Office of Government Procurement

Transcription

1 Public Service Spend and Tendering Analysis for 2013

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3 Foreword Foreword by the Minister for Public Expenditure and Reform, Mr Brendan Howlin T.D., and the Minister of State at the Department of Public Expenditure and Reform with special responsibility for public procurement, Mr Simon Harris T.D. The public service has substantial purchasing power. It spends in the region of 8.5 billion each year on goods and services, in addition to expenditure on public works. Good public procurement is key to delivering sustainable value for money in relation to this very significant element of public expenditure and good procurement needs good data. We are therefore delighted to welcome this report from the Office of Government Procurement, which for the first time, provides data from across the public service on how public funds are expended on goods and services in Ireland. Prior to the Government s establishment of the Office of Government Procurement, the State had no mechanism for collecting, analysing and reporting on spend data across the thousands of State-funded bodies in the public service. As a result, there have been wide-ranging data quoted regarding procurement expenditure. Now, with this report as the first of its kind for the public service, we have billion of non-pay expenditure data from the Health, Justice, Local Government and Education sectors for 2013 representing a significant portion of overall 2013 procurement expenditure. For the first time, we have a view as to how and with whom that money was spent and the analysis is very encouraging. The data analysed indicates that 93% of the State s expenditure is with firms within the State and that 66% of the State s expenditure is with SMEs. The Government is fully aware of the significant role that SMEs play in the Irish economy and that public procurement represents a huge opportunity for them. The findings of this report, together with the analysis it provides of tender notices published on the etenders public procurement platform in 2013, will help businesses in understanding the scale of that opportunity. The Office of Government Procurement, which commenced sourcing operations in 2014, has a clear remit to deliver sustainable savings for the taxpayer through centralising procurement across the public service and encouraging SMEs to fully engage in public procurement. In this context, the Office of Government Procurement chairs an SME stakeholder group which includes representatives from a range of groups and organisations that represent SMEs in Ireland. The Office is working with these government agencies and industry representative bodies in developing and implementing policy initiatives, and in driving supplier education and awareness. We look forward to future reports from the Office of Government Procurement as it continues to gather spend information from public service bodies. Such reports will inform future procurement strategy and increase openness and transparency on public expenditure. Mr. Brendan Howlin, T.D. Minister for Public Expenditure and Reform Mr. Simon Harris, T.D. Minister of State at the Department of Public Expenditure and Reform with special responsibility for Public Procurement 3

4 4 Office of Government Procurement

5 About the Office of Government Procurement (OGP) The Public Service Reform Plan, published in November 2011, sets out a comprehensive and ambitious reform programme for the Irish Public Service. In 2012, the Government commissioned an external report; Capacity and Capability Review of Centralised Procurement Function 1, to identify the actions required to realise substantial savings in public procurement in the short and medium term. One of the key outcomes of this report was the decision by Government to establish an Office of Government Procurement ( OGP ). The OGP, which operates as an office of the Department of Public Expenditure and Reform, is headed by the Government s Chief Procurement Officer to lead on the Public Procurement Reform Programme by: Integrating procurement policy, strategy and operations in one office; Strengthening spend analytics and data management; and Securing significant savings. The OGP commenced sourcing operations in 2014 and, together with four key sectors (Defence, Education, Health and Local Government), is taking responsibility for sourcing all goods and services on behalf of the public service. These operations will put in place contracts and framework agreements so that public bodies can buy goods and services. In addition, the OGP has responsibility for procurement policy and procedures, sourcing systems and data analytics. The Government has tasked the Public Procurement Reform Programme with delivering sustainable savings for the taxpayer, consistent implementation of policy, reduced risk for the State, and improved data provision. 1. Accenture (2012) Capacity and Capability Review of Central Procurement Function, Dublin: Department of Public Expenditure and Reform [referenced in the report as Capacity Report 2012] 5

6 6 Office of Government Procurement

7 Contents Executive Summary 9 Introduction 13 Section 1 Spend Data Analysis for Section 2 etenders Data Analysis for Conclusions 41 Appendices 43 7

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9 Executive Summary The Public Service Reform Plan, published in November 2011, sets out a comprehensive and ambitious reform programme for the Irish Public Service. In September 2012, the Government decided to establish an Office of Government Procurement ( OGP ) headed by a Government Chief Procurement Officer to: Integrate procurement policy, strategy and operations in one office, Strengthen spend analytics and data management, Secure significant savings. Strengthening procurement capability in the public service will improve the value for money that the taxpayer achieves from the State s considerable procurement expenditure, will make a significant contribution to deficit reduction targets and enable the State to deliver much needed services to citizens more cost effectively. 1. Procurement Expenditure Analysis The OGP commenced a programme in late 2013 to collect and analyse detailed non-pay expenditure from the public service. There are many publicly funded bodies, including schools, hospitals, uniformed services, and large central government departments to collect data from. The OGP has focussed initially on collecting data from larger public bodies and while data collection is not complete, the OGP has gathered a sufficiently large data set for 2013 to inform stakeholders of the outcome of its analysis. The OGP is confident that the data set is representative of public service spend and that the collection and reporting methodology is robust. 2. Procurement Tendering Analysis This report also analyses the procurement tendering activity of the public service on the national tendering platform, etenders, for Tender notices from commercial Semi-State companies and unclassified tender notices have been excluded from the analysis. State bodies are required by law to publish larger value (above threshold) tenders notices in the Official Journal of the European Union ( OJEU ) and, under government policy to publish smaller value (below threshold but above 25,000) tenders nationally. The OGP intends to produce an annual report of analysed expenditure and tendering activity each year. The expenditure has been classified into spend categories, but cannot at this time be codified at a product level due to low levels of procurement detail captured in public finance systems. These systems typically capture payments to suppliers, but not the volume or price of the goods or services involved. 9

