Written answers
Tuesday, 24 April 2012
Department of Public Expenditure and Reform
Public Procurement Contracts
9:00 pm
Peadar Tóibín (Meath West, Sinn Fein)
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Question 300: To ask the Minister for Public Expenditure and Reform the steps he is taking to promote small and medium enterprises take up of procurement opportunities. [11321/12]
Brendan Howlin (Wexford, Labour)
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I am very aware that public procurement can be an important source of business for local enterprises. In general, SMEs' flexibility and ability to respond speedily to requirements can be advantageous in competing for local contracts. Procurement guidelines (Circular 10/10) issued by my Department require public bodies to promote participation of small and medium-sized enterprises in the award of public contracts. These guidelines set out positive measures that contracting authorities are to take to promote SME involvement in a manner that is consistent with the principles and rules of the existing public procurement regulatory regime. The guidance also highlights practices that are to be avoided because they can unjustifiably hinder small businesses in competing for public contracts. The key provisions of the guidance include:
· supplies and general services contracts with an estimated value of €25,000 or
more to be advertised on the www.etenders.gov.ie website;
· less use of "restrictive" tendering procedures and greater use of "open"
tendering;
· ensuring that the levels set by contracting authorities for suitability criteria are
justified and proportionate to the needs of the contract;
· sub-dividing larger requirements into lots where this is practical and can be done
without compromising efficiency and value for money;
· the needs and possibilities for small businesses to compete and supply to be
taken into account when setting up panels/framework arrangements;
· encouragement of small companies to combine with others to make a joint bid for
a contract that they might not be in a position to perform on their own.
Both the National Procurement Service and the development agencies, such as Enterprise Ireland, offer training and support to businesses in order to raise awareness of public procurement opportunities and to improve the capacity of indigenous firms to compete effectively for these opportunities.
Peadar Tóibín (Meath West, Sinn Fein)
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Question 301: To ask the Minister for Public Expenditure and Reform the number of State contracts that have increased in size in the past three years; if his attention has been drawn to contracts such as the Bord Gáis contract; the steps that he will take necessary to reverse the trend facilitated by the centralisation of procurement towards larger State contracts; and the way he will ensure that small and medium enterprises based job retention and creation can be promoted by changes to Government procurement. [11320/12]
Brian Hayes (Dublin South West, Fine Gael)
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The National Procurement Service (NPS) in the Office of Public Works has responsibility for initiatives in procurement to achieve efficiencies and value for money for the Irish taxpayers.
Since its formation in 2009, the NPS has put in place a number of national contracts for use by all Government Departments, Offices and Agencies. Prior to this, the Government Supplies Agency (GSA) had put in place contracts for use by Government Departments only. Due to their availability to a wider number of clients, all of the contracts put in place by the NPS are larger than those previously put in place.
The NPS has made continuous efforts to ensure that Irish Small and Medium Enterprises (SMEs) are able to take full advantage of the public procurement opportunities that arise and are available to them.
The NPS facilitate seminars for SMEs, which cover all the issues relating to competing for public procurement contracts, including: Public Procurement regulations, accessing the market opportunities, the tendering process and general guidance on how companies should approach the preparation of tenders. A number of seminars were delivered to ISME and to Chambers of Commerce in 2010 and 2011. Workshops were also delivered on public procurement opportunities in association with Enterprise Ireland and Intertrade Ireland. The NPS has also produced a leaflet "Top Tendering Tips for Public Sector Contracts", which is freely available.
A significant development in the area of facilitating the SME sector was the publication, by the Department of Finance, in August 2010 of Circular 10/10. These guidelines to public contracting authorities aim to ensure that tendering processes are carried out in a manner that facilitates participation by SMEs, while ensuring that all procurement is carried out in a manner that is legal, transparent and secures optimum value for money for the taxpayer. It addresses the concerns that SMEs have regarding access to public procurement opportunities and highlights practises that are to be avoided where they can hinder small businesses in competing for public contracts. These arrangements include:
· greater open advertising of opportunities (threshold now €25,000)
· a reduced requirement for paperwork (such as accounts) at the early stages of tendering
· an instruction that suppliers are not to be charged for access to tender opportunities
· an assurance that all criteria used would be appropriate and proportionate and
· an instruction that turnover and insurance levels would be set at proportionate levels.
