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News : Irish Last Updated: Mar 2, 2010 - 3:37:53 AM

IBEC says Irish public procurement system worth €16bn annually is dysfunctional but fears radical reform
By Michael Hennigan, Founder and Editor of Finfacts
Mar 1, 2010 - 5:53:29 AM

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IBEC, the main Irish business representative group, today published results of a new survey of Irish companies, which revealed that most believe the process of selling goods and services to the public sector in Ireland, which is worth €16bn annually, is dysfunctional. However, the lobby group, which is part of the conservative establishment, appears to fear radical reform such as public transparency, which would have a dramatic impact on both public spending and competition in the economy, through ending cronyism in public procurement.

The survey asked 423 companies to rate the process of selling to the public sector in Ireland over the past year. 56% of respondents view the process as poor. Satisfaction with the process is higher among companies with existing contracts, whereas problems are particularly acute among companies trying to access this important market. The survey shows that the problems exist across the public sector, including central government, local government or state agencies.

The Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, said last May that she had commenced work within her Department on a project aimed at improving opportunities for small and medium enterprise (SME) access to public procurement business.

Apart from computerisation, the public procurement process, is a relic of the Victorian era and there is generally no transparency on contracts, which gives an inside track to big firms who maintain personal contact with key officials. A start-up in for example IT has little chance against the bigger firms who generally are not required to sub-contract some work to smaller firms.

There is a record of hundreds of millions of euros being wasted on website and IT developments but the attitude has been, apart from the personal links, is that the easiest choice is the big name firm - - not a difficult option in a system of limited or no effective accountability.

The newest State agency is the repository for toxic property loans, the National Assets Management Agency (NAMA). It has budgeted €2.5bn for professional fees over the next ten years. True to form with a former public servant as chairman and its chief executive also a product of the existing public service system, Victorian era secrecy is the rule.

It's not in the public interest; the interest of the economy nor in the interest of promoting competition. But it's hard to teach old dogs new tricks to people who are guaranteed either a high income followed by a high pension for life and that includes the political class.

SEE Finfacts article: The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time" - -  more information on the millions wasted on public IT projects.

Common complaints from the IBEC survey, aside from the reduction in government expenditure, include:

  • length of the procurement process

  • emphasis on price instead of value-for-money

  • administrative burden

  • late payment to suppliers

  • unfriendly environment for SMEs.

IBEC represents both big and small private; public sector enterprises and agencies. So despite the severe economic crisis, do not expect radicalism from it even though it is wasting its sweetness in the desert air with its limp-wristed approach to public issues such as the one it raised today.

Commenting on the survey results, enterprise executive Aidan Sweeney said: “These results provide important feedback on the Government’s efforts to reform public procurement. To date, progress has been slower that industry had hoped. Reform aspirations are different to implementing a real and lasting change in practice and culture. A number of government-backed initiatives in the public realm need to be acted upon openly and transparently.

“Procurement is an expensive process for both contracting authorities and bidding suppliers. We believe there is significant scope to streamline the procurement process in ways that benefit all parties and ultimately the tax-paying public.”

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