Bernard Durkan (Kildare North, Fine Gael)
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158. To ask the Minister for Public Expenditure and Reform the extent to which public procurement can be utilised to benefit the Exchequer in a meaningful way; and if he will make a statement on the matter. [11021/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Procurement reform is a key element of the Government's overall reform programme and is aimed at delivering increased value for money, more accurate and timely data and improvements in the capacity and capability of the procurement function across the public service.  The fragmented procurement arrangements across the public service which existed prior to this facilitated amongst other things suppliers charging different public service bodies different prices for the same goods and services.  This was not sustainable, as the State could not afford to continue to purchase works, goods and services in a manner that undermined the efficient delivery of services.

All public bodies are keenly aware of the importance of maximising the value for money achievable when procuring any commonly acquired goods or services.  The central procurement frameworks and contracts established by the Office of Government Procurement (OGP) have been designed to optimise benefits to the public service through the strategic aggregation of its buying power.       

Central procurement frameworks are targeted at securing best value for money and facilitating contracting authorities to deliver services within their budgetary constraints. In this regard, public bodies are encouraged to use these frameworks arrangements. The benefits arising from these central procurement frameworks include: cash savings; administrative savings from reduced duplication of tendering; greater purchasing expertise; improved consistency; enhanced service levels and legal certainty.  It is Government policy, as set out in Circular 16/2013, that public bodies, where possible, should make use of all such central arrangements.  Where public bodies choose not to utilise central procurement frameworks they should be in a position to provide a value for money justification.  It should also be noted that the OGP issued Circular 10/2014 which contains initiatives aimed at facilitating SME access to public contracts.

The State spends around €12 billion on goods, works and services each year. 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.  Developing a strategic approach to public procurement means that the state can deliver much needed public service in a sustainable manner at a time when Exchequer resources are limited. 

There is a perception that the move towards aggregation will mean that competitions will be won by larger foreign companies to the detriment of the SME Sector.  While the OGP has stimulated the market, and there will obviously be more losers than winners in any competitive process, this not borne out by the facts to date.  The Public Service Spend and Tendering Analysis Report for 2014, published by the OGP and launched by Minister of State Eoghan Murphy last September, indicates that 95% of the analysed expenditure is with firms with a base in the State and the majority of the spend analysed is with SMEs. In addition the OGP conducted an analysis of the 94 Framework Agreements it had in place last November which shows that 68% of Framework members are SMEs and 63% of the Frameworks had multiple lots, facilitating SME access.

Ireland's procurement reform programme has been successful in establishing new structures and building momentum but, of course, more needs to be done and the OGP, in line with the Programme for Government Commitments, will continue to refine the model.

Finally, I would point out that while the main driving force behind the establishment of the OGP has been the need to deliver better value and sustainable savings for citizens, great care has been taken to ensure this is achieved in a manner that fully recognises the important role SMEs play in the Irish economy and also taking account of wider societal concerns where practical and appropriate.