10 3. Key Facts for 2013 Analysed Spend Data 64 large public service bodies that account for a considerable portion of public procurement expenditure are included in this data set; billion in non-pay expenditure data was collected from those bodies; Of the billion, expenditure data amounting to 527 million has not yet been classified and is therefore excluded from the analysis; In addition, of the billion, interagency 2 expenditure of 39 million and un-addressable 3 spend of 484 million have not been included in the analysis; The expenditure that has been classified and analysed in this report is therefore billion across 35,827 suppliers involving 3.8 million individual payment transactions; The expenditure data includes VAT. 4. Key Facts for 2013 Analysed etenders Data 5,826 tender notices were published on etenders; Of the 5,826 tender notices, 2,078 were not from public service bodies; In addition, of the 5,826 tender notices, 230 had no CPV code, and therefore, it was not possible to map them to a spend category; The number of tender notices that have been analysed in this report is therefore 3,518 with a total published estimated contract value 4 of billion; The values here are exclusive of VAT. 5. Key Findings The analysed spend indicates that: 93% of public service expenditure is with businesses in the Republic of Ireland; 66% of public service expenditure is with Small and Medium Enterprises (SMEs), ranging from high levels of SME success in areas such as Plant Hire (98%), Laboratory and Diagnostic Equipment (87%) and Minor Building and Civils Works (85%) to low levels in areas such as Utilities (24%) and Medical, Surgical and Pharmaceutical Supplies (38%); 97.3% of the analysed spend has been categorised based on the type of goods, services or works. The analysis of tender notices indicates that: 74% of tender notices are smaller value (below threshold) tenders, accounting for an estimated value of 690 million; Construction and civil works accounts for 50% ( 2.17 billion) of the total estimated contract value with an average value of 2.2 million but a median (typical) value of 150,000; While the average contract value of tender notices by Spend Categories ranges from 46.7 million (Plant Hire) to 143,570 (Veterinary), the median values range from 500,000 (Utilities) to 50,000 (Veterinary / Marketing / Print / Stationery / Defence); The recording of contract awards is low at 18%. 2. Interagency expenditure encompasses non-commercial transfer of funds between State bodies 3. Unaddressable expenditure arises in areas which are outside the scope of procurement 4. The published estimated contract value is the forecast total expenditure over the lifetime of the contract 10

11 6. Conclusion This report will give the reader an understanding of the breadth of public service procurement spending and its importance to Irish business. The spend analysis in Section 1 of this report indicates that 93% of government procurement expenditure is within the State and that 66% of this is directly with Irish SMEs. This can be contrasted with the UK where recently produced statistics 5 indicate that just over 10% of central government spending is directly with SMEs. The analysis of tendering activity in Section 2 of this report would indicate that government contracts in Ireland are accessible to SMEs given the low median (typical) size of published estimated contract values. The analysis undertaken for this report has been able to identify, classify and categorise over 35,000 suppliers, the large majority of whom are Irish SMEs that benefit directly from Irish taxpayer expenditure. There are more suppliers that are not yet classified, many of which are likely to be SMEs. It should be noted that the OGP has been unable to quantify the number of SMEs who benefit indirectly from government spending as subcontractors to Large suppliers. This is the first report of its kind to be published in the Irish State. The OGP plans to produce a report each year analysing procurement expenditure and public service tendering activity. The level of reporting will expand as the OPG gathers increased volumes of data and the quality of that data improves. This will enable improved transparency, analysis of emerging trends and deeper examination of spend and tendering activity in Ireland

12 12 Office of Government Procurement

13 Introduction 1. Public Service Spend Data The State s procurement expenditure, excluding major capital projects, currently totals approximately 8.5 billion. This includes monies spent by public service bodies with third party suppliers, typically purchases from commercial organisations, for goods, services and minor works across the public service. Historically public service bodies made procurement decisions independently and procurement activity and tendering was decentralised, with individual procurement officers and departments operating within their own organisations. Aggregated national procurement expenditure data at a detailed level was therefore never available before, as the source data had never been collected, collated and analysed centrally. This lack of data represents a major challenge to the OGP, a body set up to drive more transparency, agency co-ordination and collaboration, and value for money for the taxpayer for every Euro spent with external suppliers. Reliable spend data is used to confirm who in the State is buying what, from which suppliers and at what cost. This data is the foundation upon which appropriate and effective procurement policies and strategies that taxpayers can have confidence in are built. The Business Intelligence team within the OGP is tasked with gathering source data on procurement expenditure from public bodies and with maintaining a central data repository. Since late 2013 this substantial project has involved gathering data from 64 public service bodies and the analysis of thousands of account codes relating to almost 4 million payment transactions. These 64 public service bodies were prioritised due to the high levels of procurement expenditure in their sectors. The project team had to enrich i.e. cleanse, categorise and analyse this data so as to provide a reliable data set and robust evidence base for the many stakeholders who have an interest in identifying where taxpayer funds are spent in relation to government procurement. Over 35,000 suppliers were classified and included in the analysed spend data. The scale and detail of this non-pay analysis is thus unprecedented in the history of the State. For the first time it is possible to reliably estimate where the money from the State s multi-billion spend with external suppliers ends up. The OGP will continue to track, measure and report this expenditure at an aggregate level, however it is not intended that individual customer or supplier spend data will be published due to commercial sensitivity. The procurement expenditure in scope for 2013 has been estimated at 6 billion and approximately 63% of that has been collected in a data set totalling billion. This is significantly larger and more granular than any previous data sets. It is now therefore appropriate and timely to publish a report on the analysis of this data set in order to provide the most authoritative source on Government procurement expenditure. The analysis of this data set is contained in Section 1 of the report and includes findings on procurement expenditure broken down by 16 Category of Goods and Services (category details at Appendix 1); Supplier Location and Supplier Size Classification. It is important to note however that the spend data gathered by the OGP has details of payments to suppliers, but not the volume or price of the goods or services involved. 13

