Welcome to the Keystone Column. This week we look at social value and procurement: we look at the wider impact procurement decisions can have. We also learn where Ireland ranks amongst the world’s innovators. As usual we conclude with our weekly list of current Irish public tenders.
Business Stories
The Worlds most innovative economies – how Ireland ranks
Ireland is less innovative than it was last year according to the Bloomberg Innovation index. The index ranks Ireland as the 16th most innovative country in the world – down one place from last year. The Irish Times reports that the country scored particularly highly for “value added manufacturing” – rated second in the world, behind South Korea – and for productivity, where it placed sixth overall (compared with 21st for the UK). However, it fell down for R&D intensity (22nd); researcher concentration (22nd) and patent activity (31st). Nordic nations dominate the top 15 this year, while South Korea reigns supreme and Russia has plummeted 14 places in the space of a year to No. 26.
Social value and procurement: Irish booksellers set to lose €14m as overseas suppliers win 60% of €6m public tender
The Irish book industry has expressed dismay about the outcome of a national public tender on the supply of library books, saying it poses “a real threat” to Irish booksellers and suppliers. Bookselling Ireland and Words Ireland claim 60 per cent of the €6 million annual contract was awarded last month to suppliers that are based outside Ireland, resulting in the loss of €14 million to the Irish industry over the four-year life of the contract. Amid fears that this will lead to the closure of SMEs, the two bodies expressed disappointment at what they see as a national tender process that has impacted significantly on their sector and placed their viability in doubt. They are quoted in coverage of this story as saying “it is likely that no local entrants will ever be able to compete for tenders in the future because of the minimum turnover requirements”. Minimum turnover requirements are a reference to the level of revenue a company must earn to be deemed eligible to enter a state-run procurement contest.
A quid pro quo of Irish businesses having access to EU markets is that international companies have the right to compete for contracts like this one in the Irish Market. Public buyers are explicitly tasked with striving to maximise value for money for the State. Value for money does not always mean the lowest price however – even when viewing a transaction in purely monetary terms. The robustness of a company, its reputation, its capacity to service a contract and the professionalism of their bid documentation all matter in helping a buyer develop a sense of what they can get from the market. No company is entitled to a contract because they happen to Irish (or American for that matter).
So far, so familiar, so what you may ask. Well there is another angle to this affair. The macro-economic one. Some countries take a broader view of the macro-economic effects of the State’s spend and go so far as to use state expenditure as a strategic development instrument. We wrote about the town of Güssing in Austria last week and their inspiring example in the clean tech sector. We have written about Scotland, Estonia, Germany, Canada and cities like Sheffield, Birmingham, Barcelona and London (most have executive Mayors) that have taken this broader approach.
In the case of this contract, this broader perspective would ask, what is the cost to the exchequer of several Irish SMEs going to the wall versus the savings in this contract? Some of these companies may well be placed in marginal areas of social disadvantage where jobs are not easily replaced. This approach would ask how much will the left pocket save from switching to international suppliers and what impact will that have on the right pocket to the taxpaying citizens. If these companies go to the wall, how much will the loss of payroll taxes, VAT and welfare supports for the newly unemployed cost society? Is this a net gain or a net loss to Irish society?
This is a concept called ‘social value’. There is a link between social value and procurement. What’s more, the 2014 EU Procurement Directives ask public buyers to take these kinds of factors into consideration. How each member state interprets the Directives’ social, economic and environmental clauses varies and how one measures social value has not been clearly mapped out for buyers. We have sympathy for them in this regard as clarity on this point is needed – they are operating without clear guidelines.
It is our view that in niche markets like this one, a greater emphasis on social value, especially during the pre-tender phase so that the market is appropriately mapped out and understood by the buyer, would be a welcome development. This would mean looking at the impact of the procurement spend outside of the buying organisation, often in areas outside of their focus or remit – and their operational budget. This requires a significant paradigm shift for procurement teams and industry should understand that this is not something that can be switched on overnight. Given the impact of decisions like this on local communities and the wider economy, we would like to see a further evolution of government policy in this area. If government rises to the challenge, industry must be supportive and engage in any consultation with a progressive sense of commitment rather than a sense of entitlement which can sometimes come through in complaints from industry (this latter comment is a general one not aimed at this specific case).
Interesting Trends – Social Value and Procurement
Since the advent of austerity, the public sector is unsurprisingly under pressure to make savings and increase efficiencies. The above article about a tender to supply books in Ireland, provides a good illustration of the wider impact procurement such decisions can have.
The concepts linking social value and procurement examine the collective benefits to the wider community, including the non-financial impact of organisations such as wellbeing of individuals and communities, social capital and the environment. It is easy to think that social value might be overlooked as an expensive luxury in hard times. However the UK (for example) has actually come to view social value as an important contributor to saving time and money, as making smarter choices when procuring products or services can produce more long-term results and benefits not only to the buying organisations but also to local and regional economies.
YPO, a UK public sector buying organisation have developed some guidance on social value for CIPS. They outline how seeking social value can be of benefit to the buying organisations as well as the wider community and how it can can help suppliers develop socially, environmentally and economically.
Measures for social value include supporting jobs and growth; supporting active, healthy and resilient communities; and promoting cleaner and greener environments. Of course measuring social value can be challenging as it greatly depends on the context of local needs or the particular strategic objectives of an organisation. The UK has developed a number of online portals to assist organisations in implementing social value best practices across supply chains and to provide a tangible means of measurement, allowing them to demonstrate what they have contributed to social value.
New public procurement tenders this week
Visit the Keystone website to view our take on the 500+ active public procurement opportunities with more than five days until their deadline. There are a vast range of services, supplies and construction related to public procurement opportunities in the following sectors (there are many more sectors than the sample list below):
- Construction and related trades,
- Professional & Advisory Services,
- PR, Media, Advertising and related,
- ICT supplies and services,
- Training,
- Property & facilities management,
- Vehicle & automotive,
- Catering and related services,
- Cleaning and related services,
- Waste Management,
- Maintenance and related services,
- Horticultural supplies & services,
- Research & environmental monitoring,
- Printing, office supplies and related services,
- Trades,
- Medical and scientific research, supplies and services,
- A vast range of other services and supplies.
Businesses interested in any of these public procurement opportunities that are unsure of how they can follow-up on these tenders can contact Keystone at any stage. We would be happy to discuss your needs and where they may fit with your business growth plans. These public procurement opportunities are sources of business growth and innovation for companies across the country.
Keystone E-Tenders Report Open YTD as at 1901 (by date of publication)
Keystone E-Tenders Report Open YTD as at 1901 (by sector)
Please note, e-tenders often has public procurement opportunities incorrectly categorised so people relying on e-tender alerts could easily miss out on opportunities if they are dependent on it. E-tenders is only as reliable as the people inputting tenders and mistakes are made very frequently. The Keystone Column includes all live tenders posted on e-tenders since January 4th 2016 that have five or more days until their deadline as at January 19th 2017.
