms also have extra costs in managers, project managers and advisers. Smaller firms do not have these costs and can be very competitive. SMEs are having to collaborate to apply for a tender. How is that fair? This is a can of worms that is only going to get bigger. I look forward to the Minister of State's response.

Frank Feighan (Sligo-Leitrim, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am pleased to have the opportunity to set out what the Government is doing to make public procurement more accessible to SMEs. I thank Senator Nelson Murray for raising this important matter. She referred to the rapidly changing world and to insurance cover. She also spoke about SMEs being both small and agile. I agree that we must look at the issue of insurance more closely.

The participation of SMEs, particularly microenterprises, small businesses and family businesses in public procurement is a key priority for me as Minister of State with special responsibility for public procurement. The programme for Government includes a commitment to reviewing the public procurement process to make it more transparent and to ensure greater participation from SMEs. I am working towards this aim and will set out the strategic direction of public procurement for the next five years. My Department is developing the first national public procurement strategy. Having been a small business owner myself, I am acutely aware of the challenges faced by SMEs when tendering for public contracts. I also chair the SME advisory group, which includes SME representative bodies. This affords me the opportunity to hear first-hand from SMEs about their experiences of tendering for public contracts.Consultation and collaboration are central to ensuring that the strategy works for all involved. With that aim in mind, last year, the Department launched an extensive consultation exercise to ensure that those with an interest in the future direction of public procurement had an opportunity to inform the new strategy. In parallel with a public consultation, regional workshops were held in Dublin, Cork and Athlone and a dedicated webinar was held with suppliers. I am delighted with the level of engagement from the enterprise sector. Representatives from across the broad spectrum of Irish business have taken the opportunity to share with the Department their primary challenges, as the Senator raised, and work with us to identify possible solutions and areas of opportunity. Final discussions with colleagues across government and other key stakeholders, including business representative bodies, are taking place now to address ways to support SME participation, as well as to identify other desired outcomes and actions for inclusion in the strategy. Once finalised, the strategy will include objectives and cross-departmental actions to support the delivery of strategic, innovative, sustainable and transparent public procurement that promotes competition, value for money and makes it easier for SMEs to tender for public contracts. The strategy will build on the significant work undertaken by the Department in recent years to promote SME participation and to help them navigate the procurement process which, as the Senator knows, can be very onerous. We have adopted a two-pronged approach - making targeted, evidence-based policy interventions aimed at promoting the participation of SMEs and developing practical supports and resources for public buyers on steps they can take to promote greater SME participation and for suppliers to promote public procurement as a business opportunity and to assist them in navigating the process. The Department also participates in InterTradeIreland's Go-2-tender programme which provides support for companies to successfully apply for public contracts. Last November, the Department, with support from InterTradeIreland, held a first all-island supplier event. The key objective of this trade show was to inform SMEs and the wider supplier base of the benefits of doing business with the Government. The event provided opportunities for SMEs to meet public buyers from across the public sector and avail of learning zones covering topical procurement subjects. Over 40 exhibitors participated from across the public sector and 2,900 people attended the event on the day. Significant work is being undertaken to support SMEs accessing public procurement opportunities. I thank the Senator for raising this important issue.

Linda Nelson Murray (Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State. I welcome that there has been a first national public procurement strategy. I note the Department launched an extensive consultation exercise last year. I am interested to know where that report is; I have not seen it. I know it will form part of the strategy going forward but I would like to have a look at that report. Will the Minister of State supply me with information from that afterwards? To reiterate, for businesses, the tendering process is complex and bureaucratic. It has high administrative costs - preparing a compliant tender can be costly and require legal, financial and technical input. For SMEs, these upfront costs can be a deterrent - the scale and turnover requirements, insurance requirements and over-emphasis on price - sometimes the cheapest is not the best. I would welcome being able to look at the report. We still have SMEs saying it is too difficult to enter the public procurement tendering process especially for Government contracts but I am happy we are working on this. I look forward to it being a lot easier for businesses to tender in the near future.

Frank Feighan (Sligo-Leitrim, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Significant work is being undertaken to support SMEs accessing public procurement opportunities. I am keen to explore further ways to make public procurement more accessible for SMEs. I will work with the Senator and all her colleagues across government to this aim. The Government is committed to making it is easier for SMEs to tender for public contracts. To support that objective, the Department has undertaken a comprehensive review of the public procurement process to understand the barriers to SME participation. We are trying to identify ways to support and simplify the procurement process and encourage SME participation particularly among micro and small businesses and social enterprises.As I said, the Minister, Deputy Chambers, and I are committed to using public procurement as a strategic tool to deliver wider societal, environmental and economic impact. I came from an SME, a family business, and I know such people will work all the days they can. Sometimes it can be difficult to stand back and put in these applications, and we have to make it easier to do so. I again thank the Senator for raising this important issue.