Bernard Durkan (Kildare North, Fine Gael)
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To ask the Minister for Public Expenditure and Reform the extent to which insurance and procurement costs will be adjusted in order to maximise benefit to the Exchequer in the context of budgetary savings required in the coming year; the extent of the achievement in these areas in each of the past four years to date; and if he will make a statement on the matter. [43781/12]

Brendan Howlin (Wexford, Labour)
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I fully agree that Department’s and Office’s should do all in their power to contain and reduce all administrative costs including both insurance and procurement costs. This is in keeping with Government’s overall reform and efficiency agenda. In light of the need to accelerate the reform agenda, my Department published the Public Service Reform Plan in November 2011. This plan identified procurement reform as a key instrument that can assist the public service to deliver services in an efficient manner.

The reform plan includes specific measures to ensure that:

1. aggregated procurement arrangements are utilised across the public service;

2. public bodies have appropriately trained staff to implement reform and to ensure the State is getting value for money; and

3. greater emphasis will be placed on analysing what the State purchases in order to assess other savings that can be made through more efficient procurement methods.

Since its establishment in 2009, the National Procurement Service (NPS) has put in place a number of national arrangements designed to secure better value for money from leveraging the public service’s buying power in relation to a range of goods and services that are commonly purchased across the public service. These national arrangements have benefits that include: cash savings; administrative savings from reduced duplication of tendering; greater purchasing expertise; improved consistency; and enhanced service levels. In some instances the take up of the NPS arrangements has been low. In order to increase the usage of the NPS arrangements and thereby secure best value for money, the Government decided that it should be mandatory for public service bodies to use specified national procurement arrangements.

The NPS has reported estimated procurement savings to the end of 2012 under its frameworks of €127m, comprising of €14m in 2010 and a further €35m in 2011 and projected savings of €78m for 2012. In addition the NPS e-Tenders website generates estimated administrative savings of on average €10m per annum. A breakdown of these procurement savings is not readily available by sector. The NPS has established a Working Group to develop the saving methodologies and reporting of procurement savings in the future.

Circular 06/12 implements the Government decision by making it a mandatory requirement that public service bodies avail of specified national arrangements put in place by the NPS. The list of categories subject to national procurement arrangements includes: electricity; natural gas; stationery and office supplies; paper; ICT consumables; managed print services; print media advertising; and, motor vehicles. These national arrangements will secure best value for money and facilitate contracting authorities to deliver services within their budgetary constraints.

The purpose of Circular 6/12 is to enable the State to do more with less by aggregating procurement to secure better value for money. While a number of the categories of goods and services mandated under the Circular are suited to single supplier national arrangements, it should not be taken that single supplier frameworks are to be accepted as the norm. The greater use, where appropriate, of multi-supplier frameworks can address local supplier issues while also ensuring ongoing cost competitiveness of the framework itself. Such multi-supplier frameworks may also offer SMEs the opportunity to participate in national level contracts, thereby offering valuable reference work when competing for public procurement contracts in other jurisdictions.

It is estimated that €9 billion is spent by public bodies annually on the public procurement of supplies and services. This is a very significant portion of overall spending and it is essential that the Public Service is achieving maximum value for money and operational efficiency in its approach to public procurement. It is for this reason that public procurement is one of the major pillars of key strategic importance under the Government’s Public Service Reform Plan.

In order to ensure that the necessary elements are in place to implement these ambitious reforms, my Department engaged Accenture to undertake a capacity and capability review of the central procurement function to identify the actions required to realise substantial savings in public procurement in the short and medium term. Of the estimated €9 billion annual spend on public procurement of supplies and services, there is a procurement addressable spend of approximately €7 billion. The review estimates that implementation of its recommendations, over a three-year period, could yield potential annual savings in the range of €249 million to €637 million, depending on the approach taken. The final report on this review is available on my Department’s website.

Following the review, proposals were recently submitted to Government. These proposals represent a new consolidated and integrated approach to public procurement that includes:

- integrating procurement policy, strategy and operations in one office through the establishment of a National Procurement Office (under the aegis of my Department) which will be headed by a Chief Procurement Officer, this position was recently advertised;

- strengthening spend analytics and data management;

- examining the specifications set out for goods and services;

- evaluating demand levels to assess how demand (volume) can be reduced; and,

- strengthening vendor and category management.

These proposals have now been agreed by Government.

These reforms will lead to reductions in the cost of goods and services; better procurement services at lower cost; introduction of technical standardisation; greater attention to contract management and better problem resolution; greater levels of professionalism among staff responsible for procurement; and better performance management of the central procurement function.

Michael Healy-Rae (Kerry South, Independent)
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To ask the Minister for Jobs, Enterprise and Innovation the way that he can stand over a situation whereby €69 million, which was earmarked for job creation here, was not actually spent on job creation. [43576/12]

Richard Bruton (Dublin North Central, Fine Gael)
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The Department and its Agencies are extremely diligent and careful in their management and allocation of taxpayer monies in the support of different enterprise objective. The drawdown of exchequer monies through the Enterprise Development Agencies of my Department is based on commitments made in a given year and projected draw-downs against those commitments in the year in question. It must be remembered that drawdown of exchequer financial support by companies or other bodies (e.g. Competency Centres) is demand-led and can only take place if the company or body in question has progressed a given project in line with the agreement entered into with the State at the time of the financial commitment.

Due to this demand-led nature of grant payments and issues relating to the timing of expenditure, the bulk of an allocation is often drawn down in the last quarter of the year. It is expected therefore, that the snapshot figure referred to in the Question, will not be reflected in the end of year figure. One example is the new Microfinance Scheme that I launched on 27 September, which is now open for business and will have an associated Exchequer expenditure of €10m before year end.

In addition, there are other timing issues around finalising legal agreements with the private sector when setting up funds, for example under the Innovation Fund initiative, which means that while drawdown will take place, it may be pushed back by some months, thereby showing up as an “underspend” in a particular accounting period.

Despite the very difficult domestic and external economic environment, we are beginning to see the positive impact of the Government’s policies. 2011 saw an increase of 6,000 jobs in IDA-supported companies, compared with net losses of 15,000 jobs between 2008 and 2010. So far this year, the IDA has announced investments with the potential to create more than 6,000 further jobs as these projects come on stream. IDA allocation for Capital Grants for the year 2012 is €85m. The IDA has assured me that they will draw down their entire grant allocation before the end of 2012.

Jobs in Enterprise Ireland companies started to grow again in 2011, for the first time in three years. In the first eight months of 2012, a total of 4,669 job commitments over the next three years, linked to Enterprise Ireland approvals to client companies, have been secured. Yesterday, the Kerry Group announced the establishment of an industry-leading Global Technology and Innovation Centre in Ireland. This €100m investment will create 800 jobs over the next four years, as well as 400 jobs in the construction phase, which will be part-funded by my Department through Enterprise Ireland. Job creation is at the core of this Government’s policies and the evidence to date in 2012, despite a challenging external environment, is that it will be a strong year for agency outputs in terms of job creation and exports.