Dublin Castle, 14th April 2011Opening
I am delighted to be here today at this Seminar on Public Procurement, which I understand, is the third in a series of such events hosted by the National Procurement Service. I’m particularly pleased to see such a broad range of public sector officials from across the country – Civil Servants, Local Government officials, Education sector workers, Health Sector, Defence Forces and An Garda Síochana - who are involved in day-to-day procurement come together to participate in today’s event.The scale of public procurement
Effective public procurement is essential for good public service and good government. In the EU expenditure on public procurement amounts to some 17% of the EU’s GDP. In Ireland the public sector spends approx €16 billion per year on the procurement of works, goods and services. This accounts for approximately 10% of Gross Domestic Product (GDP). Clearly this represents a very significant volume of economic and commercial activity which the Government recognises as extremely important as a source of business for suppliers and service providers.Increasing complexity of Public Procurement
I am fully aware that the process of procuring goods and services for the public service has become significantly more complex in recent years. Some of these complexities include:
- EU Directives place a significant onus on officials to stick quite rigidly to procedures - sometimes it may even appear that the procedures have a higher priority than actually receiving the best value for money;
- With he advent of the new Remedies Directive the bar has now been raised even higher with considerable redress available to tenderers who can demonstrate that the procurement process has been incorrectly handled. (This increased legal complexity resulted in my launching of a new legal initiative between the Chief State Solicitor’s Office and the NPS that will see full time solicitors seconded to the NPS in Trim.);
- Suppliers are prepared to fight harder for markets that they may not even have considered previously;
- Many Public Officials are now dealing with increasing volumes of work with reduced resources – this is now part of the new environment in which we all find ourselves.
With such complexities and pressures it is important that managers throughout the public service ensure that their staff are adequately trained to meet the emerging challenges of this shifting landscape. Seminars like this are welcome initiatives in the further education and up-skilling of officials.
I would also encourage officials not to ignore the many accredited, formal training courses that are now available from respected 3rd party providers in the area of procurement.Public Procurement and the SME sector
The Programme for Government has identified the role public procurement can play in becoming a tool to support innovation and to ensure access by Small and Medium Sized businesses to the public service market.
The public sector is a significant market for small businesses, so improving our public procurement practices by removing obstacles and encouraging the involvement of SMEs is a key priority. We must recognise that for some suppliers the concept of trading with the public service is alien and one masked in complexity and bureaucratic barriers. This perception alone can stop suppliers - particularly SMEs from competing for potentially lucrative contracts at home and ultimately for those abroad.
A very significant development in the area of facilitating the SME sector has been the publication of circular 10 of 2010 from the Dept Finance. The new guidelines include a range of measures aimed at opening up opportunities to bid for State business, simplifying and streamlining the public procurement process and reducing the administrative burden on businesses who want to tender for public contracts.
The 10 Step Guide to Buying Innovation produced by the Department of Enterprise, Jobs and Innovation also established some very pragmatic steps that buyers can take when conducting competitive processes.
The responsibility for facilitating SMEs however does not lie solely with the Public Service. I believe it is important for SMEs and their representative organisations to continually update their own skills to ensure that they are capable of competing aggressively in this valuable marketplace. A well-informed supplier base is crucial for a healthy marketplace that can provide true competition and innovative solutions.Standardisation of procedures
A further, important step in the lowering of perceived barriers in procurement is the need to – where possible – standardise the nature of the legal documentation that we present to the market place when conducting competitive processes. Significant work has been completed on tender and contract documents by the NPS, the Chief State Solicitor’s Office and the Office of the Attorney General which should greatly assist in bringing a level of uniformity to the procurement processes. These documents, which I will make an announcement on shortly, will reduce the administrative burden on both buyers and suppliers when engaging in tendering processes. They will also significantly increase levels of legal compliance in, what I have already acknowledged is, a complex process.The importance of collaboration among public service buyers
Increasingly the Public Service needs to act in a more unified manner when approaching the marketplace for goods and services. To me, the idea that public bodies would undertake major purchases without prior reference to the actions or needs of their colleagues in other Government Departments or Offices simply does not make business sense.
Acting collaboratively can be an important driver for value for money and is particularly relevant in areas of commonly used goods and services.
Aggregation of demand can often lead to: greater leverage with suppliers; efficiencies in developing specifications and; significant reductions in administrative costs – all of this will ultimately lead to better value for money for the authorities involved.
To date, through various procurement initiatives, the NPS, working with its client organisations, have achieved savings in excess of €35 million.Public Procurement and shared services
The focus on the need for more flexible and productive means of work in the public service has never been sharper than now. Under the terms of the Croke Park Agreement the need for the public service to realise real and immediate efficiencies that will translate into verifiable monetary savings is something that we cannot and must not ignore.
In my parallel role with responsibility for Public Sector Reform I see shared services as a major channel through which public officials can transact business more efficiently and realise real value for money. Shared services are already at various stages of development in the area of finance, recruitment and human resources. I am aware that a considerable amount of work has taken place over the past 12 months in the area of sharing expertise, contracts and frameworks in the field of procurement. I applaud these efforts as the concept of shared services is one that we all need to become much more familiar with as a means of getting the business done. I have no doubt that events such as this today will help promote networks across the public service which should lead to increased co-operation and collaboration between the various sectors.Importance of
At a time of tightening resources it is important that we fully utilise the advantages of all emerging technologies. The etenders.gov.ie website has been a major strategic tool in our procurement efforts for several years. I welcome the work that is currently underway to add improved functionality to that site. Improvements that will decrease the administrative burden on people doing business with the State are essential and we must constantly seek ways to further accelerate these efforts.
The launch here today of the new NPS website is a further, important link in the supply chain into the public service. Through this website both buyers and suppliers will have a much clearer picture of the procurement landscape that surrounds them. You should all be able to see the various initiatives that your colleagues are involved with and therefore be able to take an informed view as to the most effective path forward for your own procurement campaigns.Strict need for fairness in our dealings with all
We (as public servants) must apply the highest professional standards when it comes to spending money on behalf of the taxpayer. We must ensure we get a good deal and to provide appropriate and necessary goods and services to the quality required. It is essential that people who wish to do business with the Irish Public service can do so with complete confidence. Now, more than ever, there is a need for strict levels of corporate governance.Closing
Finally I would like to thank the NPS for inviting me to address you today. I would also wish to acknowledge our colleagues from both Scottish Procurement, and the private sector for the generous assistance that they’re giving through the sharing of their considerable experience with you.
Thank you for your attention and I wish you all the very best in your important and challenging work in the future.