New Government Policy on Procurement is eliminating small businesses from the tendering process, resulting in business closures, job losses, regional imbalance and ultimately less competition in the marketplace...
The Chairman of the Small Firms Association, AJ Noonan, has stated that “small businesses around the country are effectively being prohibited from tendering for public contracts, in the move to centralise government procurement into large-scale contracts that they are ineligible to apply for.”
In its submission to the Public Accounts Committee, the SFA emphasised that current 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 2013, the published data suggests that 28% of tenders are being awarded to countries outside of Ireland, up from a previous high of 18% recorded. Ireland frequently tops the list of countries most likely to award to non-national countries and this trend is increasing all the time.
“Large suppliers from abroad can leverage their greater buying power to compete better on price” commented Mr Noonan. “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.”
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%.
The SFA Submission to the Public Accounts Committee contains 16 specific examples of current practical issues SFA members are facing in trying to engage with the public procurement system, with Irish Water and the HSE proving most problematic for tenderers.
“New Government Policy on Procurement is eliminating small businesses from the tendering process, resulting in business closures, job losses, regional imbalance and ultimately less competition in the marketplace. It is now imperative that the Government moves to set an SME market share, benchmarked internationally, which should form part of the Departmental performance reviews in the Public Accounts Committee”, concluded Mr Noonan.
Article Published: 08/04/2014