The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer will have 10 minutes in which to propose the motion and 10 minutes in which to make a winding-up speech. One amendment has been selected and published on the Marshalled List. The proposer of the amendment will have 10 minutes in which to propose the amendment and five minutes in which to make a winding-up speech. All other Members who wish to speak will have five minutes.
I beg to move
That this Assembly recognises the importance of ensuring that public money spent on supplies, services and construction works represents value for money and results in investment in society and the environment; and calls on the Minister of Finance and Personnel to forward the recommendations in the previous Committee for Finance and Personnel’s report on its inquiry into public procurement to the Executive for consideration.
Ba mhaith liom an rún a mholadh don Tionól. This is a timely debate, given that we had a debate last week about the Programme for Government. Ministers are currently considering an early draft of the Programme for Government. There is no doubt that one of the central features of that programme, as was the case with the previous programme, will be to grow the economy and to take measures to attempt to rebalance the economy. One of the important tools that the Executive can use, and have been using, although perhaps not in a fully co-ordinated fashion over the past four years, is their spending and procurement power to try to achieve outcomes to stimulate local economic activity and achieve social objectives.
I realise that local government is not the direct responsibility of the Minister of Finance and Personnel, who, I am pleased to say, is in the Chamber. Nonetheless, whatever policies the Executive set, there should be a strong view that we must ensure that an agreed public procurement strategy follows through to local government, particularly when the shake-up of local government takes place and new structures are defined and agreed. Between central and local government, some £3 billion is spent annually on the purchase of supplies, services and construction works. That level of expenditure offers real potential to maximise the economic and social outcomes for the local community.
The strategic direction of public procurement policy is set by the Executive, with the procurement board, chaired by the Minister of Finance and Personnel, overseeing the development and implementation of overarching policy. The board is supported by the Central Procurement Directorate in the Department of Finance and Personnel (DFP). The Executive’s previous Programme for Government, ‘Building a Better Future’, highlighted procurement’s positive role in furthering cross-cutting, sustainable development and achieving socio-economic objectives. In that programme, the Executive also placed an emphasis on growing the private sector, including small and medium-sized enterprises (SMEs), and developing the social economy.
Although the predominance of smaller enterprises in the local economy is widely acknowledged, there is a growing awareness of the valuable role for social economy enterprises in operating a commercial business model for social, community or ethical purposes. Moreover, it is internationally recognised that increasing the involvement of small and medium-sized enterprises in the government supply chain can accrue benefits, including better value for money, business growth and innovation, for the public sector and the economy as a whole. In addition, the ability of social economy enterprises to access large and sustainable markets provides a stronger basis from which they can deliver important social policy outcomes.
There is a real sense that there is value in ensuring that the £3 billion spent annually through the public sector on procurement is used to achieve those outcomes and that greater co-ordination across all Departments and down through local government is required to achieve that. The benefits to small and medium-sized enterprises include increased participation in providing services and works to government. That can encourage growth in participation in the public procurement market elsewhere, which brings the added benefits of boosting employment and raising productivity.
In the previous mandate, the Committee for Finance and Personnel carried out an extensive inquiry into the value of public procurement and made some 36 recommendations to the Department of Finance and Personnel on its oversight role and the role of all other Departments. That Committee’s work has been endorsed and adopted by the current Committee for Finance and Personnel, which I chair, although I do not speak in that capacity today. The current Committee is pursuing some of the recommendations with the Finance Minister. From the previous Committee’s work, there was a strong sense that, as far as permitted by legislation, the Executive needed to develop a strategic policy for using public procurement as a tool to support the development of smaller enterprises in stimulating economic growth in the longer term. The Committee agreed that the implementation of such a policy would require a further culture change on the part of government purchasers. They must place a stronger focus on growing the economy and creatively developing procurement solutions that are sensitive to the needs of the economy. In doing so, they must also remain legally compliant.
The current Committee has taken up the sentiments behind the recommendations of the previous Committee, and those underpin the motion. Although a number of Departments have pursued the matter, some outstanding issues remain.
The use of public procurement is not only to stimulate the local economy, particularly small and medium enterprises, and to stimulate construction activity among local firms but to achieve social outcomes through the use of clauses in public procurement. We are still awaiting — perhaps the Minister can update us on this in his response — a definition of “social value”, which, I think, is centred in the Office of the First Minister and deputy First Minister (OFMDFM). That definition is essential to enable us to send a clear message that emanates not only from the Department of Finance and Personnel but from the Department that runs the Executive. Once agreed, it should be formulated through all policies.
A survey of usage was conducted by the Department of Finance and Personnel through the Central Procurement Directorate, and, in a response earlier this year to the previous Committee, it found that there was what it called a variable pursuit of social outcomes through procurement across the Departments, which, in essence, means a patchy response. That underpins the sense of the motion, which is to get the Department of Finance and Personnel to bring to the Executive, as the sponsoring body, a drive as part of the Programme for Government work to stimulate economic growth, to rebalance the economy and to use this tool, which is £3 billion of spend, to achieve an outcome that does that and achieves social outcomes as well.
In that regard, I acknowledge the amendment, which I have no difficulty in supporting. It is slightly churlish, perhaps, not to acknowledge that the Department that pioneered the use of social clauses in contracts was the Department for Regional Development (DRD). Nonetheless, I presume that the party made reference to the Department for Social Development (DSD) for its own political reasons. However, the spirit of that amendment is correct in that we can achieve not only the maximum economic benefits for local industries and the local economy but some very important social outcomes as well.
There has been some progress on the centre of procurement expertise (CoPE) accreditation exercise, which has included a scored criterion for socially responsible procurement. Work has also been developed between DFP and the Department of Enterprise, Trade and Investment (DETI) to build capacity among small and medium enterprises to allow them to get on to the supply chain or to become able to tender to get on to the supply chain. That has to be acknowledged. It would be wrong not to acknowledge that certain Departments have been working diligently at this, and certain achievements have been made by DFP and DETI.
However, the central message, which is probably reinforced by the amendment, is that we must do better. There must be a more coherent approach across all the Executive Departments. DFP has a lead on the matter, but it is essential that OFMDFM defines social value and ensures that it comes as a directive through all Departments. In that way, when the Executive get a coherent policy that every Department has fully bought into, we can, through the new local government structures, use that model to — not to insist; they do not have that authority — try to influence local government, which is also an important player in public procurement, particularly in very small local areas, and can have a very significant benefit for the local population.