14 2. Supplier Classification Particular attention has been paid to identifying procurement expenditure with Suppliers in the SME (Small and Medium sized Enterprises) classification that includes all businesses that are Micro, Small or Medium sized enterprises. The SME definition used in this report is the standard EU Commission definition and includes enterprises where the number of employees is less than 250 and, where data is available, they were reported as having either turnover of less than or equal to 50 million or a balance sheet with net assets of less than or equal to 43 million. Further breakdown of this data by Medium, Small and Micro sub-divisions is currently not possible due to unavailability of detailed profile data for a significant number of suppliers. A number of external data sources were used to enable the classification of suppliers - Central Statistics Office (CSO), Dun & Bradstreet, the Irish Times Top 1000 Business List and SoloCheck.ie - supplementing the data available on etenders, the government web based electronic tendering platform. Commercial data providers generally do not capture in-depth data on smaller businesses and it has therefore not been possible to accurately classify businesses where the OGP does not have the data. It is planned that future reports will provide greater granularity as more data is collected, particularly via etenders. 3. Tendering Activity Section 2 of the report is concerned with public service tendering activity, more specifically that carried out via the Government national web-based electronic tendering platform etenders. The OGP administers and manages this key e-procurement system. The etenders platform processes national (below threshold) and OJEU-level Request for Tender (RFT) notices, Responses to RFTs and Contract Award notices. Its use is mandatory for all procurements by public bodies for tenders greater than 25,000. Publishing of Contract Award notices on etenders was made mandatory in August 2014 and, as a result, etenders will increasingly become a valuable data source for reviewing tendering activity by public bodies and the resulting Contract Awards made to successful tenderers (suppliers). The data collated and analysed in this section relates only to tendering activity in etenders and excludes the significant number and value of lower value (below 25,000) contracts awarded by public bodies. This section focusses on the number and estimated value of tender notices (OJEU and Non-OJEU) by spend category. 14

15 4. Methodology In analysing the spend data the team followed established approaches used by procurement to create the spend cube a procurement data model that gives a sufficiently comprehensive view of current third party expenditure across three core dimensions: category/commodity, supplier and spend owner/ department/ function. The five step approach followed is outlined below in Figure 1. A detailed description of the methodology is included in Appendix 2. FIGURE 1 SPEND ANALYSIS METHODOLOGY STEP 1 DEFINE SCOPE STEP 2 DATA A EXTRACTION FROM SOURCE STEP 3 TRANSFORMATION AND LOADING TO CENTRAL DATABASE STEP 4 VALIDATION STEP 5 REPORTING The data collection, enrichment and reporting processes and the systems employed by the OGP to generate the spend analysis summarised here were deemed sound and reliable following an audit performed by an independent auditor KOSI Corporation Limited 15

16 5. Summary At the time of drafting this report, approximately 63% of estimated 2013 procurement addressable spend by value; i.e billion out of an estimated 6 billion, for the public service had been collected, enriched and loaded into the OGP central data repository. The spend data received from public bodies was used in this analysis and was not subject to extrapolation to generate estimates. The analysed data ( billion) can be viewed as an extremely large and statistically significant sample although it is not stratified across all public service entities. To maintain the veracity of the raw data, statistical adjustments were not made to take account of possible over or under-representation of sectors due to different levels of responses to data requests. The OGP believes this to be a fair, accurate and representative aggregate view of public service procurement expenditure expenditure data and 2013 procurement data from etenders has been analysed for the purposes of generating this report. Together, these two data sources provide significant evidence-based insight to inform sourcing strategies, procurement planning and government procurement policies. They also provide a useful and authoritative source of data and intelligence for suppliers seeking to win business with public bodies. This first annual publication of the resulting analysis also demonstrates the Government s ongoing commitment to openness and transparency on public expenditure. 16

