Written answers

Tuesday, 25 October 2016

Department of Public Expenditure and Reform

Public Procurement Contracts

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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365. To ask the Minister for Public Expenditure and Reform when public bodies' tender documents specify alternative evidence can be provided where a company turnover does not match that specified in the tender document in relation to public contracts; the evidence which is accepted by the contracting authority; if his attention has been drawn to the different levels of evidence accepted by different public bodies; the procedures in place to examine the alternative evidence provided under the tender documents in respect of public projects; and if he will make a statement on the matter. [31765/16]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The assessment of a tenderer's financial and economic standing is a key part of any procurement process because the contracting authority must be reasonably satisfied that a contractor will have the necessary capacity to carry out a contract if the contractor is awarded the contract. Establishing the appropriate suitability criteria that are relevant and appropriate to a particular contract is a matter for the contracting authority concerned. This is because the contracting authority is in the best position to gauge the appropriate levels of financial capacity that are appropriate to the needs of that specific contract.

The most recent EU Directive on Public Procurement (Directive 2014/24/EU) indicates that proof of the economic operator's economic and financial standing may, as a general rule, be furnished by one or more of the following references:

- appropriate statements from banks or, where appropriate, evidence of relevant professional risk indemnity insurance;

- the presentation of financial statements or extracts from the financial statements, where publication of financial statements is required under the law of the country in which the economic operator is established;

- a statement of the undertaking's overall turnover and, where appropriate, of turnover in the area covered by the contract for a maximum of the last three financial years available, depending on the date on which the undertaking was set up or the economic operator started trading, as far as the information on these turnovers is available.

It should be noted that the above list is not exhaustive.

The Directive also states that where, for any valid reason, the economic operator is unable to provide the references requested by the contracting authority, it may prove its economic and financial standing by any other document which the contracting authority considers appropriate. This provision allows contracting authorities a degree of flexibility in relation to the type of proof of financial capacity it accepts from potential tenderers.

It recognises that there can be genuine reasons why a firm has difficulty in providing a particular type of evidence requested (e.g. a recently established business will not be in a position to provide evidence of two or three years' turnover) or why the data might not be reflective of its underlying operational situation (e.g. early start-up costs may reflect disproportionately in a new firm's balance sheet or profit and loss account). In these situations contracting authorities may consider alternative means of satisfying themselves about whether or not there is a genuine financial risk should the company turn out to be a winning tenderer. Procurement rules allow for example for the acceptance of guarantees or undertaking by a parent company or other third party.

Government Policy, as set out in Circular 10/14: Initiatives to assist SMEs in Public Procurement issued by my Department, is aimed at facilitating greater participation of SMEs in public procurement opportunities. In relation to suitability criteria, the circular stresses that public bodies must ensure that any criteria/turnover levels set by them should be both justifiable and proportionate to the needs of the contract. The Office of Government Procurement through its engagement with public bodies and SME representative bodies is ensuring that this message continues to be highlighted.

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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366. To ask the Minister for Public Expenditure and Reform the required level of turnover that can be specified in the tender documents relative to the estimated contract price by public bodies, including local authorities; the mechanisms in place to ensure there is a level of consistency in relation to these matters by public bodies; if he is satisfied that where some public bodies have a much higher level of turnover required to participate in a tender process, that they are not excluding small and medium sized enterprises from participating in the process; and if he will make a statement on the matter. [31766/16]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The assessment of a tenderer's financial and economic standing is a key part of any procurement process. Establishing the appropriate suitability criteria that are relevant and appropriate to a particular contract is, of course, a matter for the contracting authority concerned. This is because the contracting authority is in the best position to gauge the appropriate levels of financial capacity that are appropriate to the needs of that specific contract. Therefore, there are no centrally imposed requirements for a minimum turnover. Such requirements must logically be developed on a case by case basis with reference to the specific needs of the contract.

However, 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, Government Policy, as set out in Circular 10/14: Initiatives to assist SMEs in Public Procurement issued by my Department, is aimed at facilitating greater participation of SMEs in public procurement opportunities. In relation to suitability criteria, the circular stresses that public bodies must ensure that any criteria/turnover levels set by them should be both justifiable and proportionate to the needs of the contract and, a matter of general policy, should not for routine goods and services competitions set company turnover requirements at more than twice the estimated contract value. The Office of Government Procurement through its engagement with public bodies and SME representative bodies is ensuring that this message continues to be highlighted.

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