In proposing the motion, I hope that the Assembly will agree that this is an important area of work for both DFP and the Executive as a whole. I have no difficulty in supporting the amendment, and I look forward to the rest of the debate.
I beg to move the following amendment: At end insert
“; and urges the revision of policy and practice on the use of social clauses in government procurement, including the introduction of the social clause model developed by the Department for Social Development for housing and regeneration contracts.”
Go raibh maith agat, a Cheann Comhairle. Éirím leis an leasú don rún a mholadh. I express my thanks to the Members who brought the motion before the House. It is an important motion that is worthy not only of debate but of the necessary follow-up action to implement the recommendations of the report on public procurement that was produced by the previous Committee for Finance and Personnel. The SDLP amendment seeks to add to the motion a greater focus on maximising the social benefit that can accrue from public procurement. I thank Mr Murphy for his support for the amendment.
The report of the previous Committee’s inquiry is very comprehensive. It covers a wide range of proposals. I estimate that there are 41 in all under a variety of headings, including, of course, “Maximising Social Benefit”. You will be relieved to hear, Mr Speaker, that I do not intend to go through each recommendation individually, but I will comment on some that I consider among the most important.
As I have observed previously in the House, we have few enough economic levers at our disposal, so we should capitalise to the greatest possible extent on all opportunities available to facilitate smaller enterprises to realise their full potential and maximise the economic and social impact of public expenditure through procurement, within the bounds, of course, of European and UK legislation. I suppose that that is the overarching theme of the report.
The report makes important points about realigning the existing drivers of public procurement with the Executive’s economic, social and environmental policy, as it will, presumably, be expressed in the final version of the Programme for Government. Now is the time to do that, as the Programme for Government nears completion. Also, it needs to be done through an Executive strategy for the support and development of our smaller business. That may require a further culture change in government purchasers so that there is focus on growing the economy and on procurement solutions that, as the report states, are sensitive to the economy.
We should encourage commissioners and purchasers to pursue social benefit through procurement and to link social and environmental policy in the Programme for Government to public procurement. We should look at alternatives to the large framework agreements, and, as the report points out, we should break down contracts into smaller lots; set targets for increased participation by SMEs; encourage collaboration; improve information flow, feedback and payment times; and develop a model for measuring the impact of public procurement, which includes its social and environmental benefits.
DFP has presented the Committee with an update on its progress in implementing the majority of the recommendations, which it accepted and which are being progressed. I welcome that. The motion calls on the Minister of Finance to forward the recommendations to the Executive, and I agree that that is a very important step. If we are to ensure that the recommendations go beyond DFP and reach down into all procurement centres and are championed by all Ministers, it is important that the Executive adopt the proposals.
Mr Murphy referred to the role that DRD played in introducing social clauses to that Department’s contracts. I am glad to say that, in the light of some of the innovative approaches to increase the supply of housing in Northern Ireland that she adopted when she was Minister for Social Development, Margaret Ritchie was asked by the British-Irish Council (BIC) to lead its work stream on housing.
One of the areas in which best practice was exchanged in the BIC was in the possibility of attaching meaningful social clauses to housing contracts so that successful contractors would make a reasonable contribution to work experience for young people and provide opportunities for the unemployed. When, on 1 March 2011, he reported to the Assembly on progress that the BIC had made, the then Minister for Social Development, Alex Attwood, outlined an innovative proposal for social clauses that he was introducing through DSD. Under that scheme, all those who would be awarded new contracts by the Department to build social housing or undertake urban regeneration would be required to provide local unemployed people with work experience. For every £500,000 of labour value in the contract, the main contractor would be required to provide either two 13-week work placements or one 26-week work placement. The work placement would be operated through the Department for Employment and Learning’s Steps to Work programme. In addition to the 13-week placement giving experience to young people who might not have worked before, the 26-week placements were designed to lead to either a level 2 or level 3 vocational qualification or an essential-skills qualification. From the start of 2011, that requirement has applied to all DSD housing newbuild and regeneration contracts.
The same clause has been included in the Housing Executive’s maintenance contracts, rolling out to all large contracts for supplies and services. It is estimated that, in a typical year for DSD contracts alone, the initiative would generate either 73 26-week placements or 146 13-week placements. In announcing the initiative, Mr Attwood pointed out that it was an initiative that could and should be rolled out across the public sector. That is an example of good practice and shows how the expenditure on public procurement can be of social benefit. Government spending on such contracts amounted to around £2·3 billion per annum, and construction contracts awarded by public sector centres of procurement excellence was £925 million. It is estimated that if the DSD social clauses initiative were replicated by other Departments, there would be around 1,850 work placements in construction contracts alone.
Mr Attwood argued that social clauses could be applied equally to revenue expenditure contracts and non-construction capital contracts such as IT projects. He estimated that of the £1·4 million spent by Departments, agencies, NDPBs, etc, on supply and service contracts, the DSD approach could be translated into 2,760 opportunities.
I was a member of the Social Development Committee when it was chaired by Simon Hamilton and others. The Committee had pushed for the use of social clauses for a considerable time. I know that Alex Attwood had input. How many people have actually been employed as a result of the scheme that was introduced at the start of 2011?
Thank you, Mr Speaker. DSD’s example is very good and should be replicated by other Departments. People have been talking about doing more with social clauses, and I am pleased that both SDLP Ministers for Social Development have implemented their policy on that issue. I hope that the debate will lead to real change —
I support the motion, and I thank the Members for bringing it to the House this afternoon. Public procurement is defined as a process of acquisition, usually by means of contractual arrangement after public competition, of goods, services, works and other supplies by public services. Twelve guiding principles have been established to govern the administration of public procurement. They are accountability, competitive supply, consistency, effectiveness, efficiency, fair dealing, integration, integrity, informed decision-making, legality, responsiveness and transparency. The public procurement board has a strategic plan, which brings us up to 2014. It has three overarching themes: securing best value for money; using public procurement in order to support economic development; and ensuring that the current procurement structures are fit for purpose and capable of delivering in the current climate.