17 Section 1 Spend Data Analysis for

18 18 Office of Government Procurement

19 1. Procurement Expenditure in Scope The Capacity Report 2012 estimated that total State non-pay expenditure on goods and services, excluding the majority of capital expenditure and commercial Semi-State organisations, was approximately 9 billion in Procurement Addressable Spend was estimated at approximately 6.9 billion. Procurement Addressable Spend was defined as that spend sourced through State purchasing processes and so excluded spend in areas such as the General Medical Services Scheme (GMS), supply of blood products through the Blood Transfusion Service and grants to Community and Voluntary bodies. It was estimated for 2013 that the procurement addressable spend was 6 billion, taking account of known reductions in procurement expenditure budgets and the outcome of further analysis on procurement expenditure. 6 billion is therefore used as the procurement expenditure in scope for the spend analysis in this report. 2. Report Data Set The initial phase of data collection focused on the sectors in the Capacity Report 2012 that represented 80% of public non-pay expenditure i.e. Health (excluding Department of Health), Local Government, Education (excluding Department of Education and Skills, first and second level educational bodies and Education and Training Boards) and the Justice group. Appendix 3 contains a list of the public service bodies included in this phase and a breakdown of the spend data received by sector. This report analyses spend data relating to the year 2013 only. The collected data totalled billion (including VAT) which is approximately 63% of procurement expenditure in scope for the public service. The data collected was transformed, mapped to an OGP category and loaded to the OGP central data repository for analysis. The methodology and systems used to do this work and to generate reports were audited by an independent third party firm. To ensure the robustness of the analysis, spend transactions not yet associated with a classified supplier (supplier with known address and size classification) were omitted from the report data set. This accounted for 527 million (14%) of the spend data collected. In addition, transactions amounting to 39 million deemed to be interagency (payments by one public service body to another), or un-addressable spend that does not arise from state purchasing processes e.g. grants or expenses amounting to 484 million, were also excluded. The final spend data set analysed in this report has a total value of billion (including VAT). This is set out in Table 1. TABLE 1 EXPENDITURE DATA USED FOR THIS REPORT Supplier business data from Dun & Bradstreet, Irish Times Top 1000 Business List, etenders, the Central Statistics Office (CSO) and SoloCheck.ie was used to classify suppliers by size. For the purposes of this report a supplier is classified as either SME (which is a group including Micro, Small or Medium sized enterprises) or Large (business with >250 employees and > 50 million turnover or > 43 million in balance sheet net assets. More details on supplier size classification are available in Appendix Spend Analysis by Supplier M (inc VAT) Total Value of Spend Data Collected 3,791 Un-addressable spend (excluded) 484 Interagency spend (excluded) 39 Spend with unclassified suppliers (excluded) Spend Data Analysed in this Report 2,742 The following charts profile the billion spend analysed based on supplier location and size classification. As already indicated, in order to protect the robustness of the data and in line with the recommendations of the independent third party auditor, supplier account details submitted without sufficient business information in their profiles to determine their location and/or size classification were excluded from the analysis. The fact that external sources of business data do not have information for these supplier accounts suggests many may be small or micro enterprises. 19

20 FIGURE 2 PUBLIC SERVICE SPEND WITHIN THE REPUBLIC OF IRELAND (ROI) FIGURE 3 TOTAL PUBLIC SERVICE SPEND WITH SME v LARGE ENTERPRISES 7% 34% 93% ROI OUTSIDE ROI 66% TOTAL SME TOTAL LARGE Figure 2 shows that 93% ( billion) of the value of the analysed public service spend is with suppliers located within the Republic of Ireland with 7% ( 183 million) spent with suppliers located outside the Republic of Ireland. Figure 3 shows that of the billion spend data analysed, just over 66% of the value ( 1.82 billion) was spent with suppliers whose business was classified as SME. 20

21 FIGURE 4 REPUBLIC OF IRELAND (ROI) SPEND WITH SME v LARGE ENTERPRISES FIGURE 5 SPEND OUTSIDE THE REPUBLIC OF IRELAND (ROI) WITH SME v LARGE ENTERPRISES 34% 22% 66% ROI SME ROI LARGE 78% OUTSIDE ROI SME OUTSIDE ROI LARGE Figure 4 shows that, in line with the total spend profile, 66% of the analysed spend within the Republic of Ireland ( billion) was with SMEs i.e. 93% of the billion is in the Republic of Ireland of which 66% is with SMEs. Figure 5 shows that for expenditure outside of the Republic of Ireland a higher percentage of the spend 78%, is with SMEs ( 143m) i.e. 7% of the billion is outside the Republic of Ireland of which 78% is with SMEs. 21

22 4. Spend Analysis by Category Analysing spend by category is the basis of the widely adopted category management approach to procurement. The categorisation taxonomy adopted has been developed out of the analysis and recommendations set out in the Capacity Report This report recommended that standard categorisation of spend be introduced for the public service so that spend from all public service bodies could be aligned. There are 16 main categories within which are grouped spend and procurement activities with comparable characteristics such as similarities in supply market profile, product type and end use. 97.3% of the analysed spend was categorised against one of these categories. Eight of these categories are common categories i.e. categories of goods or services required by most or all sectors and public bodies, with the other eight categories associated mainly with one dominant customer sector. As part of the Government s Public Procurement Reform Programme, the OGP, in 2015, is taking responsibility for sourcing the common eight categories, with sector sourcing organisations leading on the sector specific categories. The spend data analysed for this report was mapped to a spend category. This category taxonomy is used to organise and report on procurement activity today by the OGP and sector sourcing organisations and is shown in Table 2. Details of what each category includes are included in Appendix 1. The categories are set out in the table below. TABLE 2 MAIN EXPENDITURE CATEGORIES CATEGORY NAME 1 Professional Services 2 Facilities Management, & Maintenance 3 Utilities 4 ICT and Office Equipment 5 Marketing, Print and Stationery 6 Travel and HR Services 7 Fleet and Plant 8 Managed Services 9 Minor Building Works and Civils 10 Plant Hire 11 Medical Professional Services 12 Medical and Diagnostic Equipment and Supplies 13 Medical, Surgical and Pharmaceutical Supplies 14 Laboratory, Diagnostics and Equipment 15 Veterinary and Farming 16 Defence * *A very small amount of the spend data collected is categorised as Defence. However this spend does not include the Department of Defence spend or spend by the Defence Forces (which was not in the prioritised sectors for data gathering) and is therefore not representative of the category but is included for completeness. 22

