Securing best deals for the public good
Ireland spends billions each year in public procurement. We should be getting the greatest possible benefit from public money spent in this way and making powerful use of the associated leverage.
EU Directives introduced in 2014 allow for a stronger social and environmental dimension to procurement by public bodies. Unfortunately, that potential has been underused and recent controversies have made it clear that we are not only missing opportunities, we are creating problems.
That is why, I brought forward a new Bill to place quality at the heart of public procurement in Ireland.
“Currently, contracting authorities usually chose between a ‘price- quality’ or a ‘lowest price only’ approach when designing calls for tender. The collapse of UK construction giant Carillion seems to have arisen among other things from underbidding to win public contracts and the subsequent liquidation of its Irish sub-contractor halted work on six important school projects here.”.
“An approach which automatically favours the lowest bidder tends to benefit companies which are in a position to put in an undercutting bid. Last year a health expert informed an Oireachtas committee that Irish laboratories tendering for cervical screening in 2007/8 were told they had scored highly on quality and turn-around time but not on cost.
The contract was subsequently awarded to a US provider.
The Contract Preparation and Criteria Bill, would make ‘price:quality’ the default, requiring companies bidding for public contracts to compete on quality as well as price.
Public authorities can still opt for lowest price only but that requires sign off at senior level and a published rationale. The aim is to encourage more thought and accountability at an earlier stage in the process.
This does not mean that procurement becomes more expensive. In the Netherlands, where similar laws were introduced, 73% of contracts still went to a lower bidder but those companies also brought quality to the table.
Researchers there found that a price:quality ‘approach more than doubled the overall benefits to the public as purchaser.
In the case of the billions earmarked under the National Development Plan 2019–2027, the Bill raises the bar by setting a mini- mum target of 50% quality criteria on any major project.
There are wide definitions of quality under the EU Directives, but the Bill requires public authorities to give due consideration to guidelines from the Office of Government Procurement that contain established policy targets and commitments in areas such as climate change, employment and social inclusion.
Lastly, the Bill encourages greater awareness around the Public Sector Duty on Equality and Human Rights by requiring public bodies to provide updates on that duty in their annual procurement reports.
This Bill is not only in line with EU law on procurement, it also reflects a wider momentum for change within Europe’s economic policies.
It is increasingly clear that many economic mechanisms could be redesigned to deliver more for the collective common good. A strong, active interpretation of EU procurement law is one step in the right direction.
This is fundamentally about joined-up thinking. By changing the process and culture around public procurement we can deliver tangible benefits in terms of sustainability, standards and social impact.
The Public Authorities and Utility Undertakings (Contract Preparation and Award Criteria) Bill 2019 passed in the Seanad on Wednesday 3rd April with the Government abstaining and all other parties supporting.
This article was written by Senator Alice Mary Higgins. Alice-Mary Higgins is an independent Senator on the NUI panel and leader of the Civil Engagement Group