independent

Wednesday 16 April 2014

Ireland loses €3.5bn as state contracts go to foreign firms

Companies in the UK and the North are the main beneficiaries

An aerial view of the IFSC in Dublin. Developers are frustrated by the Budget's failure to deal with the 'windfall tax'

THE past year has seen a surge in the value of government contracts awarded to bidders based abroad, according to new research.

Around 28pc of the €12bn worth of contracts awarded by state bodies in 2013 were won by companies based outside Ireland – up from 18pc the previous year, the research shows.

It puts Ireland at the top of the list of countries most likely to award contracts to foreign companies, according to Tony Corrigan of TenderScout, who prepared the research.

Firms based in the UK and Northern Ireland are the main beneficiaries of what is in effect an increase in imports by the Government, Mr Corrigan said.

“UK firms have a big focus on the procurement space, they invest in putting tenders together, while in many cases Irish businesses are not even bothering to compete,” he said.

One factor that can be a deterrent to cash-strapped domestic companies is the cost of tendering.  

Tendering for work from state bodies costs a minimum of €4,500 for a contract of €25,000 or more, to hundreds of thousands of euro for larger contracts, according to Tony Corrigan.

The high level of business being won for firms abroad means Irish businesses are missing out on €3.5bn of contracts, Mr Corrigan said.  

Around half of all contracts that are won here go to companies in Dublin, he said.

He said businesses need to compete for tenders, but also to pitch for smaller contracts awarded by local authorities and other bodies.

Contracts worth less than €25,000 are not put to a formal tender but procurement officers need to secure three quotes for a job before awarding a contract, he said. Small and mid- sized Irish businesses should be pitching to be among those tapped for quotes, he said.

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