ISA call to amend public procurement process

17 July, 2007

The call came in an ISA submission to a consultation by the government's national public policy procurement unit on SME participation in public procurement.

The ISA has recommended the following improvements to reduce the barrier to SME participation in public procurement:

  • Less prescriptive tenders: Instead of prescribing the solution required, the procurement body could ask potential suppliers to propose innovative solutions to addressing a particular issue or to deliver particular benefits.
  • Dividing contracts into smaller lots as far as possible (unbundling): This will encourage more indigenous SMEs to tender for public sector contracts. A precedent for the division of public sector contracts into lots exists in other EU member states, notably Germany.
  • Supporting sub-contracting and consortium tenders: When large contracts are put out to tender and an SME cannot match the requested capacity criteria due to the large scale/threshold of the contact, we propose that Government sets out the selection criteria in a manner which facilitates the use of sub-contracting and the possibility of a consortium of companies bidding for a project.
  • Amending the financial capacity criteria: For many small new companies, balance sheet requirements can prohibit their direct participation in tenders over €100k. This is a significant and unnecessary barrier to many SME's in the procurement process.
  • Minimisation of the cost and administrative burden of entering into a tender process: Participation in large public procurement programmes represents a significant investment for small companies. There is also an associated opportunity cost. More streamlined procedures are needed along with a greater use of technology in the tendering process.

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