In its report on the inquiry into public procurement in Northern Ireland, the Committee for Finance and Personnel came up with some 52 recommendations, the majority of which were accepted by the Department. Many of those rejected were rejected for good reasons based on the fact that we must adhere to the UK and EU regulations. It is an important part of government to ensure that any government contracts are awarded fairly and openly, not only in the Northern Ireland market, but in the UK and European market, and, most importantly, ensuring value for money. It is vital that we ensure that we meet and adhere to all the legal requirements set by the UK Government and European Union. Everyone in the European market is, therefore, open to bid on government contracts in this part of the UK. That is an issue that I have difficulty with, as, I am sure, do many other Members.
I thought the Minister would like that.
It is a matter of fact in law that that could, perhaps, change if, later this year in the House of Commons, MPs permitted a referendum on our membership of the EU. I will watch that with interest.
I believe that it is imperative that all public funds are spent wisely in ensuring the best value for money for the benefit of the community. That is particularly important during these times of economic difficulties, when there is less money available to inject into the economy than there was in previous years. Money must, therefore, stretch further than it did before. In the past decade, we have seen an increase in the amount of money being spent by Departments. Much of that has gone in support of local enterprises and helping them to grow and develop. We in Northern Ireland are unique and privileged to have such a wealth of small and medium-sized enterprises, and we have seen government support those enterprises in recent years. Between May 2008 and November 2010, they accounted for 73% of all contracts issued by Central Procurement Directorate.
It should also be highlighted that it is up to each Department to decide as to how best to use public funds in the interest of the people of Northern Ireland. Since the establishment of devolution, we have seen Ministers deliver for their local enterprises. Much of that falls within the remit of the Minister of Enterprise, Trade and Investment, who has done an outstanding job in promoting the strengths of the local business. I commend her for that. I support the motion, as amended.
I thank the Members for bringing this important motion before the House today. Public procurement is a vital issue for Northern Ireland. Spending on government supplies, services and construction will be very important in this Assembly mandate in our efforts to revitalise and rejuvenate the economy. It represents a significant amount of money in Northern Ireland, with up to £3 billion being attributed to this area each year. The fact is that the majority of direction comes from the European Union via legislation and directives. However, that is not to say that we in the Assembly cannot have a say on the issue. Public procurement is a cross-departmental issue, with the Department of Finance and Personnel being responsible for overall Executive policy direction in the area.
The procurement board is responsible for developing policy across all Departments, and that is chaired by the Minister of Finance and Personnel and made up of the permanent secretaries from each Department. The Central Procurement Directorate undertakes to develop and establish the policy framework in best practice public procurement for the wider public sector in Northern Ireland. Therefore, it can be seen that the structure of public procurement is complex and that there is a very real opportunity for DFP and related agencies to ensure that we have the best approach to public procurement in place.
Within the Programme for Government, we also have an opportunity to ensure that adequate credence is given to public procurement. As the Programme for Government (PFG) is presented for consultation in the near future, I sincerely hope that that important area will be covered.
That was in the previous Programme for Government, which recognised the cross-departmental nature of public procurement and highlighted the positive role that it can have in furthering cost cutting, sustainable development and socio-economic objectives. The imminent PFG should also address the issue.
I want to move on and consider the motion, which states that:
“public money spent on supplies, services and construction” should represent value for money. The inquiry into public procurement, which the previous Committee for Finance and Personnel carried out, worked in that area and came up with a revised definition for value for money in public procurement. That definition read that value for money is:
“the most advantageous combination of cost, quality and sustainability to meet customer requirements.”
In theory, that definition is good, but the real work is in putting it into practice. To get the best possible value for money from government spending, that definition, which the Executive passed in March of this year, must permeate through all Departments and the various centres of procurement expertise.
Social enterprises and the social economy are also important in public procurement. The services that are provided by the social economy are invaluable to Northern Ireland, especially at a time of fiscal constraint. We must ensure that we give adequate support to that important area.
I also want to briefly mention a few other issues. The construction sector has been badly damaged by the economic downturn, and prudent government spending can go some way towards addressing that. Access to procurement opportunities is essential for small and medium-sized enterprises throughout Northern Ireland, as it is a way of keeping money in the Northern Ireland economy. I know that those are issues that the Minister is well aware of.
The Ulster Unionist Party welcomed the inquiry into public procurement and urged the Minister to act on its recommendations. We repeat that sentiment today, and, for that reason, I support the motion and the amendment.
I welcome the opportunity to speak in support of the motion. In retrospect, it seems all the more relevant as it comes on the tail of the recent debate about the need for a more pragmatic and contemporary revised Programme for Government.
As a new member of the Committee for Finance and Personnel, it was with great interest that I considered the report into public procurement policy and practice and its recommendations. Although the list of recommendations is comprehensive, there are several well evidenced underlying principles in the report that serve to tie it all together. Significantly, those include the growth and development of indigenous enterprises through increased local participation, the significance of social clauses and local benefit, and the need for greater synergy and cohesion between Departments and central and local government.
Of the report’s 52 recommendations, the Department accepted 43. Although that is encouraging, the emphasis going forward needs to be on action. Ultimately, that responsibility must be shouldered by the Executive, and the Minister of Finance and Personnel should see fit to bring those recommendations to the Executive Table. Given that our Programme for Government has yet to be decided, this is the opportune time to bring forward that input not simply to make an informed difference but to influence and shape the aspirations of any new PFG.
However, we appear to be making some movement in the right direction. The online e-sourcing portal has served as an opportune exchange platform for central and local government and for local firms that are seeking to engage and participate in the procurement process. However, why is it that only nine of our 26 local councils have registered to advertise procurement opportunities on that portal? We must focus on and address the need for greater co-operation between our central and local government.
Social clauses should also not be overlooked in any further consideration by the Minister or the Executive. The amendment that has been proposed to the motion is justified and welcomed, as it urges:
“the revision of policy and practice” in that area.
Although I appreciate that public procurement is ultimately subject to EU treaty obligations, that does not mean that all contracts should be exclusive of providing for our local workforce, regardless of the contractor. As other Members highlighted, the social clause model that DSD developed for housing and regeneration contracts is to be commended.
The Federation of Master Builders and the Construction Industry Training Board (CITB) have raised concerns with my party colleagues about the inability to secure work placements for students. The result is that those students have been prevented from gaining their technical certificates.
