Procurement: a real economic driver

PEYE-300213KB1-0100 The Director of the Central Procurement Directorate (CPD), within the Department of Finance and Personnel, Des Armstrong talks to agendaNi about the role that public sector procurement has in the local economy and the future impact of EU directives.

Public procurement is a high profile issue. Public spending on goods, services and construction accounts for approximately 25 per cent of the Northern Ireland block grant. This sizeable spend has a big impact on the local economy and has a high profile, attracting the interest of the Assembly’s committees, including the Public Accounts Committee.

“The real challenge for public procurement is to make the system work and to make it work smarter, not to add more red tape or bureaucracy, and to look at how we can make the system more efficient,” Des Armstrong says.

“Public procurement is about the achievement of best value for money for the citizens of Northern Ireland. It is about supporting what the Executive wants to do.” Armstrong stresses that procurement is key to delivering projects and business objectives: “That should be the focus and not the process itself.”

In order to ensure delivery of a more strategic approach to public procurement, the Executive established the Procurement Board, the Central Procurement Directorate (CPD) and Centres of Procurement Expertise (CoPEs).

CoPEs are established in public bodies such as the Roads Service, Northern Ireland Water and the Northern Ireland Housing Executive. These CoPEs seek to ensure that public procurement is conducted efficiently and in compliance with procurement policy and current legislation.

The Procurement Board was established to develop public procurement policy and monitor the implementation of that policy within Northern Ireland. It is chaired by the Minister of Finance and Personnel, Sammy Wilson, and consists of the permanent secretaries of each government department, two external experts and the Director of the CPD.

The Strategic Investment Board (SIB) has observer status on the board. The Procurement Board’s latest strategic plan runs from 2012 to 2015 and has three priorities:

• to deliver best value for money “but recognising suppliers are operating in a challenging economic climate”;

• to use public procurement to support economic growth;

• to provide confidence in the public procurement environment “as there have been a number of issues in recent times”; and

• to use procurement to help achieve the relevant departmental and government-wide strategies and policies.

Procurement in Northern Ireland continues to grow with a number of local companies recording success in winning public sector contracts. During 2011-2012, 77 per cent of all contracts went to businesses based in Northern Ireland and for construction contracts the figure was significantly higher at 96 per cent.

“This is proof that despite the often negative publicity we hear, local companies are competing for and winning local work,” Armstrong remarks. “Our small and medium sized businesses also continue to perform with 77 per cent of all contracts being awarded to SMEs during the same period, and 58 per cent of contracts awarded going to businesses with fewer than 50 employees. This figure compares very favourably with Wales and Scotland.”

Armstrong says that the Executive is committed to continuing to build relationships and working closely with the industry and those who represent them, including the Construction Industry Forum, to increase access to public sector contracts and, importantly, to share views and raise awareness of good practice.

The inclusion of social clauses in government contracts is important to the Executive and is a commitment within the Programme for Government. The CPD will continue to address this issue and provide advice and guidance to departments.

Over 950 construction contracts during 2011-2012 included clauses requiring main contractors to publish sub-contractor opportunities, and also to pass on to sub-contractors the benefit of early payments to prime contractors and ensure that the Fair Payment Charter is adhered to in construction projects. All these measures will benefit and help in safeguarding those small businesses applying for government contracts who play a vitally important role in helping Northern Ireland recover from the economic recession.

“CPD will continue to play a key role in assisting those departments with responsibility for delivering community benefits,” Armstrong continues. During 2011-2012, CoPEs delivered almost 80 construction apprenticeship and training opportunities.

Future reform

Northern Ireland’s public procurement policy operates with two sets of constraints: EU directives and the UK regulations that implement those directives.

A number of measures are being taken forward to provide greater public confidence in the procurement function across the public sector. Armstrong said: “CPD has, as a result of concerns raised by businesses, consulted and acted on a number of measures to reduce the complexity and paperwork associated with public procurements.”

Armstrong sees a number of areas for change on the horizon. There will be new EU directives on which CPD is engaging with the Cabinet Office and directly with the European Commission. The forthcoming Public Procurement Directive is likely to reflect a shift in emphasis in a number of areas and the implications for Northern Ireland will need to be assessed and addressed.

The Procurement Board has also asked the CPD to embark on a process of “simplification and standardisation” within the CoPEs including a new CoPE accreditation model.

For procurement below EU thresholds, a new simplified approach has been introduced. “The objective is to minimise the level of administration associated with these procurements and to reduce the burden placed on suppliers when tendering. The revised process will help to speed up the time to award of contract,” he explains.

“In addition, CPD has introduced further measures for procurements valued at less than £30,000 with departments now able to take these forward themselves. This helps deliver a more proportionate approach, allowing CoPEs to focus on higher value procurements.”

In the construction sector, the CPD is taking the lead in progressing work aimed at ensuring that the benefits of public procurement policy, particularly those relating to prompt payment, flow through to the supply chain. Most recently, this has included a commitment to introduce project bank accounts for all CPD contracts valued at over £1 million with a significant sub-contracting element.

Finally, Armstrong refers to the impending replacement of the eSourcing procurement portal. “The new portal will have improved functionality, will be available to all public sector bodies and, it is hoped, contain the widest possible number of tender opportunities,” he comments. “Its use will also enhance assurance of processes and documentation across the public sector and help to underpin further development for the future.”

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