Healy O'Connor

State Bodies Warned to Observe Purchasing Regulations

Minister of State for Public Service Reform Brian Hayes will “name and shame” public bodies not using the State’s procurement system, which aims to cut the expense of public sector contracts costing an estimated €14.5 billion.

The Minister believes that in some cases “local contracts are being delivered to local ratepayers”. But he said the State could no longer subsidise employment.

Mr Hayes said he understood why local authorities might wish to do that, but added that “we’re not in that space anymore”.

The State, he said, could not afford to subsidise employment just because a local company had given rates to a local authority as a means of getting a contract.

He added that 95 per cent of what is spent in public procurement stays in the country, despite reports that it was lower.

Mr Hayes was speaking at the launch of legal documents which simplify and clarify the entire tendering process for State contracts, both for companies and public sector bodies.

In 2009 the public sector spent about €16 billion on goods and services with an expected reduction to between €14.5 billion and €15 billion for 2010.

“It is a huge sum of money, exactly half the amount of our income tax take,” Mr Hayes said, adding that the deficit this year is €18 billion. The centralised tendering system had to be a fundamental part of the deficit-reduction programme, the Minister noted.

Mr Hayes said a situation should no longer be tolerated where officials throughout the system repeated the same work. He believed the changes would result in reductions in legal costs and there would no longer be a need for the involvement of “significant” legal firms. “Equally we should no longer see the need to go to external professionals, frequently paying substantial amounts of money to repeatedly produce very similar documents.”

He said OPW officials would report to him in six weeks concerning the number of public agencies using the State’s centralised contracting system and he would “ultimately name and shame” those bodies not using the service.

“I don’t think it’s good enough that where we have contracts with savings of 25 per cent, why local bodies are not using those contracts and making savings.”

The National Procurement Service, with the Office of the Chief State Solicitor and the Attorney General have developed a new set of documents for the procurement process available online and on DVD. The documents introduced by the Minister are designed to bring “clarity” to the competitive process and answer questions before a business enters a tendering process.

The new service is expected to reduce litigation and make it easier for businesses to decide whether to tender for a contract.

Mr Hayes said there were now “aggregated” contracts and frameworks in 40 areas including printing, electricity and advertising worth €414 million.

Public bodies could use existing contracts and avoid duplicating tendering, legal and other costs.

Mr Hayes said a centralised stationary contract worth €10 million had resulted in 25 per cent savings but only 20 per cent of public bodies used it. He said the public sector had to mirror the private sector in cutting procurement costs like Dell, Google or Intel.

Further information is available at procurement.ie

(The Irish Times, 18th June 2011)

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