Have your say on the future of Public Procurement

Each year the Irish State spends approximately $19 billio on public procurement. My 'Quality in Public Procurement Bill' 2021 is about spending better. We need to know that the public money we are spending is giving us the best possible results in terms of sustainability, the environment, employment, social impact, quality and delivery. My Bill would require public bodies to consider both quality and price when spending public money or to provide an explanation as to why not. In other words, think about quality or explain why you’re not thinking about quality.

Here are some points I will be making in the section on Strategic Procurement as part of my submission to the public consultation which may be of interest. 

"To achieve the Strategic Public Procurement objective, I believe a step-change in culture and practice in relation to public procurement will be required across central government, local government, public and semi-state bodies across Ireland. For many years, public procurement contracts were in the main awarded on the basis of lowest price, with value-for-money being the ostensible overriding objective of all public contracts.  

Over the years however, we have seen many examples of how an over-reliance on lowest price in the awarding of contracts is not achieving value-for-money with poorly delivered goods, works and services costing the State and the public much greater financial and indeed personal costs in the long run.  In addition, a lowest price approach fails to leverage the many opportunities to deliver social, environmental and innovative benefits to the State and wider public through the use of strategic public procurement.

With the transposition of the 2014 EU Public Procurement Directives into Irish law, public contracts must be awarded on the basis of the ‘most economically advantageous tender’ (MEAT) — with the option of assessing this as best price-quality ratio (BPQR), or price or cost only.  Member States in implementing the EU Directive had the choice to restrict the use of lowest-price or lowest-cost awards. Ireland did not do this at the time. 

It remains entirely at the discretion of the contracting authority whether or not to use best price-quality ratio as the basis to award contracts and there is no requirement on the contractor to set a minimum percentage for the quality component of BPQR.  With the result price continues to be the overriding consideration in the awarding of public contracts and quality considerations are not sufficiently considered and delivered upon in public procurement.

To bring about the necessary step-change in culture and practice to deliver a strategic approach to public procurement across the State, I believe it is imperative to enact my ‘Quality in Public Procurement (Contract Preparation and Award Criteria) Bill 2021, making best price-quality ratio the default approach to the awarding of all contracts above the EU threshold and to introduce a minimum quality weighting of 50% for all works projects over the EU threshold. Should a contracting authority wish to deviate from this approach, they need to provide a justification as to why, i.e. the comply or explain principle. I believe mandating the use of quality criteria, encompassing social, environmental and innovative considerations in all public procurement contracts over the EU thresholds will provide the necessary impetus for the State to procure goods, services and works in a manner that is strategic, sustainable and socially and economically sound over the long-term.

There has been a number of important and welcome circulars, guides and strategies published by the Office of Government Procurement, Department of Environment and Climate Change and the Environmental Protection Agency in recent years to promote the use of quality criteria in procurement, including the 2024 Green Public Procurement Strategy and Action Plan. This Strategy lists a comprehensive range of actions that are needed to advance sustainable procurement and the adoption of green criteria in public procurement contracts.

Two salient recommendations in the Green Public Procurement Strategy are to legislate for the mandatory reporting on the use of green criteria by public bodies in all procurement contracts and the use of life cycle-costing by public bodies for all works contracts under the Capital Works Management Framework. The inclusion of green criteria within all public contracts must be adopted without delay given the urgent need for sustainable development, climate actions and meeting our 2030 and 2050 GHG emissions reduction targets.  I believe only through legislation will the necessary actions be taken swiftly and the resources provided to bring about this strategic imperative in the coming years.

As highlighted by the European Court of Auditors Report 2023 on the operation of 2014 Public Procurement Directives, members states are making insufficient use of the leeway afforded to them by the 2014 Directives to deliver much greater social value through their public procurement. Given Ireland spends in the region of €19 billion per annum on procuring works, goods and services this represents a significant missed opportunity to deliver social value to communities, disadvantaged groups, minority groups, innovative small and medium firms, social enterprises, and the wider public. By mandating the use of quality criteria in the awarding of contracts, public buyers and procurers will very quickly become much more cognisant of how to incorporate both social and environmental considerations into their procurement. It will lead them to think about social considerations and quality right at the outset of the spending process. They will be compelled to consider how can they use spending opportunities to deliver the most social value and maximise the public benefit which in turn may influence the approach they take in their procurement. There will be an impetus for procurers to make greater use of grant funding to work with social enterprises, micro enterprises, voluntary and community organisations or to use reserved contracts to improve the employment prospects for people who face barriers to employment.  Payment of the living wage should be included as a condition of contract for all works and services tenders. The provision of apprenticeships and training measures for unemployed and young people and requiring suppliers to undertake due diligence on human rights in their business supply chains are other examples of social criteria to apply."