The Director of the Small Firms Association, Patricia Callan, has called on the government to immediately overhaul its public procurement procedures, which currently prevent many small Irish companies from winning valuable public contracts. 

In a recent survey of SFA members (649 companies responded), almost two-thirds of respondents (65%) have not tendered to provide goods or services to the Irish public sector / local government / state agencies in the last three years.    This is a huge lost opportunity for small companies in a market that is worth €14bn, or 11.5% of GNP, and in particular for exporters, where an Irish public sector reference site is often a key factor in winning contracts abroad. 

Just 26% of respondents had tendered to the Irish public sector, 25% to Irish local government / state agencies and 8% to public sector / government agencies overseas in the last three years.

Callan commented: “Government policy on the need to save money in public procurement is working completely at odds with its enterprise support and job creation agenda.  In its pursuit of the cheapest price, the Government is neglecting the fact that this will not deliver either the quality, cost in use savings or service levels it desires, but will result in lost jobs here at home.  The new rules make it increasingly more difficult for small innovative companies to compete and this means a serious potential loss of business”.

82% of those companies who had tendered found the emphasis on price instead of value for money to be either a major or minor difficulty, whilst 71% viewed the reduction in government expenditure generally as a difficulty. 

“The Government should publish data on the value and volume of contracts awarded to Irish vs. overseas companies and by company size.  The results should be benchmarked internationally, and appropriate targets set for procurers here on SME market share, which should form part of Departmental performance reviews”, argued Callan.

Callan also condemned the bureaucracy associated with current public procurement procedures.  The length of the procurement process was problematic for 70% of respondents, with the cost of bidding posing difficulties for 67% of respondents.  “For example, at the outset, tender documents can be lengthy with unnecessary information being sought and no recognition given to the SME environment which has limited resources available. Tenders often require extensive financial and technical information which SMEs cannot always fulfil as they may not have the in-house expertise and as a result the costs of preparing a submission are excessive.  We should move to the UK pre-qualification model immediately to remove these costs”, commented Callan.

The financial/administrative requirements were a barrier for 64% of respondents, and the contract size for 51%.  Callan stated: “The size of lots put up for tender, financial turnover thresholds, indemnity/insurance requirements and criteria such as having completed three similar projects in the past, are clearly anti-SME and anti-innovation and should be removed, unless clear justification can be given for their inclusion.” 

“There is also a need for advanced education and training for both buyers and suppliers in the procurement chain.  Training for contracting authorities should encourage them to understand and adapt to SME needs while SMEs need to be supported to develop the knowledge and skills to allow them participate successfully in modern procurement procedures,” commented Callan.

The SFA is recommending to Government that a full appeals mechanism should also be implemented forthwith, which would include mandatory feedback on all lost tenders, more scrutiny and transparency throughout the system, an internal appeals procedure in each department and the opportunity to appeal to an Ombudsman.

“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 Callan.

For further information please contact:

Patricia Callan,
Director,
Small Firms Association. 

Tel: 01-6051602,
Mob: 087-6999345,
e-mail: patricia.callan@sfa.ie