Bernard Durkan (Kildare North, Fine Gael)
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83. To ask the Minister for Public Expenditure and Reform the extent to which good public procurement practices continue to achieve savings in the public interest; and if he will make a statement on the matter. [41088/15]

Brendan Howlin (Wexford, Labour)
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The Procurement Reform Programme has been successful in establishing new structures for procurement across the State and bringing increased levels of collaboration and consistency to public service procurement.  There are now teams in place dedicated to sourcing goods and services at a whole-of-government level in key expenditure areas such as facilities management, legal services, ICT, etc.  There are also dedicated customer account managers in place and support structures to develop systems and processes. 

Since the start of the Procurement Reform Programme savings of €100 m in 2013 and 2014 have been reported by the OGP and its partners, equivalent to saving approx. 2,000 front-line jobs.  These forecast savings benefits represent only those cost reductions that can be estimated with a degree of confidence but are dependent upon public bodies using them.  The €100 m excludes €16.5 m in Utilities savings from OGP sourcing activity in 2014 as this would be regarded as a cost avoidance procurement benefit rather than a cash saving as the savings arise from beating inflation.

The 2015 procurement savings target is €150 m.  €80 m of this target is to be generated from OGP sourcing activity over the eight central categories.  The remaining €70 m is to be generated from Health, Education, Local Government and Defence sectoral procurement.  

The OGP and its partner sourcing organisations continue to identify and deliver procurement opportunities and assist customer organisations to better operate within their budget allocations while maintaining or improving services for the public.

There is strong potential for good procurement practice to deliver further financial benefits to the State.  The economic recovery sees the emergence of inflationary pressures that will need to be resisted and avoided on input costs.  Procurement can enable a non-cash savings benefit in the form of Cost Avoidance as, during periods of price inflation and/or currency volatility, it can proactively avoid a future cost increase by locking into a fixed price agreement with suppliers when prices are favourable.

There are also other less-tangible benefits arising from the Procurement Reform Programme such as building tendering skills in suppliers to help them win more private and public sector business at home and abroad.  The EU public procurement market is in excess of €2 trillion in value each year.  Working with Enterprise Ireland and InterTrade Ireland, and through programmes and events such as Meet the Buyer, Go 2 Tender and Taking Care of Business, the OGP continues to build awareness of, and skills in, public procurement among suppliers.  Increasing the application of professional procurement also reduces risk to the State, by identifying risk and establishing contractual arrangements to manage those risks, such as damages payments for non-performance.