Brian Stanley probes procurement: Are we buying the right kit?

Thanks for being here present this morning at the committee. Just in relation to procurement, there's a couple of things being established here. One is that, you know, Mr Davies said that being a neutral country doesn't prevent us from, you know, in terms of strategy, in terms of improving the capabilities of the defence forces and the equipment available and all that. If we just pick up on the point in relation to strategy and, you know, the role of the Office of Government Procurement, and I'm interested in this because of a previous incarnation I was in, the Public Accounts Committee, you know, and I'm just trying to think of the comparison, we'd say that from the discussion what I'm picking up is that the defence forces obviously will suss out, they will decide, and the Department of Defence, what equipment and technology they need, they come to you to procure it. And what I'm trying to figure out is, has the Office of Government Procurement got any role in terms of, you know, deciding maybe what's the best way of doing this or, for example, and I don't want to talk too much about it, but it's one that I laboured a lot over, as did other people, the Children's Hospital. Children's Hospital owned up, it's a big project, there's no large project that's easy to do, but the, for example, and I don't want to rehash what he was just trying to use as an example, that if you pick the most difficult site in Dublin, we probably found it. If you try to design the most expensive building, we went with it. If you try to design a building that will have the highest maintenance costs, we done it. And in terms of fit out and everything like that, two banana ships, two bananas stuck together in terms of, you're on top of it, looking down at it, and it'd been out of it a few times. And I'm just wondering, whereas what we need is a functional hospital, but obviously an architectural company arrived in with a wow project, popped it down, and away we go with it. And I'm just thinking about in terms of the Office of Government Procurement, in a situation like that, and I'm thinking about the Defence Forces, and I'm not a military expert, but I think it's very important that we're not buying equipment that we don't need, or that we're not buying the best equipment. I'm using the analogy of the children's hospital. And as I said, big projects are never easy. I know all that. If you go to build a house, it's not easy. But we seem to make things very difficult and very expensive, and they take longer to do. And I'm just wondering, in the case of Defence, for example, or other procurement, does the Office of Government Procurement ever say, hang on here a second, what you want to buy here? Whichever department it is, it looks fantastic, wow project, or whatever else. Do you ever say, hang on here, lads and lassies, this is going to be, is this unnecessarily complicated? Is there unnecessary expenditure here? Is it going to slow down the project? And are we increasing the number of complications? And maybe the same with Defence. Are we cutting our way through the wrong jungle? So first of all, to say we don't do the procurement on behalf of Defence. In fact, the only procurement we do, in fact, we don't really do procurement. I know that sounds a bit of a strange statement to make. We do the central procurement framework. So frameworks for standard goods and services. Anything from professional services, vehicles, energy, stationery, all that type of stuff. Standard goods and services. The CPB, which Anne is one of the head of the portfolios there, we put the frameworks in place and then contracting authorities will draw down off them. So it makes it very simple for them. Everything is done for them. Green, social, all those things are all included in the frameworks. What we also do do, though, is we do bespoke competitions. So what I mean by that is sometimes we will have contracting authorities come to us and say, look, I normally buy X, Y and Z, but they've now asked me to buy, we had one recently with the Coast Guard. They want us to buy this special ship with all this equipment or whatever on it. It's going to cost whatever, hundreds of millions. I do not have the experience for this. I don't know what I'm doing, blah, blah, blah. I'm paraphrasing. So the OGP will look at that because we have a lot of expertise in-house. At times we will take competitions like that on board and we will run them. And then we ask all of those probing questions. What is it you're buying? Why are you buying it? What's the strategy? What is it to deliver? What will be the ongoing operating costs of it? What is it supposed to do? We lend our expertise to those competitions. And generally I think we can say, I know John is in the bleachers back there and John runs that section, we generally have not had much issues in terms of any challenges legally against all of those. So in short, because I have a couple of questions, so in short, you would question... Oh, absolutely. Absolutely, because we have the expertise and I think that's really the difference because one of the things that I certainly would always be concerned about is we have approximately about 8,000 contracting authorities across the state. About 4,000 of those are schools. Now, we often say let's put schools aside, but actually schools, besides buying general goods and services, sometimes they're building schools themselves or they're adding classrooms. Could I just move on a bit for a second? In terms of, it's accepted that we have to improve the