I also welcome, therefore, the commitment shown by the Minister for Employment and Learning in his advocacy of the inclusion of social clauses in building contracts for construction in the Titanic Quarter. Whether they relate to employment, apprenticeships or environmental sustainability, such clauses should be seen as an integral aspect of the public procurement process here. Arguably, through their implementation, our public spending return is likely to be much more beneficial, economically and practically.
This year, we have celebrated the achievements on the international stage of a number of local companies, which succeeded in securing procurement contracts through Europe. In January, the Northern Ireland construction group Graham won a contract worth a potential £100 million to design and build a radioactive-waste disposal facility in Scotland. In June, the Lisburn telecoms firm Arcatech won a £200,000 contract from Telekom Austria. Part of those companies’ success seems to be due to experience of dealing with stringent procurement processes in Northern Ireland, which do not appear as evident in other jurisdictions. We should be proud of our small and medium-sized enterprises, but we should also encourage our local companies to grow and develop if we wish to see their success reflected in our economy. For example, many of our small construction companies find it difficult to break through the barrier to become a main contractor, even if they have the relevant skills and experience to deliver a project. One way to do that would be to allow previous experience of working as a subcontractor on a similar-sized project to be acknowledged in the procurement process.
I strongly support the motion and the amendment and I trust that the Minister will take on board the report’s recommendations, as well as Members’ comments in the debate.
I welcome the motion. Procurement is fraught with all sorts of difficulties, and a number of firms find the bureaucracy of the process off-putting. The revised guidance provided by the procurement board has gone some way to alleviating and simplifying the process.
The e-portal for contracts in excess of £30,000 has been mentioned. That has been beneficial, but it has also opened the local market to a lot more competition. I am not a great supporter of the European standard. We have heard all sorts of voices supporting that, but I do not believe that we have benefited greatly. Some contracts have been won by local firms but, overall, they are of a miniscule value. We have to be careful that the public procurement process, and the £3 billion already mentioned that is spent by Government Departments, is fairly split up and that the process is open, accountable and delivers value for money for businesses and the public spend.
I have some difficulty with the way in which the process seems to have worked in the past. We have striven to make it more straightforward and to target the spend so that it will benefit the local social economy. As other Members have said, we should be trying to encourage apprenticeships. Firms that win contracts should deliver training and certificated qualifications to those who work in those industries.
One of the main reasons for this issue coming to the fore is the economic downturn. That has impacted greatly on the construction industry and small and medium-sized industries. The Northern Ireland economy depends greatly on our small and medium-sized firms to keep it going. I represented one of those businesses, and I know how difficult it is for them to break into public procurement.
Many small businesses subcontract to major contractors, and they are not being given the opportunity to get a fair crack of the whip. As Judith Cochrane said, it is vital that some of their involvement in previous contracts is taken into account.
I congratulate the Department of Enterprise, Trade and Investment (DETI) on its work in trying to engage with local businesses and on providing feedback to the Department of Finance and Personnel to ensure that what is coming forward will work. I think that that needs to happen as a matter of urgency. I appreciate the important input of the Minister of Enterprise, Trade and Investment, Arlene Foster, into that process.
It is important that Members ensure that the matter is brought forward to the Executive in order to make it a priority that everyone who applies for government contracts is given a fair crack of the whip. I must say that the process has to be more streamlined, but I find it difficult to see how on earth we can keep it streamlined while remaining accountable to everyone. If we make it too straightforward, it would leave us open to all sorts of criticism. Therefore, it is important to get the balance right.
The guidelines put forward by the procurement board were very helpful. If those guidelines could be implemented in their totality — I appreciate that not all of them have been — it would make the process a lot more straightforward. I support the motion and the amendment.
Go raibh maith agat, a Cheann Comhairle. I support the motion and the amendment. I am gratified by the focus around the House on the important opportunities that procurement offers and by the support for the measures to attempt to maximise the benefit to the local economy. This morning, there was some reference in the media to preparation for the Programme for Government. I do not think that any of us expect the overarching priority of growing the local economy to be de-prioritised. Assuming that all parties will continue to support that, I think that we are required to continue our focus on procurement policies to see whether we can improve.
The overarching aim of our work in the whole area of public procurement is to identify measures for maximising the wider economic and social benefits to the local community. The Assembly’s spend has clearly been affected, not just by the global recession, but by the significant hit —
I appreciate that contribution because I think that it gets to the heart of the issue. We need to be able to measure the benefits. We should be prepared to learn lessons, particularly if there is better practice. Among the 50-odd recommendations that came from the Committee’s 2009 report was recommendation 3:
“The Committee recommends that the procurement board, in conjunction with DETI considers redefining the definition of small and medium sized enterprises in the Northern Ireland context, paying particular attention to those currently identified as small, or micro-businesses, when exploring ways of boosting access to procurement opportunities by local businesses.”
That was not accepted. In fact, the answer that came back was:
“The current definition is consistent with the standard definition used by DETI and within Europe.”
That may be so, but nobody was arguing that we should simply tear up the European competition legislation. In my view, however, that response misses the point.
What is required is an approach that not only takes account of employment and competition law but underpins the Executive’s and Assembly’s priority of growing the local economy. Creative thinking and the application of social clauses give us the opportunity to take that approach.
I ask that, in his response, the Minister address the issue of whether we take an ongoing approach, particularly with CPD and other agencies acting on behalf of the Assembly, to be ever more vigilant and creative in looking for opportunities that involve local stakeholders in the local economy. European law has been cited as a reason why we do not take such an approach. However, on closer examination, the Committee’s inquiry discovered that European law actually supports the idea of taking interventionist measures to grow regional economies. That is what the whole ethos of subsidiarity is about. It is about growing local and regional economies. Some of the Civil Service should be encouraged to come at the issue in a more confident way.
The percentage of local companies that manage to access the procurement arena is also cited quite often, and I am reassured by that. However, I think that we all recognise that that very often happens in a sub-contracting or franchise context, which can at times create insurmountable obstacles in bringing young people who need the opportunity for trade apprenticeships or the long-term unemployed into the workforce. If we are talking about growing the local economy, we are also talking about eradicating the disadvantage that has existed for many in our community for too long. So, I think that those who guide our procurement policy can take a more comprehensive, imaginative and flexible approach within existing European competition and employment legislation. We should ensure that benefits are absolutely maximised, even in these more difficult economic times. Go raibh míle maith agat.
