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Dublin: 7°C Thursday 24 September 2020

Irish businesses could cut the state's €8.5 billion spending bill

But owner-operators say they are still taking far to long to get paid when they do get contracts.

Updated at 12.47pm

GOVERNMENT CONTRACTS COULD be made cheaper if more small businesses were enticed to bid for public tenders.

But the head of the Competition and Consumer Protection Commission, Isolde Goggin, warned that locking small and medium enterprises (SMEs) out of the market for government tenders would probably have a “detrimental impact” on competition.

Last year the state sector spent about €8.5 billion on goods and services, a figure which doesn’t include the amount spent on public works.

Today the commission put out guidelines for SMEs planning to bid for public contracts as part of a consortium after the government pledged to make it easier for SMEs to go for tenders.

Goggin said including “efficient smaller firms and new entrants” in tender bids could deliver better value-for-money for the state.

It should also increase the number of firms that take part in a tender competition, which should increase competition and decrease the cost of goods and services purchased by the state,” she said.

New Competition Protection Commission Competition and Consumer Protection Commission chair Isolde Goggin Source: Leon Farrell/Photocall Ireland

The share of public contracts going to big, offshore companies has been disputed – with Tenderscout, set up to help SMEs win tenders, putting the figure at 28% for 2013, compared to the 5% figure claimed by Public Expenditure Minister Brendan Howlin.

The Small Firms Association has called for the government to employ a “think small first” attitude when putting out tenders.

Waiting to long for payment

Meanwhile, small businesses have said they want the government to step in over concerns that they are waiting too long to get paid for their services.

The Irish Small and Medium Enterprises Association (ISME) will today release their Credit Watch survey, which shows that businesses are waiting an average of 60 days to get paid.

ISME is calling for a change in the “useless” Prompt Payments legislation which they say “has failed to benefit small and medium businesses in its 12 years of existence”.

They want the law updated to eventually make 30 days the statutory time for payment.

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The report found that of the 952 respondents:

  • The average payment period for SMEs in the fourth quarter of 2014 has improved to 60 days
  • 24% of SMEs are experiencing delays of 3 months or more
  • Over 5% are waiting more than 120 days
  • Late interest is charged by less than 2% of small businesses, while only 4% of medium sized businesses charge it
  • Dublin businesses continue to wait longest, at 61 days, while Ulster is best at 58
  • Distribution businesses wait on average 69 while hospitality is shortest at 54 days

Speaking about the survey launch, ISME Chief Executive Mark Fielding said that big business was taking advantage.

IPU Meetings ISME chief executive Mark Fielding Source: Laura Hutton/Photocall Ireland

“Once again the figures show how Irish SMEs are being abused by their big business customers and recent ECB figures also confirm that big business in Ireland extract more credit from trade debt than any other EU country.

“The 30 days mentioned in the legislation is now a sick joke, while our government allow ineffectual prompt payments legislation to continue to strangle small business”.

- Additional reporting Peter Bodkin

Originally published at 6.30am

Read: Ireland needs more backers to get ‘skin in the game’ for business to grow

Read: Ireland needs more backers to get ‘skin in the game’ for business to grow

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