Irish SMEs 'priced out' of local authority contracts
BUYING goods and services from overseas companies by tender could add 15pc to the final price for the State, Chambers Ireland has warned.
Small and medium-sized businesses are losing out if local authorities award contracts solely based on the lowest price, as tax revenues will drop and the social welfare bill will increase as smaller companies go out of business.
Chambers Ireland, which represents 10,000 businesses across 45 individual chambers of commerce, said that many Irish companies could not match the prices being offered by overseas retailers, and that many now "feared for their survival".
Chief executive Ian Talbot said that commercial ratepayers should be offered the opportunity to win lucrative contracts, to help grow the economy.
"If you focus solely on price you might not get the best product," he said. "Call it reciprocity. If you have a business in a town, for example supplying stationery, they pay commercial rates to the local authority.
"Local authorities need stationery for 31,000 staff, but are buying from one supplier.
"The EU requirement is for the most economically advantageous tender. Our argument is it's not just about price, as there's a knock-on effect to the Irish economy (by not awarding tenders locally). There's social welfare costs and tax foregone by not having these local suppliers involved.
"It's likely that there's a 15pc loss to the economy as a whole when contracts are awarded to companies located outside of Ireland during the procurement process. We would ask that all contracting authorities to be mindful of this and place increased weighting on factors such as local job creation and value to the local economy when designing tenders."
The Government has issued guidance to local authorities to increase SME involvement in public procurement. Public bodies spend an estimated €6bn a year on goods and services.