I am a fairly new member of the Committee for Finance and Personnel, and today’s debate has given me the opportunity to look a bit closer at some of the work that the Committee has already carried out on public procurement. Given the current economic situation, it is timely that public procurement is used as a way and means of supporting and developing our small and medium-sized enterprises, stimulating economic growth and investing in society for the longer term. All too often, we see small, local companies and firms losing out in tendering work that is procured by Departments and other aspects of government in Northern Ireland.
I have been personally involved in a number of project teams involving work being carried out on our local community infrastructure. Having experienced that process along with other colleagues, I have to be honest and say that I did not have confidence in the local delivery element of it. With that background, I approached the Committee’s report with interest. I have to say that I am fairly well in agreement with the report and the 52 recommendations contained therein. I welcome the findings and take a degree of encouragement from the fact that the vast majority of recommendations were accepted by the Department and that a commitment was given that those recommendations would be taken forward in the procurement board’s strategic plan for 2011-14.
That being said, I believe that today’s motion can work in tandem with and alongside the commitment from the Department to make the Executive realise the scale of what we are dealing with, especially when they look at the figures knocking about of £2·4 billion in procurement plus £300 million from local government procurement, and be in absolutely no doubt about the huge gains to be made by local businesses and companies during this period of government.
I am sure that the Executive will see the importance of procurement as a way of regenerating the local economy and keeping as much money in the public purse in Northern Ireland and our local communities as possible. I hope that the benefits of devolution can be acknowledged and seen through the outworkings of this process, whereby a Committee identified an area of work and took issues and concerns to a Department, which got credit for accepting recommendations that can cascade down through other Departments, thereby bringing benefit to our society and, in this case, the business community.
Most issues have already been covered in today’s debate, and I do not wish to be repetitive by rehearsing the same arguments. However, I want to say that we need to be consistent in our desire and keenness to see the progression of small businesses in providing services, supplies and works to government in Northern Ireland.
Nevertheless, I do not want to be involved in projects in which small businesses do the scoping and early costing work only to be cast aside at the tendering stage, along with any benefits to the local community, as happened in one particular project. The same contractor emerged again later in a similar contract. Again, having given the early estimated figures, it was unsuccessful. However, the contractor was engaged as a subcontractor and was able to achieve the original cost estimate. That brings into play questions on another angle to procurement in Northern Ireland. As I have indicated, I acknowledge the issue and welcome the debate. I look forward to the Minister’s response.
I thank the Members who tabled the motion and the amendment. I am glad to speak on behalf of the Ulster Unionist Party. At the outset, I want to emphasise, as many other Members have, the importance of public procurement. It is essential, especially at the current time of fiscal constraint, that public procurement is used to maximise economic recovery as far as is practically possible. Given that that represents a huge amount of money — around £2·5 billion each year, as we have heard — there must be absolute clarity as to how that is distributed. It is also a simple fact that public spending will be significantly reduced over the next Budget period and that, therefore, efficiency in the administration of public procurement must be paramount.
I want to move on to speak about the procurement system that is being used by the Central Procurement Directorate, whose role it is to develop and establish the policy framework and best practice in public procurement for the wider public sector in Northern Ireland. As many Members have said, it is essential that the system used by the directorate is of benefit to small and medium-sized enterprises. That could be done through simplification of processes as well as by reducing the bureaucracy associated with this area. That could also lead to a reduced time frame and greater efficiency.
In order to rebalance the economy, which is well documented as being over-reliant on the public sector, we must ensure that SMEs have the greatest opportunities possible afforded to them. In that respect, specifications for contracts must be written up in an inclusive manner and not in a way that cleverly excludes companies or SMEs from applying. A watchful eye is needed at all times to ensure that that happens.
The Minister has cited statistics that show that between May 2008 and November 2010, 73% of all contracts that were issued by the CPD went to small and medium-sized businesses. I urge him to continue to ensure that SMEs are adequately encouraged in that regard, although I am aware that his hands are tied by European directives in some respects. I like the idea of targets, which one Member raised. However, I wonder how they really fit in with European directives. I am also intrigued by another Member’s comment that we should grow the local economy. We need clarification on that because I feel that it may not fit in with European directives. I agree that we need to find a clever way of doing that.
I also note the implementation of the eSourcing single portal. It lists all Government opportunities for contracts that are worth over £30,000 and enables small and medium-sized businesses to log on and see what is available. It is a good initiative that improves the accessibility of public procurement for SMEs.
As a member of the Committee for the Environment, I am particularly interested in the wording of the motion, which states that the spending of public money should result in investment not only in society but in the environment. Any future tendering opportunities in the green new deal should be explored fully; for example, with regard to SMEs being involved in the retrofitting of housing. The alternative energy sector is also important. Northern Ireland could move from assembling wind turbines to manufacturing them.
The Ulster Unionist Party would also like to see tighter regulation of subcontracts. Often, it is the case that a job is given to a main contractor, who then passes it on to a subcontractor.
Often, the subcontractor does not go through the same scrutiny. There is also an issue when a main contractor goes bust: the flow of money must be accounted for in those circumstances.
The Committee for Finance and Personnel’s inquiry into public procurement in Northern Ireland contained a number of recommendations, and the Department accepted the majority of them. Given the importance of this subject, those should be considered by the Executive.
My colleague spoke about the amendment. The Ulster Unionist Party supports the motion and the amendment, especially when it comes to encouraging greater employment of apprentices.
Go raibh maith agat, a Cheann Comhairle. Gabhaim buíochas le moltóirí an rúin seo. My thanks go to the proposer of the motion and to my colleague for the amendment that he tabled.
Over the past 10 years, the Executive’s expenditure on public procurement in Northern Ireland has increased to some £2·3 billion in 2009-2010. The total spent on procurement across the island of Ireland was around £15·2 billion per annum. Even with Budget cuts, we are looking at significant amounts of money. It is crucial that small businesses, local businesses, contractors and unemployed people from a very high skill base derive the best benefit from that.
