Sector News
New Procurement Regulations – Will They Benefit Irish Firms?

We spotted this article in the Sunday Business Post, the website linked to the Irish newspaper. With the  attention-grabbing title “New EU rules may open trillion-euro procurement market to Irish firms”, it was written by Anthony Flynn, Ph.D. researcher at DCU (Dublin City University) Business School.

Ireland spend some €8.5 billion annually on goods and services, a small fraction of the figure in the UK, Germany or France but significant of course in that country. And it looks like Ireland is finally close to putting new procurement regulations in place, after being named by the Commission in the recent list of those countries who were lagging behind as we reported here.

According to Flynn, the directives “are about to be transposed into Irish law to create a more efficient and effective pan-European procurement system. Their impact is potentially far reaching, presenting both opportunities and challenges for public procurement stakeholders in Ireland”.

Flynn talks about two themes; the simplification of procurement rules, and the drive for value for money (which hardly seems like a distinctive theme really – it has run through every set of directives from the beginning, we would have thought). Under the simplification heading, he talks about the ability for suppliers to self-declare in various areas, and the European Single Procurement document.  Turnover requirements can be no more than twice the contract value and contracting authorities should divide large contracts into lots where feasible.

As he says, “Similar policy directives have been in place in Ireland since 2010 to promote SME involvement in public contracting. Their articulation in EC Procurement Directives puts them on a firmer legal footing, however, and will help to institutionalise SME-friendly procurement throughout all EU Member States”.

Shortening the tendering time period, legitimisation of consortium and greater scope for negotiation during the procurement process are all steps that also give the buyer greater flexibility. Indeed, those consortia might cross different countries as “different EU countries can come together, aggregate their supply requirements, and transact with the marketplace as a single entity”.  Now there has been no evidence so far that we’re aware of that anyone is taking advantage of this possibility, and that highlights one issue with Flynn’s view point. He seems to be taking a very positive view of the future, as we can see from the title of his article.

But some of the changes coming in may in our opinion work against the vision of more cross-border trade rather than helping Irish firms win a lot more work in other EU countries.  More “scope for negotiation” for instance may end up with buyers being able to tilt the playing field towards their favoured local suppliers. That might be for good reasons, political reasons, or fraudulent reasons, all of which can and do come into play at times.

In terms of the value for money theme, he says this about the use of MEAT (“most economically advantageous tender”) when evaluating bids. “The MEAT principle is distinct from lowest price tender as it takes into account life-cycle costs, quality, innovation, and socio-economic factors. In effect, it understands value to be something more than the quoted price”.

We believe the vast majority of procurement has been carried out on a MEAT basis for some time, so we’re not so sure this is a big change, but formalising it is welcome, without a doubt.

Flynn does finish his article with a more balanced view. The new directives and the national legislation that flows from them “are not, it must be said, a panacea to solve all problems”. He identifies that tensions exist between open, transparent and non-discriminatory procurement, and the national (or even regional / local) imperatives. More tensions exist in the area of volume aggregation versus supporting smaller firms.

It’s a good contribution to the debate anyway, with a lot of information and analysis packed into a fairly short article – read the whole thing here!