23 In addition to the 16 spend categories two additional categorisations have been included in the analysis Capital and Uncategorised. Capital refers to expenditure on Major Works. This is currently out of scope for the centralised procurement model and this data was not requested from customers. Some customers nevertheless provided it and so it has been included for completeness, however it should not be relied upon to develop any inferences. Data included under the heading Uncategorised refers to expenditure that could not be classified into one of the 16 categories. Uncategorised spend is 2.7% of total analysed spend which indicates that the categorisation taxonomy is logical with over 97% of analysed spend traceable to a category. Spend data by category is summarised in Figure 6. The amount spent in each category is detailed in Table 3. FIGURE 6 ANALYSED SPEND BY CATEGORY 2013 Professional Services Minor Building Works And Civils Facili es Management, Maintenance Capital Medical, Surgical and Pharmaceu cal Supplies Informa on & Communica on Technology, & Office Equipment U li es Medical And Diagnos c Equipment and Supplies Medical Professional Services Fleet / Plant Uncategorised Laboratory, Diagnos cs and Equipment Plant Hire Marke ng, Print and Sta onery Travel and HR Services Managed Services Veterinary and Farming Defence 4.9% 3.6% 2.7% 2.6% 2.4% 2.3% 1.9% 0.4% 0.1% 0.0% 8.9% 8.7% 7.6% 6.7% 13.1% 12.5% 11.2% 10.6% 0 3% 6% 9% 12% 15% 23

24 FIGURE ROI SHARE OF CATEGORY SPEND Professional Services Minor Building Works and Civils Facili es Management, Maintenance Capital Medical, Surgical and Pharmaceu cal Supplies Informa on & Communica on Technology, and Office Equipment U li es Medical And Diagnos c Equipment and Supplies Medical Professional Services Fleet / Plant Uncategorised Laboratory, Diagnos cs and Equipment Plant Hire Marke ng, Print and Sta onery Travel and HR Services Managed Services Veterinary and Farming Defence 0% 20% 40% 60% 80% 100% 120 ROI % OUTSIDE ROI % Figure 7 shows the share of spend in each category within and outside ROI. As stated earlier, 93% of the total analysed spend is within the Republic of Ireland (ROI). 24

25 FIGURE TOTAL SME SHARE OF CATEGORY SPEND Professional Services Minor Building Works and Civils Facili es Management, Maintenance Capital Medical, Surgical and Pharmaceu cal Supplies Informa on & Communica on Technology, & Office Equipment U li es Medical and Diagnos c Equipment and Supplies Medical Professional Services Fleet / Plant Uncategorised Laboratory, Diagnos cs and Equipment Plant Hire Marke ng, Print and Sta onery Travel and HR Services Managed Services Veterinary & Farming Defence 0% 20% 40% 60% 80% 100% TOTAL SME % TOTAL LARGE % Figure 8 shows the percentage of total spend in each category by SME and Large suppliers. 66% of the total analysed spend is with SMEs. 25

26 FIGURE SME SHARE OF CATEGORY SPEND WITHIN ROI Professional Services Minor Building Works and Civils Facili es Management, Maintenance Capital Medical, Surgical and Pharmaceu cal Supplies Informa on & Communica on Technology, & Office Equipment U li es Medical and Diagnos c Equipment and Supplies Medical Professional Services Fleet / Plant Uncategorised Laboratory, Diagnos cs and Equipment Plant Hire Marke ng, Print and Sta onery Travel and HR Services Managed Services Veterinary & Farming Defence 0% 20% 40% 60% 80% 100% ROI SME % ROI LARGE % Figure 9 profiles the billion of analysed spend within the Republic of Ireland showing the percentage share between SMEs and Large suppliers for each category. 26

27 FIGURE SME SHARE OF CATEGORY SPEND OUTSIDE ROI Professional Services Minor Building Works and Civils Facili es Management, Maintenance Capital Medical, Surgical and Pharmaceu cal Supplies Informa on & Communica on Technology, & Office Equipment U li es Medical and Diagnos c Equipment and Supplies Medical Professional Services Fleet / Plant Uncategorised Laboratory, Diagnos cs and Equipment Plant Hire Marke ng, Print and Sta onery Travel and HR Services Managed Services Veterinary & Farming Defence 0% 20% 40% 60% 80% 100% OUTSIDE ROI SME % OUTSIDE ROI LARGE % Figure 10 profiles the 183 million of analysed spend outside of the Republic of Ireland showing the percentage share between SMEs and Large suppliers for each category. 27