In the previous mandate, the Assembly recognised public procurement as a key cross-departmental issue that affects all levels of government and forms a significant element of the local economy. However, in the midst of all that, those of us on last year’s Public Accounts Committee saw silly things, such as centre of procurement excellence status being presented to NI Water by a company that had employees in NI Water. Despite the fact that other public sector bodies have the status conferred on them for good and just work, that totally undermined the credibility of that status. Therefore, any such high-level conferment on a public sector organisation must be merited, rather than it costing £30,000 for a wee pat on the head of people who have buddies working there. The former Minister knows exactly what I am talking about.
The expenditure involved in public procurement is an important lever that the Executive could use more strategically as a tool for supporting the long-term economic and social well-being of our community, especially at this time of economic recession, when we face a more constrained public expenditure outlook.
In February 2010, the previous Committee for Finance and Personnel — Mr McLaughlin has expertise there — produced a report on the inquiry into public procurement in Northern Ireland, and that was debated on 23 February 2010. The procurement board has produced an action plan in response to the Committee for Finance and Personnel’s inquiry into public procurement. Members will have seen or been apprised of the updated version of June 2011. As part of that action plan, the procurement board is to work with OFMDFM to establish a working definition of and methodology for measuring social value in Northern Ireland. That is particularly relevant to social clauses. We have a pool of highly skilled people who are unemployed and have great value to offer. It is important that we do not lose that pool to other countries. The same applies to those who are long-term unemployed and deserve jobs. That is a crucial point: people with high levels of skills are leaving this country to work in Australia, Canada and other places. That is our loss, and we need to make sure that we derive benefit from those people and do not lose that pool of talent.
It is right that we consider carefully how best to make changes in public procurement policy to ensure that public moneys spent on supplies, services and construction works represent value for money and result in investment in society and the environment. It is difficult to argue against the logic of such an approach. Last week, I attended a meeting in my constituency about investment in the new college for policing and emergency services. People wanted to know how local subcontractors and employers could derive benefit from that. I know that there are EU protocols and rules about tendering and public procurement. However, we need to look at how best local suppliers and businesses can benefit from those, without, obviously, any breach to public sector procurement rules and regulations.
Perhaps the most creative way forward is to get rid of the bands and ropes that tie us due to membership of the EU and join the Better Off Out group, which I am a member of, so that we can be free of the fetters of the European Union.
Thank you very much, Mr Speaker. I am glad to hear that the Minister has been outed as wanting completely out of the EU, in spite of all the benefits that this region has derived from it. I hope he is not thumbing his nose at the millions — indeed, billions — that come to this country and region from the EU. However, he has clearly sent a very negative message to the EU from the Executive, which is unfortunate. Those are extreme-right views.
Mr Kinahan raised the important matter of the green new deal.
I thank all Members who took part in the debate. It is an important debate because, as Members pointed out, we spend about £3 billion a year in public procurement in Northern Ireland. The procurement board has set out its aims, which are very similar to the aims that were elucidated by Members. Those are, first, to deliver best value for money in a challenging economic environment; secondly, to use public procurement to support economic growth; and, thirdly, to provide public confidence in the procurement environment. That also means instilling confidence in people who supply the public sector that they have access to procurement.
I will deal with a number of points. Rather than go through what each Member said, I will take the main themes that came out of the debate. If I remember to attribute a point to the Member who raised it, well and good; if I do not, do not feel snubbed because it is just that I have written them down as the main points.
The first point is in the motion: we should take the recommendations in the excellent report by the Finance and Personnel Committee or what we have done with them to the Executive. At present, I have no plans to do so. I am not really averse to doing that, but I will explain to Members where we are with that. The report contained 52 recommendations, 43 of which have been accepted, and many of those are already in the process of being implemented. In the way procurement is set up, it is not really the Executive who have the central role. That is carried out by the procurement board, which I chair and which the permanent secretaries of the main procurement Departments attend on a regular basis. From that, the work that we want the different COPEs and Departments to do is disseminated. Frankly, I believe that that is a much more appropriate way to ensure that the recommendations of the report are accepted. They should not just be accepted; we can accept all the recommendations you want, but the important thing is how we make sure they are implemented. I believe that the report not being taken to the Executive is appropriate. I suspect that if it did go to the Executive, it would be simply noted because the main body to deal with it is the procurement board.
The second theme to come out of the debate was that we should maximise the benefit of the procurement that we undertake. It stands to reason that we wish to do that.
At least the debate here this morning was a bit better informed than the commentary on the Programme for Government and procurement given by the ‘Belfast Telegraph’. I laugh at journalists who pontificate about how we should do our job. Sometimes I think that they should go and do their job a bit better or at least apprise themselves of the facts. Liam Clarke, in his blueprint for turning Northern Ireland around, says that we procure around £10 billion worth of goods. I do not know where he got that figure from. Secondly, he states that there is “no sign of action” in the use of Stormont’s purchasing power. We actually spend the money, so there is some action there. Secondly, had he taken time to do the most cursory investigation, he would have found that a number of things have already been done that I have mentioned in answers given in the Assembly during Question Time and in debates.
We have done a number of things to try to improve the use of public money. First, we already have an efficiency reform group, which looks at government procurement service frameworks. There is also collaboration between the COPEs. Collaborative contracts in Northern Ireland include the supply of paper, tyres, batteries and multifunctional printers. The CPD is already developing a business case for the establishment of a central team to manage a range of common areas of central government generic spend such as energy and transport. Work is being done to maximise the buying potential of the public sector.
Secondly, we aim to get value for money for the funds that we spend. That is done through open competition, which some Members alluded to. The more open the competition is, the more bureaucracy there will be. I have asked, for example, why we have to seek five quotations and judge them against criteria for purchases as low as £2,000. The argument is that, if you do not do that, you leave yourself open to the allegation that there is no competition. On the other hand, if you require a printer, photocopier or scanner for a hospital or school, do you really need to go through all of the process when, once it has been done and the competition has been created, it is always open to challenge? There are many challenges to these contracts.
Some people argue that we should raise the threshold. On the other hand, if you want value for money, you have to lower the threshold. There is always tension, and I think the fact that we have such a low threshold shows that we are seeking value for money even if it causes some problems for the procurement professionals. Ninety-eight per cent of procurement in Northern Ireland was subject to the professional influence of a COPE. In other words, it had to go through the rigorous process of investigation.
