New public procurement rules aimed at encouraging SMEs to bid

The Government has introduced new guidelines aimed at making it easier for small business to tender for public contracts.

The new rules, which were announced yesterday by Minister of State with special responsibility for Public Service Reform and the Office of Public Works Brian Hayes, provide for the sub-division of larger contracts into lots, where possible, and for the setting of relevant financial capacity, turnover and insurance levels for tendering firms proportionate to the circumstances of a particular contract. They also urge buyers to provide for the formation of a consortium of smaller businesses to allow them to bid for public contracts.

The guidelines instruct public sector buyers to analyse the market before tendering to better understand what is on offer, the capabilities of SMEs and the competitive landscape. To encourage innovation, tender documents should also indicate if buyers are prepared to accept reasonable variants to the specifications.

“The reform of public procurement is a key element of the public sector reform programme,” Mr Hayes said. “Our goal is to ensure that it gets easier for businesses to engage with public procurement while at the same time driving improved value for money for the taxpayer.”

The guidelines were mostly welcomed, with Minister for Public Expenditure and Reform, Brendan Howlin noting the purchasing power of the public sector, which spends more than €8 billion every year on goods and services.

“The measures announced today will further improve small businesses’ access to the public sector market by making government procurement more SME-friendly, reflecting not only the vital importance of SMEs to our economic recovery but also the significant value these suppliers are delivering to all parts of the public sector,” he said.

Business lobby group Ibec said the guidelines were a welcome step, but warned that they were just a start and more would need to tbe done.

"A level playing field is needed for all companies bidding for public contracts. The new initiative is a welcome step towards reducing unnecessary barriers that limit the ability of small companies to compete effectively in the process," said Ibec enterprise executive Aidan Sweeney. "To achieve the priority of better government, it is vital that these new changes are adopted by buyers right across the public sector. However, these new rules are just a start. A national strategy with the specific aim of developing a procurement culture, inclusive of SMEs is now required."

Isme, the Irish Small & Medium Enterprises Association, was equally cautious, saying more would need to be done to help SMEs obtain government contracts, and called for real action.

"The bottom line is that the national procurement system must be designed with a 'long term vision', 'whole life cost model' and from a 'think small first' perspective, whereas, to date, it has been guilty of simple 'blind bureaucracy'," said Isme chief executive Mark Fielding.

He called for the Government to introduce an ombudsman who would hear complaints from SME suppliers in the public procurement process.