ISA seeks changes to procurement process
17-10-2007
by Ciara O'Brien

The Irish Software Association (ISA) has called on the Government to make it easier for small firms to bid for public sector projects.

The lobby group wants what it calls "restrictive barriers" in the public sector procurement process removed, as they effectively rule SMEs out of lucrative government contracts.

In its pre-Budget submission the ISA said firms that were getting public sector contracts abroad were being excluded from winning Irish business because of "unnecessarily restrictive tendering requirements" that are unique to this country.

"Irish software companies provide innovative products that benefit the taxpayer by increasing public sector efficiency and lowering costs. However, unnecessarily restrictive tendering requirements, unique to Ireland, prevent indigenous firms from even being considered. The extent of the problem is highlighted by the many Irish companies who successfully secure business in other countries' public sectors and get nothing at home," said Pat Brazel, chairman of the ISA.

The group also wants to see the financial capacity criteria altered to reduce the ratio of required turnover to project cost. Some contracts stipulate that companies must have a turnover of three times the value of the project tendered for -- sometimes translating into millions of euro.

The ISA is also lobbying for the introduction of 'weighting' in award criteria for larger firms who subcontract part of the tender out to SMEs, to encourage partnering between firms. It is also looking for the current R&D tax credit scheme to be improved.

"Ireland's knowledge economy requires companies to be innovative. However, many SMEs are not able to avail of tax credits and must bear the entire cost of R&D," said Brazel. "SMEs should be able to offset the cost of investment against PRSI contributions on R&D staff. This will stimulate product and service innovation in the economy."

The skills gap is still causing some concern, with incentives sought for those students who achieve high marks in maths and science subjects.

Last year in its pre-Budget submission, the ISA called for the extension of the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS), in a bid to encourage investment in the industry. The Government extended and enhanced the scheme in the 2006 Budget, and also brought in changes to the R&D tax credit scheme, extending the rolling base period from three to six years, and allowed the qualification of sub-contracted R&D.