Circular 10/10: A New Deal for Irish SMEs to help them win more tenders

I made strong representations last April to the Department of the Taoiseach and Government to the effect that major changes needed to be made to procurement rules in order to help Irish SMEs win more tenders.

Happily, I can report that many of the ideas in the Ten Point Plan I recommended have been adopted as Government policy.

The Department of Finance has informed all public bodies, with immediate effect, that the following measures are to be introduced.

1. All contacts for supplies and non–construction services over a value of €25,000 must be published on eTenders (the current threshold is €50,000). This will increase greatly the number of published tenders.
2. There will be no more pre-qualification requirements under the restricted procedure for tenders of a value of less than €125,000; all such tenders will be considered under the open procedure. This will speed up decision-making and cut down on paperwork.
3. Supporting documentation about a bidder’s financial and technical capacity will need to be provided only when a tenderer is short-listed.
4. The setting of SME suitability criteria must be far more flexible, and must be ‘relevant and proportionate’.
5. Much more flexibility will be introduced to encourage small and start-up companies, for example by not setting disproportionately high turnover thresholds, nor requiring three years of fully audited accounts.
6. All contracting bodies are now required to constructively de-brief all tenderers (and not just those above the EU threshold) in a comprehensive manner in full compliance with current guidelines.
7. For certain requirements, public authorities have been encouraged to do market research before they publish tenders.

Also note that electronic tendering will become the norm.

Public contractors have been instructed not to use arrangements (such as Supply Line) which involve potential tenderers having to pay to access tender competitions. This is a significant change.

The splitting of tenders into lots is also encouraged for the first time.

Circular 10-10 should be studied carefully as it is the New Deal for Irish SMEs seeking to win business by public tendering.

The quick response to my representations (and from others no doubt) is welcomed news for those of us in the bid managment community who want to see easier access for SMEs and smarter and slicker procedures. We now have a level playing field.

Well done to Robert Watt and his colleagues responsible for procurement at the Department of Finance.

‘We will drain the Shannon….’

This was Eamon De Valera’s promise when he was Taoiseach nearly 70 years ago.

In the meantime the Shannon has continued to flood, with last year’s incidents a salutary reminder of the power of the river.

The Dublin local authorities want to bring water from the Shannon to meet a projected and significant shortfall in water capacity in the Midlands and the Greater Dublin Region from 2016.

The Shannon Protection Alliance is opposed to the plan. But many of their arguments are not based on evidence. For example, they claim ‘the plan contravenes the EU Water Framework Directive because of lack of consultation and failure to address adverse effects.’ The SPA should read the Strategic Environmental Assessment published in November 2008 which clearly deals with the concerns expressed by local land community groups. There has been significant consultation on this project.

The SPA also claims it has the support of 1 million in opposing the scheme. That is a bit over the top. Has anyone asked the farmers, householders and businesses who are flooded every year if the proposed scheme is a good idea?

‘The plan will spell the end of all planning and development in the towns and villages situated on the Shannon’ is another widely exaggerated claim based on not a scintilla of evidence.

How about the following: ‘…the plan will bring about the swift, total and irreversible demise of tourism, leisure activities, agriculture, and the destruction of the fragile ecology’. More hyperbole.

How about a few facts for a change:

1. Some 1,000 mm of rain falls on the Shannon catchment area every year; a daily average of 2.7mm. Drawing 300 million litres a day (which is the proposal) is the equivalent of 0.02 mm/day: basically equivalent to a normal shower of rain. Source: Met Eireann.
2. The scheme is designed to provide water supplies to the counties of the Midlands, Kildare and Dublin. So it is a scheme to help the East Region of Ireland.
3. The scheme will have to be approved by An Bord Pleanála. This will require a detailed Environmental Impact Assessment to be prepared and will allow all parties ample time to comment and appeal the decision.
4. To take account of seasonal flooding the option of diverting water into bogs at Rochfordbridge/Portarlington is being considered.
5. Ireland’s most pre-eminent climate scientists are forecasting that last year’s flooding will become more commonplace and that there will be less rain fall in the east of the country.

The water that falls onto Ireland does not belong to anyone. It is a national natural resource. Therefore it makes sense in order to sustain jobs and to meet demand from households that that resource flows to where it is most needed in the country.

The SPA needs reassurances. The planning process should address their concerns.

The Midlands and the Greater Dublin Region need water. The planning process will determine how best this can be done in a sustainable manner.

And in words of Phil Fitzpatrick’s song…..where the Shannon waters flow.

Forfas Report on Climate Change Adaptation

The report published yesterday by Forfas on climate change adaptation is timely and a top class piece of work.

Its key message is that businesses and indeed Irish society should start anticipating the impacts of climate change.

Irish climate is changing, but to date there is no evidence that the Government is doing much about it.

The Cabinet Committee on Climate Change has it appears not met at all this year.

Minister Gormley’s Climate Change Bill has yet to surface and there is no sign of the promised National Adaptation Strategy nor indeed the National Climate Change Strategy.

As a consequence State agencies and the private sector have no idea about the details of the package of measures needed to reduce our greenhouse gas emission levels by perhaps 30% within a decade.

The Forfas report points out that Ireland will not be as badly affected as many other countries and this a good selling point for IDA Ireland as many investors will want to locate in temperate climates and where water supply is guaranteed. Irish farmers too will benefit as their counterparts in other countries will suffer from drought; we will have somewhat hotter summers which will result in higher yields. Irish tourism will get a boost as soon as parts of the Mediterranean and other parts of Europe become too hot for summer holidays.

