SMEs and Public Procurement – General Overview

SMEs and Public Procurement – General Overview

GENERAL OVERVIEW

This is the first in a four part series of articles discussing the rules governing public procurement with a particular focus on how these rules affect SMEs.

 

What is public procurement?

Public procurement is the acquisition, whether under formal contract or not, of works, supplies and services by public bodies.

Public work requires public spending and for this reason it is essential that such spending is closely regulated.  Every piece of work which is commissioned by a public body needs to comply with a particular set of rules.  The rules have evolved from the fundamental principles of EU law

  • Non-discrimination
  • Equal treatment
  • Transparency
  • Mutual recognition
  • Proportionality
  • Freedom to provide services
  • Freedom of establishment

Keeping in mind these principles, we will look at how they are set out in the Procurement Directives, their applicability to procurement which falls outside the scope of the Directives and the measures which have been put in place to assist SMEs in participating in public procurement.

Why are these rules important for SMEs?

The Office of Government Procurement estimates that the Government spends in the region of €8.5 billion each year on goods and services.  Participating in public procurement opens the door for SMEs to provide services to the Government and to gain access to this significant pool of funds.

 

The Threshold

There are three new Public Procurement Directives which apply to all public sector bodies including, for example, Government departments, local authorities, health authorities and commercial state bodies.  These Directives must be transposed into national legislation by 17 April 2016. The Directives also apply to most works and related services contract awarded by private entities which are subsidised 50% or more by a public body, if the contract exceeds the EU thresholds.

The thresholds for 2016 are:-

Works  
Contract Notice€5,225,000Threshold applies to Government Departments and Offices, Local and Regional Authorities and public bodies
Supplies and Services  
Contract Notice€135,000Threshold applies to Government Departments and Offices
Contract Notice€209,000Threshold applies to Local and Regional Authorities and public bodies outside the Utilities sector
Utilities  
Works Contracts / Prior Indicative Notice€5,225,000For entities in Utilities sector covered by GPA
Supplies and Services€418,000For entities in Utilities sector covered by GPA

For contracts which fall below the EU thresholds, the authority must ensure the contract is awarded in accordance with certain procedures.

We will look at the provisions of these Directives in more detail in our next article, together with some information on the rules applying to tenders which do not reach the EU thresholds.

For further information on this topic, please contact Paul Keane in our commercial department pkeane@reddycharlton.ie.