The third point raised concerned help for businesses. It has already been pointed out that we do our best to help local businesses to win tenders. I know that a lot of things have been said about that, and I listened to Mr Bradley’s speech, which was very interesting. It shows what happens when the balance of power in a party starts to move. He mentioned the current leader four times; he mentioned one of the wannabe leaders 15 times. I wonder whether Mr Bradley has now become the election agent for Mr Attwood. Maybe he hopes for a ministerial post when the election is over.
The impression given was that only the SDLP has considered and implemented the idea of helping businesses. I will come to that in a moment or two, as well as the introduction of social clauses. A lot of practical help has been given. We have to be careful, of course. Everybody qualified their comments with the words “keeping within the law”. Again, there is a bit of tension, because, whether Mr McGlone likes it or not, being a member of the European Union ties our hands and our feet and puts tape around our mouth and a hood over our head, when it comes to the freedom to do things. He asks, since I have adopted the stance that we would be better off out, whether I would be happy that we would lose all the riches that we get from Europe. He might notice that, actually, the EU takes more money from the United Kingdom than it gives to the United Kingdom. If that money was not given to Europe, it would be available for spend in the United Kingdom. We might actually do better. So, before Mr McGlone starts getting into the flow about money and membership of the EU, he should bear that in mind. I think that, increasingly, people across the United Kingdom are getting sick and tired of the rules and regulations that may fit Europe centrally but do not allow for local changes to be made. Of course, that applies to procurement. I notice that you were going to rule me as deviating from the subject, Mr Speaker, so I am getting back to it quickly.
My views on lots of things do not reflect the views of the Executive, so I do not think we need to worry too much about that.
As far as help for businesses is concerned, let us look at the things that we have done. All contracts worth over £30,000 are now advertised on the e-tendering portal, which means that firms do not need to look through journals or whatever. They can know exactly what the public sector is looking for and what it wants to tender for. The Business Industry Forum for Northern Ireland has been set up to give greater communication between the various COPEs and the business organisations. The Construction Industry Forum for Northern Ireland has done a lot of work on construction projects. There is a common range of issues, including the standardisation and streamlining of the pre-qualification process and setting proportionate minimum standards for experience and financial standing. The result of that is that we now have new arrangements for PQQs that will save suppliers answering questions over and over again. It will allow them to reuse their original application and edit it for different competitions. That saves time and resources, because they can be quite sizeable documents.
Measures have been designed to include SME participation. We have also held “meet the buyer” events across Northern Ireland — 53 of them — and approximately 2,600 people have attended them. The idea is to explain how the procurement process works, show people how to apply and encourage them to take part. I could say many other things about that, but I want to hurry on and deal with a couple of points.
The fourth theme that came through was maximising social benefit. Again, the point has been well made and has already been reflected in contracts. Ms McCann tried to draw Mr Bradley on that point, though he would not be taken off his platform of beating the drum for Mr Attwood. However, DSD is not the only Department that has been engaged in that. Indeed, many contracts have now been secured that have enabled a maximisation of social benefits to take place. In my Department, the properties division now has a contract for properties management. As part of that agreement, up to 14 opportunities have been created for unemployed people, and there is provision for 35 apprenticeships over the life of the contract. The contractor has also established a supply chain registration portal, meaning that potential subcontractors can register their interest to supply services.
The recently awarded Northern Ireland Civil Service contract for cleaning and catering includes at least 28 work placement opportunities through DEL’s Steps to Work programme and four apprenticeship opportunities. The tender for temporary workers provides for 45 placement opportunities in the contract. So, we are doing this across a range of services. However, although we can put these things in the contract, EU directives do not allow us to use them as the judging criteria when awarding the contract. Therefore, although as a region of Europe with a lot of long-term unemployed and a lot of youth unemployment it might suit us to put these things in contracts, Big Brother in Brussels, looking at what is suitable for Europe as a whole, prevents that. That is only one small example, but it is one of the reasons why the dead hand of European involvement does not suit regions such as Northern Ireland. So, we have a wide range of measures in place.
I hope that in the remarks that I have made, along with other points that Members raised, I have shown that we have taken the report seriously and have sought to implement it. I believe that public sector procurement in Northern Ireland can help to grow the economy and achieve many of the objectives that the Executive have set.
I thank Mr Murphy and his colleagues for bringing this proposal to the House. I am also grateful to him for supporting the SDLP amendment. There has been consensus on the motion among Members, in the main, apart from the Finance Minister. That is indicative of the support that MLAs from all parties have for efforts to stimulate the economy and get a better deal for small and medium-sized businesses in Northern Ireland.
Many good points were made in favour of making the public procurement process more flexible and more user-friendly. Indeed, some progress has been made on foot of the Assembly’s report — the report on public procurement by the previous Committee for Finance and Personnel — and that is to be welcomed. Indeed, the Minister himself illustrated that when responding to the debate.
All the steps taken represent progress for small and medium-sized businesses here in Northern Ireland. In the main, the motion is trying to emphasise the importance of making continuing progress and helping local businesses. Mr Murphy and others made the point that the Executive have yet to really embrace this. The House is saying that the Executive need to embrace the report and the 43 recommendations that have been accepted by the Department of Finance and Personnel. It is important that all Departments be involved in a concerted effort to make public procurement better for local businesses.
Other colleagues, including Dominic Bradley, emphasised the importance of the proposals and of making sure that social clauses are introduced into contracts. He cited DSD in that regard, which he has been taken to task for. However, there is no harm in using that as a useful illustration of the way in which a Department can effectively approach public procurement. I dare not mention either the former or the present Minister for Social Development in case I incur the ire of the Minister of Finance and Personnel for being involved in some sort of internal party electioneering. I hasten to add that I am not. Both Ministers and, indeed, other Ministers have contributed to this, but there is no harm in using that experience to illustrate the progress that we can make.
I was taken aback by the Finance Minister’s passionate rejection of our connection with the European Union. I do not want to dwell on that for too long, but it seems to go against the grain and against, I think, the Executive’s public policy on Europe. We want to embrace Europe. We see it as a positive benefit for the people of Northern Ireland. There is a huge market in the European Union in which many local firms can participate. Yes, bureaucracy is associated with Europe, and all of us recognise that and must work towards its reduction. However, we must not throw the baby out with the bath water by saying, “Well, there is bureaucracy, therefore we do not want to be involved in Europe”. It sends out a very bad message for our own Executive in Northern Ireland if we are seen to be publicly anti-European. What message does that send to President Barroso and his colleagues, who have come here to help us out of recession and to help us to reconstruct and rebalance our economy and work towards a better future?