On the other side of the coin, we need to get water to where it is needed i.e. the east coast. Areas at risk from flood damage such as the IFSC will need protection. Some insurance costs will rise.

Correctly, Forfas encourages the business community to assess the risks of climate change and to adopt adaptation measures in good time.

Government will also have to pay attention as it is estimated by the European Central Bank that the budgetary impacts of severe weather events could be as high as 1.1% of GDP per annum; in real money this is in the ballpark of €1.6 billion.

If you were faced with a bill of that magnitude would you take climate change seriously?

Dublin’s Mayor – Act 2 Scene 1 – Influencing the Agenda

The following is the Op Ed piece which I wrote for yesterday’s Sunday Business Post:

Dublin Needs a Mayor that is ‘Fit for Purpose’

Businesses and their representative bodies, such as the Dublin Chamber, rarely take a strong interest in the structure of local government, instead leaving it to be debated amongst public representatives and political scientists. However, with compelling evidence from the European Commission, OECD and the National Competiveness Council pointing to the importance of City Regions in determining the competitiveness and growth of national economies, businesses are now asking questions such as how effective are our local authorities and are we getting value for the rates we pay?

Local government in Dublin is big business, with the four local authorities employing some 10,000 staff and with an annual budget of about €3 billion. These local authorities provide many similar services in areas such as waste, water and housing, resulting in duplication (actually a quadruplication) of some functions. And it is Dublin’s citizens and businesses that foot the bill for these inefficiencies through local rates and charges, income tax, VAT and other taxes.

 Current expenditure of the Dublin local authorities is almost €1.7 billion, of which 37%, or €625 million, is funded by commercial rates. This is well above the national average of 27%. The recent Local Government Efficiency Review Group Report assessed our local government system and identified cost savings and additional charges of a mere 7% of the total cost of running local authorities. Decisions on cutting Dublin’s cost were postponed and will the subject of a separate investigation.

Dublin Chamber welcomes the Government’s commitment to create the office of a directly elected Mayor for Dublin, with strong executive powers over Dublin’s four local authorities. Enabling legislation for a directly-elected Mayor is expected to be published in October, with the possibility of an election in the Spring of next year.

Directly elected mayors have proved their value internationally. Through their strong executive powers they transform the cities they serve – putting them on the map and making a real tangible difference to the lives of their citizens. Mayors such as Richard Daley of Chicago turned his city into a contender for the title of the world’s greenest city; Bertrand Delanoe of Paris who has created beaches along the banks of the Seine and made Vélib Paris free bikes is as synonymous with Paris as red double decker buses are with London.

For Dublin, a mayor with the appropriate budgetary controls and oversight would ensure that local authority costs would be brought under control and only services that are ‘fit for purpose’ are delivered. 

There has been no leadership to reduce the cost base, while improving the services provided by local authorities in Dublin because no single body has overall responsibility at a political level for the Dublin City Region. The Fingal Mayor is concerned with Fingal, the South Dublin Mayor with South Dublin and so on. When budgets or resources are tight, projects, such as Park and Ride facilities, where the benefits fall in another local authority area are the first to go.

Yet, the Dublin City Region is the driver of growth for the Irish economy as a whole. It accounts for over three out of every ten jobs; 47% of Ireland’s services sector; and nearly half of Ireland’s tax revenue. Clearly a national recovery is heavily dependent on a Dublin economic recovery. The importance of City Regions to their national economies is not unique to Dublin and Ireland. Internationally city regions offer a concentration of economic activity and the pool of skills and resources that provide a natural environment for companies to grow. The harsh reality is that if Dublin grows so does the rest of economy.

The political debate on the draft legislation for a directly elected Mayor shows the possibility of real change in local government, with better services at a lower cost a real prospect. Dublin Chamber has met with Minister Gormley to articulate how the draft legislation could be strengthened in a way that would lead to real change and promote greater operational efficiency in the running of the City Region. With the country facing one of the most challenging periods in its history, the commitment to have an accountable Mayor with a real vision that can run local government in a way that places Dublin on the international map is vital.  

Dublin Chamber believes that the election of a Mayor with real executive powers could be the catalyst for positioning Dublin as a location of choice for international investors and a hub of economic activity. For this vision to work we need a much streamlined local authority system. Otherwise the Mayor would become another layer of bureaucracy which nobody wants.

What businesses and citizens deserve is a leader who will promote the Dublin City Region and run it the way a modern city should be run, and who is accountable for spending decisions, cost effective service delivery and local taxation. Minister Gormley should bring forward a transformational agenda for local authorities and allow Dublin’s Mayor have far more power and authority than is currently envisaged.

Comments welcomed on draft submission to Government on proposals about Green Public Procurement

In May 2010, the Department of Environment, Heritage and Local Government published a consultation document on their plans to introduce new rules about Green Public Procurement (GPP).

In summary, it is envisaged that upwards of 50% of all public contracts (currently worth €16 billion) will have ’green’ criteria added as a requirement. These could be product specific, or could relate to achieving environmental standards.

Companies bidding on a regular basis to public authorities should pay particular attention to what is emerging in the GPP space.

As companies in 14 EU Member States are already familar with GPP requirements there is a danger that their Irish counterparts may lose out if Government introduces a too ambitious GPP programme.

The enclosed (draft) submission tries to capture the key issues.

Your views are welcomed before the end-August deadline for the submission of comments.