On 6 September 2012, the Department of Public Expenditure and Reform published a report ("the Report") received by it from Accenture, which undertook a capacity and capability review of Ireland's central procurement function. 

The Report conveys that Ireland currently spends €9 billion on supplier goods and services on an annual basis.  The Report focuses on the €6.9billion of spend made on goods and services which it considers is "Addressable by Procurement", that is, could be reduced if reform is introduced in relation to how those supplies and services are procured.   Of this spend, the health sector accounts for €3.1 billion, education €1.1 billion and local government €1.1 billion.  Justice and Defence, combined, account for €647 million and other central agencies account for a further €890 million. 

The Report identifies annual savings of between €249 million - €637 million as being achievable through adopting the various recommendations.  Those recommendations can be summarised as follows:

  • The Report recommends the establishment of a hybrid centralised procurement operating model in a single location in Dublin.  Under this model, there would be a new Chief Procurement Officer accountable for national procurement strategy policy implementation and effective compliance.  The Chief Procurement Officer would sit at the head of a new agency – the New Procurement Office,  under the aegis of the Department of Public Expenditure and Reform.  The current National Procurement Service, National Public Procurement Policy Unit and Centre for Management and Organisation Development, which all currently perform certain centralised procurement functions, would all transition across to the new agency.
  • A new Minister of State for Procurement position would be established within the Department of Public Expenditure and Reform and the Chief Procurement Officer would report to the Minister for State.
  • The National Procurement Office functions will have three primary headings:  Policy & Compliance, Strategic Sourcing and Category Management & Procurement Operations.  The Procurement Board of the National Procurement Office would comprise representatives from each of the key procuring Departments at Assistant Secretary General level, to include the Department of the Environment, Community and Local Government, Defence, Justice and Equality, Education and Skills, Health as well as representatives from the Department of Public Expenditure and Reform and the Chief Procurement Officer and a representative from the Minister of State for Procurement.
  • The National Procurement Office would be responsible for managing all strategic spend for common categories of goods and services.  Certain experienced resources from individual procurement teams within the sectors of health, education etc. would transition to the National Procurement Office in Dublin.  A Procurement Officer within each sector would be appointed on a full-time basis to be responsible for procurement across relevant Departments and Agencies within that sector. 
  • In order to enable savings, delivery and compliance, the Report recommends the introduction of a centralised spend analytics IT system to capture all State spend by type, location and seller. 
  • Targets would be established, both in respect of spend and savings, and monthly reports would be provided to the Chief Procurement Officer by each relevant Government Department.A major transitional phase would be undertaken to set up the new organisational capability.

The Report uncovered some interesting issues within public procurement in the Irish State.  For example, it notes that currently there is no central database or reporting of procurement spend within the Irish public service.  There is also no standard contract management process across the State once contracts have been awarded.  The Report notes that certain sectors have processes which report adequately on both of these areas.

The Report estimates there are, at least, 536 public service personnel across the State working full time on procurement. (The Report suggests that when compared to a global average of one full-time procurement professional being required for approximately every €19 million of spend, this number could be reduced to 227 procurement resources to manage the €4 billion of common categories of spend within the Irish State).

The Report estimates the process for reform would take between 18 – 24 months to implement. 

Comment

Structural reform of procurement processes in the State has long been highlighted as one of the areas where the State can make significant annual savings.  In this respect the findings of the Report are not very remarkable.  Having consistent methodology and processes for public service procurement and centralised procurement for certain common supplies and services, would be broadly welcomed within the procurement community.  The extent of the proposed structural reform suggested in the Report is considerable.  It will be interesting to see how this process of reform develops over the coming months.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.