28 Table 3 is included to give a breakdown in tabular format of the data included in the graphs above. TABLE 3 ANALYSED 2013 SPEND PROFILES BY CATEGORY (inc VAT) TOTAL CATEGORY SPEND CATEGORY SPEND BY SUPPLIER SIZE CATEGORY SPEND WITHIN ROI CATEGORY SPEND OUTSIDE ROI CATEGORY M % TOTAL % SPEND WITH SMES % SPEND WITH LARGE M % SME SPEND M SME SPEND % M % SME SPEND M SME SPEND % Professional Services % 70% 30% % % 23 6% 20 87% Minor Building Works and Civils % 85% 15% % % 11 3% 6 59% Facilities Management, Maintenance % 71% 29% % % 23 7% 11 50% Capital % 62% 38% % % 15 5% 15 97% Medical, Surgical and Pharmaceutical Supplies Information and Communication Technology, and Office Equipment % 38% 62% % 85 37% 12 5% 8 68% % 59% 41% % % 17 7% 11 67% Utilities % 24% 77% % 42 21% 8 4% 7 85% Medical and Diagnostic Equipment and Supplies % 78% 22% % % 15 8% 12 80% Medical Professional Services % 63% 37% % 77 61% 8 6% 8 93% Fleet / Plant % 84% 17% 91 92% 75 82% 8 8% 8 100% Uncategorised Spend % 75% 25% 62 83% 45 73% 12 17% 11 86% Laboratory, Diagnostics and Equipment % 87% 13% 61 85% 52 87% 11 15% 9 88% Plant Hire % 98% 2% 64 99% 63 98% 1 1% 1 97% Marketing, Print and Stationery % 86% 14% 57 89% 51 89% 7 11% 5 66% Travel and HR Services % 78% 22% 40 79% 30 73% 10 21% 10 94% Managed Services % 73% 27% % 8 73% 0 0% 0 100% Veterinary & Farming 3 0.1% 94% 6% 3 84% 3 96% 1 16% 0 82% Defence 1 0.0% 100% 0% % % 1 96% 1 100% Total 2, % 66% 34% 2,559 93% 1,677 66% 183 7% % 28

29 Section 2 etenders Procurement Analysis for

30 30 Office of Government Procurement

31 1. Background This section of the report summarises the tendering activity of Public Service Bodies in 2013 as recorded on etenders. etenders is the Irish Government s electronic tendering platform, that has been operating since March It is a public platform used for advertising public sector procurement tenders. Opportunities published are referred to as tender notices, which are Requests for Tenders (RFTs), and vary in value. All tender notices entered into etenders are advertised on this national system but notices greater than a certain threshold value must also be advertised in the Official Journal of the EU (OJEU). Under EU Directives on public procurement, public works, utilities, supplies and service contracts above certain thresholds must be advertised (tender notice) and details of the contracts awarded published (contract award notices) in the Official Journal of the European Union (OJEU). The EU Thresholds for 2013 which is the only year considered in this report are shown in Table 4. TABLE EU THRESHOLDS FOR OJEU WORKS THRESHOLD PUBLIC BODIES Contract Notice 5,000,000 Government Departments and Offices, Local and Regional Authorities and other public bodies. SUPPLIES AND SERVICES Contract Notice 130,000 Government Departments and Offices Contract Notice 200,000 Local and Regional Authorities and public bodies outside the Utilities sector. UTILITIES Works Contracts / Prior Indicative Notice 5,000,000 Entities in Utilities sectors covered by GPA (Government Procurement Agreement as part of the WTO arrangements) Supplies and Services 400,000 Entities in Utilities sectors covered by GPA The Official Journal of the European Union (OJEU) is an electronic publication where all public procurement tenders above the EU Thresholds, from across all member states must be published. Non- OJEU refers to the tender notices that are below the OJEU public procurement thresholds. The etenders system facilitates the entry and publication of tender notices and contract award details for both national and EU procurement opportunities. etenders is set up and approved to automatically send notices of tender notices above threshold estimated values to be published in the OJEU. This allows Contracting Authorities to meet national and EU guidelines for publishing notices and awards in a single system. This report analyses etenders data only. The published estimated values referred to are those entered by the contracting authorities when the initial tender notice is created on the etenders system. It is possible for contracting authorities to enter different values for publication in the OJEU. While the EU Directives require publication of tender and contract award notices for above threshold activity (OJEU-level), below threshold (Non-OJEU) activity is governed only by national rules. Under national rules, tenders above 25,000 have a general requirement to be advertised on etenders while those less than 25,000 are not required to be advertised on etenders (but can be processed via etenders) but should be awarded on the basis of a competitive process of direct invitation to an adequate number of suitable suppliers. 31

32 The etenders system can automatically send out e-notifications of tender notices published on the system (above and below threshold) to registered suppliers who have expressed an interest in the particular type of goods, services or works required in the tender notice. This is driven using the Common Procurement Vocabulary (CPV) codes of the European Commission. The system also incorporates a Supplier Register that holds company information as entered by each supplier. Historically many suppliers have registered their company multiple times and often provided incorrect business profiles. While significant progress was made during 2014 in cleaning up supplier data, the work is still on-going and there is insufficient current information available to report on tendering activity by supplier classification. Following the introduction of Circular 10/14: Initiatives to assist SMEs in Public Procurement, since August 2014 the entry of contract award details into etenders for all tenders greater than 25,000 is mandatory. In 2013 only a very small set of data on below threshold contracts awarded is available. etenders has the capability to manage the entering of, and reporting on, award details for below threshold contracts. 2. Report Data Set The data used for this section of the report comes solely from etenders and is fully dependent on the accuracy and availability of information entered in etenders by Contracting Authorities. The resulting analysis is therefore dependent on the quality and robustness of this source data. A total of 5,826 tender notices were published in 2013 by all Contracting Authorities. 3,518 of these have been analysed as this report considers only the procurement activities of public service bodies. Tender notices that have no CPV codes have been excluded as it was not possible to analyse those notices by category. As mentioned previously, it was not compulsory in 2013 for Contracting Authorities to enter contract award notices. For public service bodies, 627 contract award notices were published in 2013, the majority of which are above threshold. This represents approximately 18% of the analysed tender notices. Table 5 sets out the total amount of notices published in 2013 on etenders and how the amount of tenders analysed in this section of the report is arrived at. TABLE 5 TENDER NOTICES PUBLISHED ON etenders IN 2013 NUMBER All tender notices in etenders 5,826 Non-Public Service Body tender notices (excluded) Public Service Body Tender Notices with no stated CPV code (excluded) Public Service Body Tender Notices Analysed for this Report 2, ,518 The data analysis has been carried out upon the tendering activities of public service bodies including non-commercial Semi-States but excluding commercial Semi-States and private limited companies. See Appendix 5 for a complete definition of a public service body. Tendering activity was analysed based on tender notices (RFTs) published in 2013, responses to those tender notices and contract award details for 2013 tender notices only. This means that contract award notices published in 2013 which did not relate to a tender notice published in 2013 were excluded from the analysis. 32

