Public Procurement

Oral Answers to Questions – in the Northern Ireland Assembly at 2:00 pm on 17th February 2014.

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Photo of Peter Weir Peter Weir DUP 2:00 pm, 17th February 2014

2. asked the Minister of Finance and Personnel to detail what progress has been made on improving the public procurement process. (AQO 5543/11-15)

Photo of Simon Hamilton Simon Hamilton DUP

I thank the Member for his question.  In its role of supporting the procurement board, the Central Procurement Directorate has made significant progress in improving public procurement processes by making them less bureaucratic and more SME-friendly.  A number of improvements have been put in place, such as the publication of guidance notes on how to overcome barriers that may prevent local businesses and companies accessing procurement opportunities; making tendering opportunities easily available via a single portal; and simplifying the procurement process for lower-value procurements that are not subject to the same level of European legislation.  The directorate is working closely with construction and business representatives, and further areas being addressed include the standardisation of tender documentation and terms and conditions of contract; setting qualification requirements at levels that are proportionate to the contract; and introducing project bank accounts for construction contracts.  The measures, many of which address the recommendations arising from the Finance Committee's inquiry into public procurement, are making it easier for Northern Ireland suppliers to participate in tendering opportunities.  I look now to Executive colleagues to ensure that their Departments and arm's-length bodies implement those improvements with help and guidance from CPD.

Photo of Peter Weir Peter Weir DUP

I thank the Minister for the responses so far.  What work has gone on between the Central Procurement Directorate and business organisations with the aim of improving procurement processes?

Photo of Simon Hamilton Simon Hamilton DUP

It is important that the Central Procurement Directorate and I, as the Minister responsible for public procurement policy in Northern Ireland, listen to concerns or positive suggestions from representatives of particularly the construction industry but right across business.  My predecessor had an open door policy, and I have continued that in encouraging people who have issues around public procurement to come forward and raise them directly with me or with CPD.  We will not be found wanting in coming forward with solutions where and when we can.

The CPD has been working closely alongside industry to address problems that it raised with us.  For example, we have been working closely with the Confederation of British Industry (CBI) focusing on reducing bidding costs, improving consistency across centres of procurement expertise (COPEs), reducing information demands in tenders and standardising documents.  The outcomes of that work were publicised at a public procurement conference that I attended at the end of January.

With the construction industry specifically, we have been working on developments on construction procurement, the most recent of which are the standardisation of pre-qualification questionnaires and the development of project bank accounts.  We have also been working with business on the dissemination of public procurement policy and the review of the delivery of procurements across business sectors.

I very much support joint working between business and government in improving procurement because it is so important to developing and growing the Northern Ireland economy.

Photo of Raymond McCartney Raymond McCartney Sinn Féin

Go raibh maith agat, a Cheann Comhairle.  Gabhaim buíochas leis an Aire.  I thank the Minister for his answer.  In light of some of the procedures in place, would the Minister consider a specific review?  There are contracts worth less than £10,000, yet tenderers are expected to have an income of £2 million.  Many small businesses feel that they are not in the range of earning £2 million but are ruled out of tenders of less than £10,000.  Would he consider a review of such incidences?

Photo of Simon Hamilton Simon Hamilton DUP

As the Member will know, procurement is a heavily regulated area, not least as a result of European directives handed down from national government that we have to implement at regional government level at Stormont.  There seems to be positive progress in respect of the new set of EU procurement directives, which seem to be a little more responsive to and reflective of criticisms not just from Northern Ireland, the United Kingdom or Ireland but that the whole of Europe has been levelling against procurement across the European Union.

One issue that I think they specifically want to look at to assist small businesses is the turnover cap that prevents buyers from setting turnover requirements at more than twice the contract value.  I can recall cases where requirements for the likes of insurance or indemnity insurance were unnecessarily high and above and beyond what many small firms could tender for.  Without trying to twist or bend the rules in any way, we have always to be mindful in public procurement that our economy is dominated by microbusinesses and that, as we want to encourage them to avail themselves of public procurement opportunities, we do not set barriers of whatever nature so high that they will never surmount them.  It is an area that we are mindful of and where we have taken action, and it is an area where, I hope, the new EU procurement directives will assist us in taking further action.

Photo of Basil McCrea Basil McCrea NI21

Would the Minister care to comment on the impact that year-end flexibility or the lack of it has on the public procurement process and whether the public get value for money?

Photo of Simon Hamilton Simon Hamilton DUP

I regularly hear the criticism from Ministers that not having end-year flexibility does not allow them, particularly on the capital side, to plan sufficiently far in advance.  We are all aware of the old criticism that year-end expenditure is not necessarily of the same value as stuff that is planned further in advance.  The problem is that we work within the rules that the Treasury sets us, which do not allow us to have end-year flexibility.  It is not called "end-year flexibility" any more, it is the budget exchange scheme.  In respect of capital carry-over into the next year, we have a maximum of £10 million for the entirety of the Executive's capital budget.  That is out of a budget of over £1 billion of capital spend, so the Member and the House will appreciate that the amount of money that we can carry forward is very small.  That does not permit us to give any one Department or business area total flexibility in what it can carry forward.

I accept that in many circumstances — I have spoken to some colleagues about this — there are business areas where not having the ability to carry forward money into another year does not allow them to plan capital expenditure with the degree of certainty and strategic nature that they would want.