Minister makes step in the right direction but still some way to go
Faced with a wide ranging recession, many private sector firms are keenly interested in an opportunity to bid for public sector contracts.
The co-ordinating unit in the Department of Finance and Personnel, the Central Procurement Department (CPD), has been vulnerable to serious recurring criticism, ranging from excessive bureaucracy, protective specifications deterring new bidders, and the unnecessary consolidation of potentially smaller contracts into single large contracts, to inconvenient access and offering inadequate communications to enhance awareness of opportunities.
The pleas from the business community for improved contracting arrangements are matched by the ambitions for improvement of the minister with responsibility for the CPD, Sammy Wilson. He has taken an active role in monitoring CPD and starts with an acknowledgement of some of the inherited criticisms.
Also, he admits that, while there have been many improvements, there is still scope for further useful changes.
The minister offers some reassurance. Recently 56% of tenders monitored by the procurement specialists (CoPE) were from firms employing less than 50 people and 51% of contracts were won by these smaller firms. In answer to concerns that local firms received too small a proportion of contracts, he added that 77% of all contracts (and 96% of construction contracts) went to locally-based businesses.
A critical improvement in contracting processes has been the insistence that all contracts worth over £30,000 are now listed on the eSourcingNI web site. This is re-enforced by targeted awareness and advice sessions with interested potential bidders.
Public sector contracts must be organised to fairly test the market place and ensure that contracts deliver best value for money.
A complicating factor in awarding public sector contracts is the need to respect the EU rules applicable to larger contracts which are designed to ensure that there is a 'single market' across the EU. The EU directives have two consequences.
First, they open the door for competition which should deliver optimum outcomes (or prices) across the EU.
Second, the directives necessarily have their own rules and mechanisms which, in some cases, may be seen as more time consuming, more bureaucratic and more open to the possibility of a legal challenge.
Sammy Wilson notes that Northern Ireland businesses have successfully used some EU advertised tenders to gain business outside Northern Ireland.
The plea made on behalf of business is that for contracts with expected values below the minimum EU levels, greater local discretion and simplification should be applied. This would mean that construction contracts for less than £4m and contracts for supplies of goods for less than £156,000 (approximately) only need to be advertised locally.
A revised set of guidelines are due in the near future and Sammy Wilson expects to endorse a series of simplifications to make the 'smaller' contracts more user friendly for local bidders. There is one important distinction to be made. Sammy Wilson, understandably, wants to make access to public sector contracts simpler and more easily understood. However, this cannot be a mechanism to build in undue preferential treatment, or incentives, for local bidders.
Private sector businesses generally welcome the opening-up of the public sector contracts market place. There are some apprehensions about the opportunities. One is that the public sector will begin to use social clauses in ways that may frustrate generating value for money.
On this topic, the minister quotes recent examples, including the Giant's Causeway, which, he believes, add a helpful dimension to the role of the public sector.
Another is that public sector contracts sometimes bring difficult procurement litigation. In the last five years there have been 32 challenges. This is less than 0.3% of all awards. Nevertheless, Mr Wilson takes some comfort from the standards set by the courts and their outcomes in terms of support for the implementations procedures.
The debate about fairness and efficiency in public sector contracts is currently showing considerable improvements but the Minister emphasises that he has ambitions to go even further.