33 3. Analysis of Tender Notices This section analyses the 3,518 tender notices published by public service bodies in 2013 and reports on the total number and the estimated value between OJEU and Non-OJEU tender notices. Tender notices are also analysed by spend category. FIGURE 11 NUMBER OF TENDER NOTICES FOR 2013 TOTAL ESTIMATED VALUE OF TENDER NOTICES FOR % 16% 74% NON OJEU OJEU 84% NON OJEU OJEU Figure 11 sets out the proportion of opportunities by volume and by value published on etenders. The total of the published estimated contract values of the 3,518 tender notices in etenders in 2013 is billion. 2,600 tender notices (74% of the total number analysed) are for Non-OJEU level opportunities with an estimated value of 690 million or 16% of the total estimated value. 918 tender notices (26%) of the total number published are for OJEU-level opportunities and they have an estimated value of billion or 84% of the total estimated value of tender notices in These values exclude VAT. It is important to note that caution should be applied when considering the total of the published estimated contract values of the tender notices of billion. This figure relates to the estimated value over the entire contract life which typically varies between one to four years. This total number includes tender notices that may have been withdrawn or not actually awarded. The estimates that are included in the individual tender notices are made before going to market, so the value of contracts actually awarded may be different depending upon the prices received. Tenders cancelled after they are published are not recorded via etenders and this fact should also be borne in mind when viewing the analysis. 33

34 The number and value of tender notices varies considerably by category as can be seen in Table 6. The following points should be borne in mind when reviewing this table and subsequent charts. The median (middle value) is a better measure of the typical contract award value than the average in situations where the distribution is skewed i.e. the population data includes a small number of very large awards and a much larger number of smaller awards. The analysis indicates that this is the situation in many of the categories. For example, in the case of Construction and Civils Works, although the mean (average) tender notice value is 2.21 million, the typical tender notice value is 150,000, the median (middle value). It should be noted that Construction and Civils Works category includes both major and minor building works and civils. This category in the analysis would be equivalent to combining the Minor Building Works and Civils category with the Capital category in Section 1. TABLE 6 ANALYSIS OF TENDER NOTICES PUBLISHED IN ETENDERS IN 2013 (EX VAT) ESTIMATED VALUE OF TENDER NOTICES CATEGORY TOTAL VALUE % OF TOTAL VALUE MEDIAN VALUE AVERAGE VALUE NUMBER OF TENDER NOTICES NUMBER % OF TOTAL NUMBER Construction and Civil Works 2,170,527, % 150,000 2,208, % Managed Services 526,033, % 60,000 1,529, % Professional Services 271,963, % 70, , % Information and Communication Technology, and Office Equipment Medical and Diagnostic Equipment and Supplies 212,393, % 70, , % 185,366, % 105,000 2,346, % Utilities 160,447, % 500,000 4,719, % Facilities Management, Maintenance 149,282, % 70, , % Travel and HR Services 141,843, % 70, , % Plant Hire 140,100, % 100,000 46,700, % Laboratory, Diagnostics and Equipment 122,815, % 80,000 1,023, % Fleet / Plant 110,692, % 80, , % Medical Professional Services 103,254, % 80,000 2,244, % Marketing, Print and Stationery 18,377, % 50, , % Defence 15,431, % 50, , % Uncategorised* 14,618, % 50, , % Veterinary & Farming 10,049, % 50, , % Medical, Surgical and Pharmaceutical Supplies 7,655, % 130, , % Total 4,360,843, % 3, % *CPV code could not be readily mapped to a single category. 34

35 Figure 12 sets out the number of tender activities presented to the market on etenders in 2013 by category of spend. FIGURE 12 NUMBER OF 2013 TENDER NOTICES BY CATEGORY Construc on and Civil Works Informa on & Communica on Technology, & Office Equipment Professional Services Facili es Management, Maintenance Managed Services Fleet / Plant Travel and HR Services Laboratory, Diagnos cs and Equipment Medical and Diagnos c Equipment and Supplies Veterinary & Farming Marke ng, Print and Sta onery Medical Professional Services Defence U li es Uncategorised Medical, Surgical and Pharmaceu cal Supplies Plant Hire

