Issues

Reform in public procurement

Since the commissioning of Capacity and Capability Review of the Centralised Procurement Function in 2012, Irish public procurement has undergone significant reform. One of the key actions that arose from the review was the foundation of the Office of Government Procurement (OGP); its Portfolio Manager, Róisín Killeen speaks with eolas about what has been and what is to be done to reform public procurement.

“Public procurement spans the entire public sector and encompasses huge investment in the economy. It ranges from low value common goods and services right through to high value complex capital infrastructure projects,” Killeen begins. “Operationally, the public procurement reform programme has meant the development of a collaborative model, between the OGP and its four key sectoral partners in local government, health, defence, and education, each of which retains control of specific categories of spend.”

This centralised procurement model is designed to make the process and the award of public contracts more efficient for public bodies and “to deliver value for money for citizens through savings, risk management and administrative efficiencies”. Engagement with external industry stakeholders has been improved through a specific purpose SME advisory group, chaired by the Minister of State for Public Procurement, Open Government and eGovernment, Patrick O’Donovan TD. “This has helped to support and strengthen public procurement practice across the public sector while ensuring fair access for small and medium sized businesses,” Killeen says.

“It’s important to acknowledge where we’ve come from,” the Portfolio Manager points out. “The reform programme began in 2012 with the publication of an Accenture report on capacity and capability. The first government appointed Chief Procurement Officer, Paul Quinn, came to office in 2013 and he was tasked with a strong mandate for change. The new centralised model with the five central purchasing bodies became operational in 2014. When the OGP became active in 2014 as a central purchasing body, it also took responsibility for reform, policy, systems and data gathering, as well as communications.”

These central purchasing bodies allow the reform programme to implement “a category management approach to focus on supply knowledge and to develop category-specific knowledge” according to Killeen. “It is also designed to work with public sector bodies to enable compliant and competitive outcomes with appropriate risk management,” she says.

At a time when public procurement and its transparency is in the spotlight following overspends and extensive delays in public projects such as the National Broadband Plan and the National Children’s Hospital, Killeen says that the reform programme “is designed to bring policy and operations together to enable better understanding, effective policy making and implementation, and to improve transparency”. Earlier this year, Minister for Public Expenditure and Reform, Paschal Donohoe TD, launched a specific review of procurement policy for public works projects, which is currently being undertaken by the OGP.

“Another pillar is systems and data, so we can better understand spend and tender activity across the public sector, measure outcomes and improve how we manage procurement plans,” Killeen continues. “This allows public sector bodies and clients to engage with us, and with the market, more effectively.

“The final pillar is increasing professionalism for practitioners. Anecdotally, prior to the reform programme, public procurement practitioners had little training over the years and many practitioners operated in relative isolation or in small groups. Under the reform banner, the opportunity exists to improve the training and experience that people receive and to improve their skills in the area of procurement.”

Underpinning this structure are new governance arrangements, which bring together “key stakeholders to enable collaboration and cooperation” and oversee the delivery of objectives set by government. At the top of the governance structure sits an interim public procurement reform board, whose role is to oversee the implementation of the programme’s structures, practices and policies. This board is again chaired by the Secretary General of the Department of Defence and comprises “some of the key leaders across the state as well as independent external experts”. Separately, a procurement executive is responsible for the operational management of the government’s centralised procurement model. Killeen says that these pillars always seek to “ensure that SMEs are fully considered in the development of public procurement contracts”.

The obligations on public sector bodies to give reasons for their decisions at all stages of the public procurement process are stated in Regulation 84; this is an important regulation to ensure that the transparency objectives contained within the process are met.

“The central purchasing bodies control the design of frameworks by standardising specifications where possible with a view always to facilitating SME access,” Killeen explains. “By category management, procurement staff are dedicated to specific areas of spend, which allows for a better understanding of market structures and seeks to align government needs to those structures, assessing risks at supply and industry level. Through our systems and data gathering, the requirements are rooted the known needs of public sector clients. The OGP is also continuously developing electronic procurement, for example, by launching an electronic version of the European Single Procurement Document earlier this year, which all aids in streamlining the tendering process.”

The OGP now has approximately 200 staff across five offices, with 130 dedicated sourcing staff and continued investment in staff training and systems. Data gathering and business intelligence units have been retained in order to produce an annual public spend and tendering report. The OGP currently has over 130 active framework agreements, many of which are drawdown agreements, allowing public sector bodies to directly engage with suppliers for services. In 2018, over 1,100 competitions took place within the OGP and the eInvoicing programme was established.

With the publication of the National Public Procurement Policy Framework (NPPPF), the ongoing review of the Capital Works Management Framework, a broad suite of policy circulars and information notes available to public sector bodies to assist them in matters including Brexit, social considerations and eESPD and the relaunching of the Tender Advisory Service in 2018, public procurement policy development is now “in line with operations” according to Killeen.

“Notwithstanding how far we have come, or the extent of progress to date, public procurement remains a complex environment,” she reflects. “It involves a balancing act to marry together sometimes competing objectives, ranging from policy to market capabilities. Public procurement practitioners must always remain alert to the ever-changing circumstances, from economic conditions to budget restrictions, to the social, environmental considerations, as well as the many risks inherent at every stage of the process.

“There is always a multitude of factors, trends and developments to remain mindful of, amongst these are the complexities of growing litigation. There’s an increasing body of public procurement reference cases. Over the past 12 months there have been a number of recent decisions across all courts on a number of procurement issues that we remain mindful of. The obligations on public sector bodies to give reasons for their decisions at all stages of the public procurement process are stated in Regulation 84; this is an important regulation to ensure that the transparency objectives contained within the process are met.

“Social considerations are another area of increasing importance, with social, labour, and environmental issues featuring strongly. The OGP have published an information note on incorporating social considerations into public procurement. There is also the National Development Plan and our delivery capability. While national expenditure is increasing, this places a challenge on the capability of the market to respond and to provide a successful outcome. Having regard to the NPPPF is imperative on all of us both in the short and medium term.”

Killeen reflects before concluding: “The area of eProcurement is progressing both at national and EU level. There is still considerable uncertainty with regards to Brexit, the final agreement and timing of transitionary arrangements; public sector bodies will be impacted. Risk assessment is needed and close engagement with supply chains is imperative.”

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