capacity of the defence forces and in every way, both in personnel and in equipment, et cetera, and technology, okay. And I'm saying that as somebody who supports neutrality and it's okay. But my understanding is that there has been, the discussions are taking place at European level is that we've moved to a situation where Europe as a whole is, to use the term, tooling up. So the defence industry in Europe is gearing up and obviously, there will be a lot of private industry involved in that, particularly Germany and industrialised countries and some in Ireland as well. But what I'm trying to, the question I'm asking is this, and there's a defence budget being set out, in terms of procurement here, is there a lean on government departments here, defence budget being set out, in terms of procurement here, is there a lean on government departments here and on yourselves to purchase from European-based companies? Is there pressure or any kind of, I suppose, favouritism, it's probably the wrong word, but I suppose emphasis is better, emphasis being used on that you procure from Western European countries? So the EU preferences is certainly starting to emerge through the review of the current directives. The Council are, I suppose, that's one of the agenda items is around this notion of buying European. Up until now, we all operate on an open market. In fact, public procurement stipulates that it must be done in an open and transparent way. So in other words, there's no favouritism over using certain countries or certain suppliers, it all has to be done in an open and transparent and in a fair way. What would be security implications, depending on where you're buying from? Well, for defence, it's different, because defence can go direct, whereas classic directive for standard goods and services, you can't go direct. In other words, security implications. If there's security implications, you can go direct, yeah. Sorry. Dr. Davies, I think we're coming there. I think it's important to note, when you ask that question, you have to look at individual levels within the defence forces, whether that's naval, whether that's air force, whether that's the army itself. There is limited capacity and limited organisations globally in each of those fields. So when you talk about a European defence industry, or you talk about defence industries, there's limited supply market. In many other marketplaces, if I'm going out to buy staplers, I have a huge supply market in terms of what I can go to. So yes, there will be a European perspective creeping in, and I think it's probably the right word to use, creeping, rather than actually form a policy of saying we need to look at Europe and we need to look at the industries within Europe to support. But within defence, you're limited. You may not actually have either the industry supplier or the manufacturer that's available within the state or within the area that you're buying from. So you have to be very careful about the way that you ask that question, because automatically somebody might turn around and say, well, you know what, I want to buy a Boeing craft, which is a defence craft, an aircraft that I have to use for defence, and the reason I'm buying it is because that has the capabilities that Airbus doesn't have. So I'm going to go use the securities directive and I'm going to go approach them directly. Is that reasonable? Europe might not think so, but on the other hand, the defence force may turn around and say, but given our capability, given we're an island nation, given the size of the border, this may be something that we have to think around. I want to highlight that difference because it's a really important difference. I don't have a wide open marketplace to choose from. I have limited marketplace and limited suppliers for a lot of the technologies and a lot of the support equipment that are out there, and that then leads to the issues of what are the relationships and how are the supports going to be, which goes back to that building that capacity and capability locally to ensure that should a geopolitical shift happen, you actually have the resources available to deal with it. There are also security concerns, and again, Europe has made this clear, and as has America, you won't buy off certain countries because of the security concerns, be that equipment or otherwise. And again, general procurement would say it's open procurement. We're not going to take that into account because it's open and transparent, but security defence forces will take that into account because of the nature of the equipment and services that they're buying. They're very different marketplaces. And I think sometimes when we talk about public procurement, we tend to forget that we're not dealing with one sector. Defence is one. Education is completely different to defence. Health is a completely different set of outcomes to defence. And we need to understand that each of those brings from a procurement perspective, a different set of skills and knowledge in order to implement the policies that you make, not the policies that the buyers make, the policies implement those. And so they take each of those policies differently, and they need a different set of skills to do that and a different market understanding. That, I think, has maybe, hopefully, answered some of your questions, but it's not as wide open market. And by the way, having a local defence industry and having local suppliers, everybody would favour that, but also people recognise that to have a local defence industry may take 25, 30, 40 years. Okay. Thank you.