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Recession
New Government purchasing policies will be detrimental to local small businesses
By Aviné McNally, Director, SFA
May 14, 2013 - 10:14:33 AM

The Small Firms Association Chairman AJ Noonan has expressed concerns that small firms will effectively be prohibited from tendering for public contracts, in the move to centralise Government procurement into large-scale contracts that they will be ineligible to apply for.  

Mr Noonan said, “new Government buying policies on procurement has the potential to eliminate small businesses from the tendering process, resulting in business closures, job losses, regional imbalance and ultimately less competition in the marketplace.

Government policy on the need to save money in public procurement, whilst valid, should be clearly aligned to 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.”
 
Noonan highlighted that centralised large aggregated contracts make it increasingly more difficult for small innovative companies to compete.  “There are difficulties in small firms collaborating to make joint tender bids, as they may fall fowl of Competition Law and do not have the necessary skills.  
“Competition concerns regarding the pre qualification criteria are also raised by SMEs along with the request for unnecessary information with no recognition given to the SME environment who has limited resources available.”

The Government should delay the roll-out of the National Framework process until these issues have been addressed satisfactorily.”

In a recent SFA survey on public procurement:

  • 82% of respondents who had tendered found the emphasis on price instead of value for money to be either a major or minor difficulty, 
  • 71% viewed the reduction in Government expenditure as a difficulty, 
  • 70% found the length of the procurement process problematic; the cost of bidding posed difficulties for 67% and the financial/administrative requirements were a barrier for 64%

Noonan stated that it is essential that the new purchasing system is designed from a think small first perspective, and that actions are put in place to remove the barriers against small businesses.  

SFA called on a full appeals mechanism to be implemented, 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.

The State currently spends €6.9bn on public procurement goods and services each year.  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 the departmental performance reviews.”

“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.  Small businesses provide a valuable contribution to the needs of the public sector through innovation, responsiveness and quality.  By allowing small Irish firms access to this market, enables them to contribute to job maintenance and economic growth”, concluded Mr Noonan.

For further information contact:
A J Noonan, Chairman, Small Firms Association, Mobile: 086 2592610.

Aviné McNally
Director SFA
Confederation House
84-86 Lower Baggot Street
Dublin 2
T: +353 1 605 1633
F: +353 1 638 1633
M: +353 87 645 0205
E: avine.mcnally@ibec.ie

 

 



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