Written answers

Thursday, 19 June 2014

Department of Public Expenditure and Reform

Public Procurement Contracts

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Independent)
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68. To ask the Minister for Public Expenditure and Reform the changes that have been made to the rules regarding the tendering process for public contracts in order that small sole traders and small and medium enterprises are able to compete and offer tenders; and if he will make a statement on the matter. [26508/14]

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Public Procurement is governed by EU and National rules. 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 EU rules for a public body to favour or discriminate against particular candidates on grounds such as nationality, organisational size, etc. and there are legal remedies which may be used against any public body infringing these rules.

The Government acknowledges the significant role that SMEs play in the Irish economy and is committed to ensuring that SMEs are fully engaged with public sector procurement and the opportunities presenting. 

In order to encourage greater SME participation the Office of Government Procurement has conducted a targeted programme of education for suppliers who wish to learn more about doing business with the Irish Public Service.  This programme consists of seminars, workshops and large scale 'Meet the Buyer' events hosted nationwide.  These 'Meet the Buyer' events are run in conjunction with Enterprise Ireland and Inter-Trade Ireland. To date the OGP has facilitated workshops and presented at seminars to over 4,500 SMEs nationwide.  These events afforded suppliers an opportunity to meet and discuss the issues with public service buyers and provide networking opportunities for suppliers and encourage consortia-building.

My Department has also recently finished reviewing and updating existing guidelines and procedures aimed at promoting SME participation in public procurement.  Circular 10/14, launched on 17 April, sets out new initiatives aimed at opening up opportunities for small businesses that want to tender for public contracts and also to ensure that engaging with government procurement is easy and low cost.  The main thrust of the circular is as follows:

- buyers are advised to undertake market analysis prior to tendering in order to better understand the range of goods and services on offer, the competitive landscape, including the specific capabilities of SMEs etc.

- the circular promotes transparency in procurement by requiring supplies and general services contracts with an estimated value of €25,000 be advertised on the Government's electronic tendering portal, e-Tenders,;

- it encourages suppliers including SMEs to fully use e-Tenders and avail of its facilities in relation to registration, e-tendering and automatic alerts in relation to future tendering opportunities.

- buyers are encouraged not to set turnover thresholds at more than twice the estimated contract value and puts limits on insurance levels for suppliers where possible

- promotes greater use of "open" tendering and less use of "restrictive" tendering

- it  encourages SMEs to consider using consortia where they are not of sufficient scale to tender in their own right or where they may lack certain capabilities necessary to provide a compelling proposition

- it encourages Contracting Authorities to break large contracts down into lots where reasonable to do so. This enables smaller businesses to compete for these smaller elements of a larger contract. This has to be done in a way however that does not expose the State to undue risk or significant management overheads.

The SME Working Group, established under the Government's Action Plan for Jobs, was consulted on the new Guidelines.   The new Circular has been broadly welcomed by industry representative associations.

The SME Working Group is chaired by the Office of Government Procurement and includes representatives from ISME, IBEC, Inter Trade Ireland, Enterprise Ireland, the Competition Authority, the Small Firms Association, Chambers Ireland and the Department of Jobs, Enterprise and Ireland.  The focus of this group is to develop and monitor strategies for SME access to public procurement.  The group also has regard to actions aimed at maximising procurement opportunities for SME in the public sector. 

At EU level there is a growing recognition of the need to promote and facilitate SME participation in public procurement. The New EU Directives on Procurement are currently being transposed into Irish law by the Office of Government Procurement. They are intended to make it easier for businesses and SMEs to tender for public sector procurement contracts.  They are designed to simplify the rules and provide more flexibility for public purchasers.   The directives contain measures specifically designed to improve access for SMEs and start-ups. These include:

- A limitation on requirements for participation, to avoid unjustified barriers to SME participation.  In particular, except in justified cases, turnover requirements are explicitly limited to two times the estimated contract value.

- Acceptance of self-declarations will have to be accepted for evaluating the capacity and capability necessary to select them as tenderers until the award stage and the promotion of e-procurement with mandatory electronic availability of procurement documents;

- Contracting Authorities will now have to comply or explain in relation to the division of contracts into lots;

- Member states will be required to provide the Commission with detail on SME participation. Such monitoring can support consistent application across all Member States and ensure that the objective of greater SME involvement is being delivered.

I am pleased to advise that my Department has accelerated some of the key measures contained within these new Directives and included them in the recent Circular 10/14 as set out above.

The reform of public procurement across the public service is on-going and will continue to provide opportunities to the SME sector to win business.  The Office of Government Procurement will continue to work with industry to ensure that winning government business is done in a fair, transparent and accessible way and to ensure that government procurement policies are business friendly.

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