36 FIGURE 13 TOTAL PUBLISHED ESTIMATED VALUE (EX VAT) OF 2013 TENDER NOTICES BY CATEGORY Construc on and Civil Works 2,171M Managed Services 526M Professional Services 272M Informa on & Communica on Technology, & Office Equipment 212M Medical and Diagnos c Equipment and Supplies 185M U li es 160M Facili es Management, Maintenance 149M Travel and HR Services 142M Plant Hire 140M Laboratory, Diagnos cs and Equipment 123M Fleet / Plant 111M Medical Professional Services 103M Marke ng, Print and Sta onery 18M Defence 15M Uncategorised 15M Veterinary & Farming 10M Medical, Surgical and Pharmaceu cal Supplies 8M M 500M 1,000M 1,500M 2,000M 2,500M As can be seen from Figure 13 there is a considerable difference in the total estimated value by category which ranges from 2,208,064 for Construction and Civils Works, to 143,570 for the Veterinary & Farming category. With this high average estimated value and the highest volume of tender notices the Construction and Civils Works category accounts for nearly 50% of the total estimated value of all tender notices published by public service bodies. 36

37 FIGURE 14 PUBLISHED TENDER NOTICES FOR 2013 PUBLISHED ESTIMATED AVERAGE AND MEDIAN VALUES (EX VAT) ,998, ,206 60, ,000 0 NON OJEU OJEU PUBLISHED AVERAGE ESTIMATED VALUE PUBLISHED MEDIAN ESTIMATED VALUE Figure 14 shows that, as expected, OJEU notices have higher average published estimated values than Non-OJEU notices. Again, given that the distribution is skewed, the median (middle value) is a better measure of the typical contract award value than the average. 37

38 4. Contract Award Notices in etenders Figure 15 sets out the level of recording of contract awards. Until the introduction of requirements under Circular 10/14 in August 2014, Contracting Authorities were not obliged to enter contract award details or notices for Non-OJEU level awards. This is a key reason why there is a low level of contract award notices in 2013 for Non- OJEU level tender notices published in 2013 (11%). 332 OJEU contract award notices were published in respect of 918 tender notices published in 2013 meaning 36% of OJEU tender notices have award details. This does not take into account tenders cancelled after they are published as that is not recorded via etenders or awards granted post 2013 for the 2013 notices being analysed. FIGURE PUBLISHED TENDER NOTICES V 2013 CONTRACT AWARD NOTICES , , TOTAL OJEU NON OJEU 2013 PUBLISHED TENDER NOTICES 2013 CONTRACT AWARD NOTICIES 38

39 Table 7 and Figure 16 detail the estimated values published for contract award notices that relate to tender notices published in etenders in The average estimated award value and the median estimated award value are also included. Due to most contract award notices not including a CPV code it was not possible to analyse those notices by category. Results are broken down by OJEU and Non-OJEU level contract notices. TABLE PUBLISHED AVERAGE AND MEDIAN VALUE OF AWARD NOTICES (EX VAT) CONTRACT AWARD NOTICES OJEU NON-OJEU Number of tender notices with contract award details in etenders Total Estimated Award Value 488,384,020 33,258,682 Average Estimated Award Value 1,471, ,741 Median Estimated Award value 350,000 60,000 FIGURE 16 PUBLISHED AVERAGE AND MEDIAN VALUE OF CONTRACT AWARD NOTICES 2013 (EX VAT) 1,500,000 1,471,036 1,200, , , , , , , ,741 60,000 0 TOTAL OJEU NON OJEU AVERAGE MEDIAN 39

40 40 Office of Government Procurement

41 Conclusions Good public procurement is key to delivering sustainable value for money for the taxpayer. The new centralised structures for procurement are at an early stage but offer a significant opportunity to deliver better value for money, consistent implementation of policy, reduced risk for the State and improved data provision. The OGP is leading on a programme to gather and analyse procurement expenditure on goods and services across the public service. This report presents the data collected by the OGP to date for 2013 and provides, for the first time, a robust analysis of how public procurement monies are spent across the public service. It indicates that 93% of the State s expenditure is with firms within the Republic of Ireland and that 66% of the State s expenditure is with SMEs. The OGP is aware of the significant role that SMEs play in the Irish economy and is committed to encouraging SMEs to fully engage in public procurement. It works with State and industry representative bodies in developing and implementing policy initiatives, and in driving supplier education and awareness. In this context, new public procurement guidelines (Circular 10/2014) were introduced in 2014, to further assist SMEs by promoting business-friendly measures, such as greater use of open tendering, breaking contracts into lots and the setting of relevant and proportionate financial, turnover and insurance criteria. This report also summarises the tendering activity of the public service in 2013 as reported by the etenders public procurement platform. The analysis shows that 74% of tender notices are smaller value (below threshold) tenders median values range from 50,000 to 500,000 depending on the category of goods and services involved. The data also shows that, in 2013, the recording of award notices was low. The fact that it was not possible to adjust the data to account for cancelled tender notices or awards granted post-2013, contributed to this finding. In addition, until the introduction of the new public procurement guidelines in 2014, contracting authorities were not obliged to record award notices for below threshold awards. From August 2014, the new guidelines make it mandatory for contracting authorities to publish all contract award notices over 25,000 on the etenders platform. An important enabler of public procurement reform is the availability of accurate data on procurement expenditure across the public service. The OGP intends to build on the data set provided in this report by producing annual reports of analysed expenditure each year to inform future procurement strategy and policy initiatives and to enhance openness and transparency with respect to public expenditure. 41