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News : Irish Last Updated: Jul 23, 2009 - 5:09:16 PM

Coughlan announces "project" to devise SME friendly Irish public procurement policy; Glacial change welcome but endemic cronyism likely to persist
By Finfacts Team
May 29, 2009 - 6:30:15 AM

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The Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, TD on Thursday confirmed that she has commenced work within her Department on a project aimed at improving opportunities for small and medium enterprise (SME) access to public procurement business. Coughlan was speaking in Brussels at a meeting of the EU’s Competitiveness Council, where she claimed she had emphasised to colleagues, that EU procurement rules must also reflect the Union’s “think small first” approach to entrepreneurship. To coincide with the lecture in Brussels, there is at last an effort starting in Dublin to match lip service on policy towards encouraging start-ups and developing SMEs, with procurement by the biggest purchaser of goods and services in the State. Change comes at glacial speed in the sclerotic Irish political system and changes in rules for procurement are likely to help but endemic cronyism will not change while the overall governance system remains in an archaic timewarp.

The State purchases €16 billion worth of goods and services each year and Finfacts has often highlighted the lack of transparency in the process and the opportunities for Insiders to exclude firms beyond the crony loopc of senior politicians, senior public service managers and favoured business people.

It's an opaque process where for example large IT projects can be issued with no requirement to subcontract work to competent small firms. No information is available on the main suppliers to the State.

There is also the issue of value for money.

For example, the National Consumer Agency cannot provide a price comparison website, as one tendered through the public process would likely be ordered from a big firm and cost more than €1 million. Meanwhile, the NCA can issue a public relations contract for €200,000  - - a sum which wouldn't be required to get an SME to provide a  high standard web service.

Irish Public Spending: Pre- IT/Web official policy prevails - hide as much information as possible from taxpayers

New approach needed to fix broken Irish political system

In early 2008, a survey by the Irish Software Association (ISA) claimed that small and medium-sized software firms were "effectively ruled out" of taking part in the Irish public procurement process.

The ISA said half of the software companies surveyed cited the cost of tendering for such work as a deterrent against participating in the process.

Shane Dempsey, director of ISA said: "Most software companies, many of which provide excellent solutions to other countries' public sectors, find it difficult to get contracts in Ireland due to aspects of the procurement process.

"The Government must be innovative and take steps to remove any measures that unnecessarily militate against SMEs. Software SMEs can offer excellent value-for-money options that increase productivity and efficiency, however, current procurement policies restrict officials from selecting these options.

"In most cases, tender requirements are rigidly defined, removing any possibility for offering innovative solutions outside of the definitions.

"Consequently, superior solutions that could enable public sector bodies to provide excellent public services are ruled out from the outset," he said.

The ISA called on the public sector to engage more fully through an enhanced 'Technical Dialogue' procedure in advance of the tender being awarded, thereby enabling both parties to fully clarify the requirements of the tender.

On Thursday, Coughlan confirmed that a project is now underway in Ireland, which would implement a number of actions aimed at breaking down barriers to SMEs’ access to public contracts. She said that these would include measures to ensure minimisation of the transaction costs of preparing and submitting tenders, by for example maximising the application of the national public procurement website and electronic procurement opportunities, breaking down contracts into lots, encouraging partnering among SMEs and also encouraging larger companies to sub-contract.

The Tánaiste said that,
“the public procurement process must become SME friendly and in Government we must make every effort to ensure that our smaller enterprises are enabled to participate in the competitive bidding process for public contracts.”

The Small Firms Association welcomed the move on public procurement.

Avine McNally, SFA, Assistant Director said “for a number of years we have been calling on the Government to overhaul its public procurement procedures, which have prevented many small Irish companies from winning valuable public contracts.”

“The actions outlined in today’s announcement including the minimisation of the costs and bureaucracy associated with current public procurement, recognises that the SME environment has limited resources available and by reducing the administrative burden and procedures will mean that many small firms will find it easier to tender, and thereby open up new business opportunities.”

“Public procurement is an essential element of delivering better public services in Ireland. Effective procurement procedures ensure value for money for taxpayers and the efficient allocation of resources, thereby enhancing the quality of public services. Small businesses provide a valuable contribution to the needs of the public sector through innovation, responsiveness and quality in the provision of goods and services which are vital to the public sector and the economy. In addition, by allowing small Irish companies access to this market, it enables them to increase their competitiveness and consequently contribute to job maintenance and growth and the overall economy,”
concluded McNally.

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