Go raibh maith agat, a Cheann Comhairle. I will probably not take the 10 minutes, as I do not intend to rehearse everyone’s arguments. Everyone has been in agreement on the motion and the amendment.
I will start by distancing us from the Minister’s comments that we would be better off out of Europe. It might have been better if he had said nothing on the issue, because such comments can cause difficulties in the outside world when it comes to Europe. As Mitchel McLaughlin said, the Minister’s personal views are definitely not those of his Executive colleagues, so he might be better off retracting that comment. Sometimes it is better to say nothing — that is the important point to note today, Sammy.
Will the Member accept an assurance from me that I will not be retracting that statement? It is a view that, I think, I share with the vast majority of people in Northern Ireland.
I appreciate your honesty, but I do not appreciate your comments. If you look at the Hansard report tomorrow, you will see that one of your statements was that we may do better without Europe. However, that is not a good reason to say that we need to move out of it. You need to do a bit of homework and a bit of work on it. It is clear that your statement is a bad one. It is up to you whether or not you retract it, but there you go.
Procurement is a massive issue for us all. From time to time, we meet businesspeople in our communities who are trying to get on the list but, for whatever reason, find it impossible to do so. Somewhere in the region of three quarters of SMEs and social economy projects do not even apply for procurement contracts because they recognise that the process is stacked against them and is weighted in favour of larger companies. That is wrong. I met people from the local construction industry and some who have their own business, and they stated clearly that they do not get a look-in in the tendering process.
As they see it, the big companies get the vast majority of public procurement contracts that are being applied for. Those contracts are subcontracted out, and, sometimes, smaller companies will get a subcontract. But those companies are asked to reduce their costs and their profit margins while the bigger companies’ profit margins remain the same, or are increased in some cases, because they are putting the smaller companies under massive pressure.
Nearly every Member who contributed to the debate touched on the social clauses, which are very important. However, it is not good enough that DFP allows the other Departments to put them in if they so choose. It is up to DFP to demand and ensure that all Departments step up to the mark when it comes to social clauses. They are not the be-all and end-all. We have met local people, and Dominic Bradley spoke about the fact that 1,200 or 1,600 people could have been put back into employment had the Executive looked at that issue.
One of main planks of the motion is that the previous Finance Committee’s recommendations on public procurement should be forwarded to the Executive. The Minister of Finance and Personnel has said that he is undecided about that. Does the Member agree with me that it is very important that we get buy-in from the Executive for those proposals, and, in fact, that Ministers should act as champions of the use of public expenditure on procurement to grow the economy?
We all agree that the social clauses are good and need to be included in procurement contracts by every Department, council and local government agency. They must be entrenched in the system to ensure that Ministers and permanent secretaries push them forward. Some Members said earlier that people may be given work placement opportunities that last for only six weeks. Is that good enough? Is it good enough that we can screw the numbers about to make six-week placements? Some of the companies that I have met over the past couple of years have told me that the apprentices that they take on do not get a full apprenticeship; they can be put on a contract that lasts for a year or two years, which does not allow an individual enough time to serve his or her time as an apprentice. That means that a skilled workforce cannot be produced, even if the number of apprenticeships is smaller. It is much more beneficial to us all to have fully qualified apprentices coming out of work schemes.
There has been a failure today to mention the legacy for communities in which the work is being done, and what that legacy looks like. We will, possibly, look at that in future. It has been stated clearly that £3 billion is spent annually on procurement. That is a massive amount. The Minister says that we could be better off without Europe and that we should not be dictated to by what it tells us. Three billion pounds is being spent annually, which is a massive budget. Four billion pounds in cuts are being imposed on us by Westminster over the next four years, yet we are not going to receive many benefits from the £3 billion that is spent on procurement contracts. How will we get more people into employment? How will we get value for money? How will local communities benefit from it? Those are massive issues.
I am amazed by the Member’s statement. What does he think happens when £3 billion is spent? That puts people into employment. A large number of procurement contracts, including those entered into by DSD, DFP, DRD and DE, contain social clauses. How can he justify his comment that we are not getting any impact from the £3,000 million that we spend? That is just nonsense.
That is not what I am saying. I am asking whether we could maximise that, and I think that we could. That is the important step that the Executive need to look at, and those are the important issues that every Department and local government agency needs to examine. We need to maximise the return for the money that we are spending. There are to be £4 billion in cuts over the next four years, and although the economy here is benefiting from the £3 billion, we need to maximise those benefits. That is the point that I am making.
I have an example of how we could maximise it, and it should be considered. Two separate envelopes are submitted with a tender bid; the first one is the commitment to social clauses and the second is the detail of the bid, including the financials, expenditure and outputs. If the Assembly, on examining the bids, is not satisfied that the minimum thresholds for social clauses have been met, it should not open the other envelope. We can address it in that way so that it is a proactive policy rather than a laissez-faire approach.
I thank the Member. I do not know whether he or Mr McLaughlin were listening when I was speaking, but it was emphasised that we have to stay within the legislation. We cannot use anything that is not associated with the main contract when making a decision, so what was suggested would be illegal.
How can they do it in places in England but you cannot do it here? Recommendations were made by the Finance Committee last term, and perhaps you have rejected some of the issues that you should be taking forward and promoting. An awful lot of time was spent on those recommendations. I urge you, Minister, to look at how they do it elsewhere under the European banner. You seem to find difficulties with doing it here. I finish the debate by urging you to take the issue forward and come back to us with some sort of response.
Question, That the amendment be made, put and agreed to.
Main Question, as amended, put and agreed to.
That this Assembly recognises the importance of ensuring that public money spent on supplies, services and construction works represents value for money and results in investment in society and the environment; and calls on the Minister of Finance and Personnel to forward the recommendations in the previous Committee for Finance and Personnel’s report on its inquiry into public procurement to the Executive for consideration; and urges the revision of policy and practice on the use of social clauses in government procurement, including the introduction of the social clause model developed by the Department for Social Development for housing and regeneration contracts.