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To ask the Minister for Public Expenditure and Reform his views on reports that Government plans to centralise procurement will exclude many small businesses from the tendering process, resulting in business closures and job losses; and if he will make a statement on the matter.

- Mick Wallace.

For ORAL answer on Thursday, 23rd May, 2013.


Reform of public procurement is one of the major projects of key strategic importance in the Government’s Public Service Reform Plan, which was published in November 2011. Procurement of supplies and services accounts for around €9 billion of current spending by the State per annum. 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.

Progress has been made on several of the actions for procurement reform contained in the Public Service Reform Plan. The Government agreed on 12 June, 2012 to implement mandatory arrangements in respect of the centralised purchasing frameworks organised by the National Procurement Service (NPS).

The National Procurement Service (NPS) has put in place a number of national arrangements designed to secure better value for money from leveraging the public service’s buying power in relation to a range of goods and services that are commonly purchased across the public service. These national arrangements have benefits that include:

Ø  cash savings;

Ø  administrative savings from reduced duplication of tendering;

Ø  greater purchasing expertise;

Ø  improved consistency; and,

Ø  enhanced service levels.

Last year my Department issued Circular 06/12 which implements the Government decision by making it a mandatory requirement that public service bodies avail of specified national arrangements put in place by the NPS. These national arrangements will secure best value for money and facilitate contracting authorities to deliver services within their budgetary constraints.

While the key purpose of Circular 6/12 is to enable the State to do more with less by aggregating procurement to secure better value for money, it is worth noting that such aggregation arrangements can be implemented in a manner that achieves value for money with a minimal negative impact, or indeed a positive impact, on SMEs. While a number of the categories of goods and services mandated under the Circular are suited to single supplier national arrangements, these need not be accepted as the norm. The greater use, where appropriate, of multi-supplier frameworks can address local supplier issues while also ensuring on-going cost competitiveness of the framework itself. Such multi-supplier frameworks may also offer SMEs the opportunity to participate in national level contracts, thereby offering valuable reference work when competing for public procurement contracts in other jurisdictions.

In order to encourage greater SME participation the NPS, over the past three years, 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.  To date the NPS has facilitated workshops and presented at seminars to over 4,500 SMEs nationwide. Parallel with these events the NPS also works closely with business representative bodies such as ISME and IBEC to provide briefings for their members.

Larger enterprises were also encouraged to consider the practical ways that SMEs could be included in their proposals to maximise the social and economic benefits of the contracts that result from these tenders. For example, the indigenous company, which won the Stationery contract, with an estimated value of €10m per annum, is sourcing up to 60% of their products using 136 local agents and manufacturers.

In addition, an external review of the central procurement function was commissioned by the Department of Public Expenditure and Reform. The report of the review, which was published in September, found that significant savings can be achieved through the implementation of a transformational change to the central procurement model.

In December 2012, arising out of recommendations in the report of the review of the central procurement function the Minister announced the appointment of a Chief Procurement Officer (CPO) to lead a key element of the Government’s Public Service Reform agenda. The new approach to public procurement will involve:

  • integrating procurement policy, strategy and sourcing in one office;
  • strengthening spend analytics and data management;
  • much greater aggregation of purchasing across public bodies to achieve better value for money;
  • examining the specifications set out for goods and services;
  • evaluating demand levels to assess how demand and volume can be reduced; and
  • strengthening supplier and category management.

Since the appointment of Paul Quinn, CPO, on 28 January 2013, he has initiated and completed a series of engagements (workshops and one-to-one meetings) with key stakeholders within the public sector and their representatives in relation to the development of the proposed governance structures, implementation plan, transition arrangements and savings targets for the procurement function. The following sectors were engaged in workshops / meetings: Health, Education, Local Government, Defence, Justice, and other Central Government Departments.

To summarise: we in government want better value for money for our substantial procurement spend and we want Irish SMEs, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work. To ensure the reform process take account of the needs of stakeholders further consultations will be undertaken with employees and workers’ representatives as the new Office for Government Procurement is established.  We are committed to ensuring that SMEs are fully engaged in the process and will be encouraged, where necessary, to form alliances and networks to ensure they can tender on a competitive basis for this work.

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Namaleaks is a project that seeks to uncover possible injustice and poor practice related to NAMA (National Asset Management Agency) and financial institutions in Ireland.


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