SFA Meets Minister Hayes Regarding Public Procurement

Thursday, 24 January 2013

SFA meets with Minister Brian Hayes

New Public Procurement System will be detrimental to local small businesses around the country

“New Government Policy 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.”AJ Noonan, Chairman, Small Firms Association.

The Chairman of the Small Firms Association, AJ Noonan, at a meeting with Minister Brian Hayes, TD, today, outlined the concerns of small businesses around the country, that they 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. The State currently spends €6.9bn on public procurement goods and services each year.

“New Government Policy 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,” commented Mr Noonan.

Mr Noonan stated that “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.”

Mr Noonan commented: “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 here at home. Centralised large aggregated contracts make it increasingly more difficult for small innovative companies to compete and this means a serious potential loss of business. 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 skills necessary to do this at present. The Government should delay the roll-out of the National Framework process until these issues have been addressed satisfactorily”.

In a recent SFA study (649 companies responded), 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 length of the procurement process was problematic for 70% of respondents, with the cost of bidding posing difficulties for 67% of respondents. The financial/administrative requirements were a barrier for 64% of respondents, and the contract size for 51%.

Mr Noonan commented, “It is essential that the new procurement system is designed from a think small first perspective, as recommended by the EU, and that actions are put in place to remove the barriers raised against small businesses around the country. 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 Mr Noonan.


For interviews, please contact: AJ Noonan, SFA Chairman at Tel: 086-2592610
Issued by: Patricia Callan, SFA Director Tel: 01 605 1602 / 087 6999 345, e-mail: patricia.callan@sfa.ie