Written answers

Wednesday, 12 June 2013

Department of Public Expenditure and Reform

Public Procurement Regulations

Photo of Arthur SpringArthur Spring (Kerry North-West Limerick, Labour)
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102. To ask the Minister for Public Expenditure and Reform his views on the way new policies on public procurement will affect small and medium enterprises in view of the concerns expressed by the Small Firms Association; and if he will make a statement on the matter. [28365/13]

Photo of Brendan HowlinBrendan Howlin (Minister, Department of Public Expenditure and Reform; Wexford, Labour)
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Reform of public procurement is one of the major projects of key strategic importance in the Government’s Public Service Reform Plan, which was published in November 2011. Procurement of supplies and services accounts for around €9 billion of current spending by the State per annum. This represents a very significant portion of overall spending and it is, therefore, essential that the Public Service achieves maximum value for money and operational efficiency in its approach to public procurement.

In this regard, the National Procurement Service (NPS), which will be transferring into the new Office of Government Procurement (OGP), 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. Last year my Department issued Circular 06/12 which 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.

While the key purpose of Circular 6/12 is to enable the State to do more with less by aggregating procurement to secure better value for money, it is worth noting that such aggregation arrangements can be implemented in a manner that achieves value for money with a minimal negative impact, or indeed a positive impact, on SMEs. While a number of the categories of goods and services mandated under the Circular are suited to single supplier national arrangements, these need not be accepted as the norm. The greater use, where appropriate, of multi-supplier frameworks can address local supplier issues while also ensuring on-going 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.

In relation to plans for further reform of public procurement, an external review of the central procurement function was commissioned by the Department of Public Expenditure and Reform. The report of the review, which was published late last year, found that significant savings can be achieved through the implementation of a transformational change to the central procurement model. In December 2012, arising out of recommendations in the report I announced the appointment of a Chief Procurement Officer (CPO) to lead a key element of the Government’s Public Service Reform agenda. The new approach to public procurement will involve:

- integrating procurement policy, strategy and sourcing in one office;

- strengthening spend analytics and data management;

- much greater aggregation of purchasing across public bodies to achieve better value for money;

- examining the specifications set out for goods and services;

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

- strengthening supplier and category management.

Since the appointment of Mr Paul Quinn, CPO, on 28 January 2013, he has initiated and completed a series of engagements (workshops and one-to-one meetings) with key stakeholders within the public sector and their representatives in relation to the development of the proposed governance structures, implementation plan, transition arrangements and savings targets for the procurement function. The following sectors were engaged in workshops / meetings: Health, Education, Local Government, Defence, Justice, and other Central Government Departments.

To summarise: the government wants better value for money for our substantial procurement spend and we want Irish SMEs, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work. To ensure the reform process takes account of the needs of stakeholders further consultations will be undertaken with employees and workers’ representatives as the new Office for Government Procurement is established. We are committed to ensuring that SMEs are fully engaged in the process and will be encouraged, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work.

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