It’s a myth large firms favoured in public contracts

Posted by Jim on February 19, 2018  /   Posted in Blog

By Patrick O’Donovan

Patrick O’Donovan is Minister of State at the Department of Public Expenditure and Reform

Our State spends approximately €12.5bn every year on goods, works, and services. This represents a significant opportunity for our businesses to sell to public bodies and to grow. Myself and my colleagues in Government are committed to making sure that all SMEs are aware of this opportunity and have the supports they need to compete.

One of the keyroles I have as a Minister for State is the responsibility for the Office of Government Procurement (OGP). The OGP sources goods and services on behalf of public sector bodies. Its work represents an opportunity to achieve value for money by pooling significant demand. However, we have to balance the drive to make savings with the need to make sure that firms from the SME sector have a fair opportunity to access public spending. Striking this balance has been, and continues to be, a major priority for this Government.

Some facts: Almost 70% of the firms on OGP frameworks are from the SME sector and our analysis shows that most of the money spent–52%–is spent with SMEs. There are areas, such as gas and electricity where larger firms are the obvious supplier. But there are also categories of spend where SMEs are a natural solution. In marketing, print, and stationery, for example, 70% of public expenditure goes to SMEs. Our analysis also shows the vast majority of spending–94%– is done in Ireland. It is true our public procurement rules support the European single market and offer opportunities for other European firms to bid. But we must also remember the same rules give Irish firms access to a wider European market worth in excess of €2 trillion.

Every time the OGP establishes a new framework, it undertakes extensive market research to understand the structure and dynamics of the market and how to ensure SMEs have the opportunity to compete. The OGP does this in a number of ways including by breaking competitions down into smaller lots by geography or specialism, introducing proportionate requirements in terms of firms’ turnover and insurance, and providing pre-competition briefings. Nobody disputes that public procurement, done correctly, can take longer than it does in the private sector. Transparency demands this. For firms that do succeed, however, the scale of the opportunity and the benefits of prompt public payments can make a transformative difference to their business. And smaller firms don’t always have to undertake the work of bidding in competitions alone. Consortia of firms can come together to meet the criteria for a competition.

I chair an SME advisory group tasked with further promoting SME access to public procurement opportunities. This group has representatives from the OGP, Department of Business, Enterprise and Innovation, InterTradeIreland, Enterprise Ireland, the Competition and Consumer Protection Commission, and business groups Ibec, Isme, SFA, Chambers Ireland, and the Construction Industry Federation.

A recent key recommendation of the group was better communication to SMEs. In response, the OGP has developed a series of breakfast briefings, delivered by our partners in InterTradeIreland, which are currently being delivered around the country. The briefings are supported by a range of videos explaining public procurement in plain English that can be accessed from the OGP website. But I recognise there is more we can do to simplify the process for smaller firms. More of our processes, from qualifying documents to invoices, are moving online. This streamlines public procurement and reduces the bureaucratic burden on businesses of all sizes.

It is a myth that larger suppliers are favoured by the public procurement process. Smaller firms can and do win business selling to public bodies. When they do, we know that the impact is immense, as they take on new people, open up new lines of activity, and invest in their premises and communities. SMEs also promote healthy competition and offer innovative solutions and that is why we are committed to continuing to ensure that they have the opportunity to bid.

Patrick O’Donovan is Minister of State at the Department of Public Expenditure and Reform

About Jim

James is a director with JCR Network Services Ltd, which provides sales, marketing and business development expertise to local SMEs in Ireland and the UK. Many businesses have developed their growth strategies through our focussed actions. We specialise in helping the agri-food , emerging technology, manufacturing and services sectors.

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