Michael McCarthy (Cork South West, Labour)
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94. To ask the Minister for Public Expenditure and Reform if he will change the current pre-qualified builders' tendering criteria for capital projects (details supplied); if his attention has been drawn to the exclusive nature of the existing criteria; and if it is his intention to review same as it potentially discriminates against builders who have both the competence and capacity to construct and who have a strong track record of providing valuable local employment. [9759/14]

Brendan Howlin (Wexford, Labour)
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Public works contracts must be awarded on the basis of objective and non-discriminatory criteria.  Different criteria are applied at the pre-qualification stage to those at the award stage with pre-qualification criteria designed to assess the capacity of applicants and tenderers to deliver the project in question.  Their capacity is typically assessed by criteria set out under the EU procurement directives and public works tenders usually include criteria such as economic and financial standing and technical ability, amongst others.

All policy, guidance and implementation measures relating to capital projects is published on the Construction Procurement Reform website where the Capital Works Management Framework (CWMF) provides a suite of best practice guidance, standard contracts and generic template documents.  Tendering is dealt with through a range of guidance notes and template documents such as Suitability Assessment Questionnaires, Instructions to Tenderers and Forms of Tender which are published under the CWMF.  These documents may be downloaded and modified to suit each particular tender competition, and provides a consistent approach for contracting authorities to the management of public works projects. 

The CWMF was introduced on a phased basis from 2007 and became mandatory for all contracting authorities through the issue of Department of Finance Circular 06/10 on 5 May 2010.  The documents are updated and augmented where appropriate to respond to new developments in the industry and changes in the regulatory environment. 

The Deputy will appreciate that the assessment of a tenderer's capacity is a key part of any procurement process because the contracting authority must be reasonably satisfied that the contractor awarded a public works contract has the necessary capacity to carry out and successfully deliver the project in question. Establishing suitability criteria that are appropriate to a particular contract is a matter for the contracting authority concerned since they are in the best position to understand the delivery requirements for that specific contract. Once appropriate suitability criteria are established it is important to apply proportionate minimum standards to these criteria. In this regard my Department has developed specific national guidelines for contracting authorities in relation to minimum standards for suitability criteria for construction contractors interested in tendering for public works projects, published as part of the Capital Works Management Framework (Guidance Note 2.3.1.3 Suitability Criteria for Works Contractors Minimum Standards refers. ). 

The Government recognises that the small and medium enterprise (SME) sector is very important to the economy and that public procurement can be a source of business for SMEs. In this regard, my Department has issued public procurement guidelines (Circular 10/10) to public bodies which are aimed at facilitating greater participation of SMEs in public procurement opportunities. In relation to suitability criteria, the guidelines stress that public bodies must ensure that any criteria/turnover levels set by them must be both justifiable and proportionate to the needs of the contract.

Andrew Doyle (Wicklow, Fine Gael)
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95. To ask the Minister for Public Expenditure and Reform the manner in which contracts offered under EU directives are assessed; if he will explain potential revenues or losses by way of VAT and other taxes that are costed into the contracts; if these factors are applied before contracts are awarded; and if he will make a statement on the matter. [9781/14]

Brendan Howlin (Wexford, Labour)
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Under EU Directives on public procurement works, supplies and service contracts above certain thresholds must be advertised on the Official Journal of the EU and awarded on the basis of objective and non-restrictive criteria. For works contracts the threshold is €5.186 million; for supplies and service contracts awarded by Government Departments the threshold is €134,000 and for the remainder of public bodies the threshold is €207,000. The threshold for supplies and service contracts of entities operating in utility sectors (water, energy, transport and postal) is €414,000. The aim of these rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. It would be a breach of the rules for a public body to favour or discriminate against particular candidates on the basis where a supplier is liable for tax purposes. There are legal remedies which may be used against any public body infringing these rules.

The main rules that apply to the calculation of the value of contracts are as follows:

- the calculation should be based on the total amount payable or the total value of the contract and, in the case of frameworks and contracts divided into lots, the amount is the total value of all potential contracts to be awarded under the arrangement;

- all financial and non-financial elements that may be paid are counted including payments from third party sources (i.e. co-funded projects); and,

- the estimated value of the contract must take into account the estimated total amount, including all options and renewals (even if those options or renewals are not subsequently exercised) and all other types of payment made to all candidates or tenderers.

In relation to how VAT and other taxes are assessed when tenders are being evaluated, the position is as follows:

- Tender value is assessed exclusive of Value-Added Tax (VAT). This is because of the variety of VAT rates in operation across the EU. In this regard, it is worth noting that where a successful supplier is located in another EU Member State and the annual value of a foreign supplier's distance sales to this State exceeds €35,000 the supplier is obliged to register for VAT in this State. 

- All other taxes would be included in tender price.

The Office of Government Procurement (OGP) is responsible for producing annual statistical information in relation to above-EU threshold procurement activity by the Irish public sector and for providing these statistics to the European Commission. The most recent data available on above EU threshold awards relates to 2011 and is as follows:

- Approximately 10% (valued at €240M) of the total known awarded contracts above threshold by the State went to non-domestic companies. This represents less than 5% of the overall annual public procurement spend (approximately €13.1 billion).

It is important to remember that open tendering is a two way street and that it provides Irish companies with opportunities to compete abroad. The public procurement market in the EU is estimated to be valued in excess of €2.4 trillion. In this regard, it is worth pointing out that the open market regime also offers opportunities for Irish companies to win business abroad and reliable EU studies indicate that many Irish businesses are successful in this regard.