NPS policy seeks to encourage participation by SMEs in public sector competitions. SMEs that believe the scope of a competition is beyond their technical or business capacity are encouraged to explore the possibilities of forming relationships with other SMEs or with larger enterprises. The NPS tender documentation for larger contracts allows and encourages SMEs to come together to bid for these contracts. Larger enterprises are also encouraged to consider the practical ways that SMEs can be included in their proposals to maximise the social and economic benefits of the contracts that result from a tendering exercise.
The NPS has conducted a major consultation process involving all energy stakeholders including: the Commissioner for Energy Regulation (CER); Department of Communications, Energy and Natural Resources, Energy providers and public service clients. Due to the nature of the energy market, the need to encourage greater competition and the potential size of the public service demand it was apparent that there was a distinct risk that a single public service contract would distort the market. The NPS concluded that the optimum procurement strategy for electricity and natural gas would, therefore, be through the use of multi party framework agreements.
The NPS conducted an EU competitive tender process which has resulted in Electricity and Natural Gas framework agreements being put in place for supply to the public sector. There are five different companies on the Electricity Framework and seven separate companies on the Natural Gas Framework.
Anne Frawley
Posted on 24 May 2012 11:20 pm (Report this comment)
The Minister details - the information provided by the NPS to those wishing to tender and he goes on in great detail to explain how the service envisages SME's must adapt to be successful in any tendering process.The formation of the NPS the Minister explains gave rise to an policy change resulting in larger tenders compared to the tenders as per the GSA.
As the EU requires tenders over 25K to go out for EU tender this policy decision results in many tenders going out to European tender. Ireland is rated as one of the countries in the EU with the highest granting of tenders to "foreign" companies. Countries like Spain, France and Poland which one would expect to have high levels of tenders going to companies within the EU by virtue of their populations have less that 1% each - recent reports detail.
One would suspect the policy change the Minister referred to on the formation of the NPS has given rise to the fact Ireland issues a high level of tenders out-side its boarders while other larger EU member States provide less than 1%.
In proportion to Ireland's size, its economic distress and the fact that other larger member state's policy seems to be diametrically opposite to Ireland this I would suggest is a matter of concern.
Efficiencies and value for money for the Irish taxpayer are detailed as core requirements when tendering.There is no detail given by the Minister on the risk assessment carried out by the NPS on all pertinent factors regarding tenders nor indeed does he define what government or NPS policy is in the circumstances where:
In determining the value for money aspect of the tender what proportion of risk assessment is
given to over to the consideration as happened recently that a tender issued to a "foreign" company had a cost saving value of 7,500K but an Irish company who lost out had to lay off 6 people. That would be 6 x 30K per year in costs to the domestic exchequer as a result of job losses.
This would be an Irish company who's job is tendering in a specialized area and who is prohibited from tendering in the UK as in this area in the UK there is a mandatory 5 million t/o required.
There was no explanation given as to whether "mandatory"checks are carried out by the NPS to see that there is compliance on all aspects on competition law and or Revenue law on the issuing of a tender to a company before final granting of the tender.
Neither did the Minister define what steps are taken by the NPS to ensure no action they take may remove competition and thus leave the Irish taxpayer exposed
to future restricted options whereby the Irish taxpayer would not be perceived as getting value for money.
I also noted with concern that the Minister did not at any stage indicate that the NPS or the department have been mandated to monitor other EU member trends in tendering. Nor to closely watch trends whereby companies in members States such as the UK (though not exclusively the UK) - UK companies are acquiring the "rights" for the supply of product or services in both jurisdictions as this trend has substantial implications for Ireland and on competition.