In 2023 the Department of Public Expenditure, NDP Delivery and Reform recently published Circular 05/2023, entitled Initiatives to Assist SMEs in Public Procurement. It replaced Circular 10/2014 and set out revised and enhanced measures to support small and medium-sized enterprises (SMEs) in winning public contracts. While written for public servants, SMEs can benefit from being aware of the measures it includes. As the two year anniversary of its publication approaches, now is a good time to review its contents.
Central to Circular 05/2023 is the principle that public procurement processes should be fair, transparent, and accessible to as many potential suppliers as possible. When SMEs have equitable opportunities to bid for government contracts, it fosters innovation, drives competition, and can lead to better value for taxpayers. This emphasis on levelling the playing field means contracting authorities are now encouraged, and, in some instances, required, to adopt specific measures that simplify and clarify how competitions for public contracts are managed.
Key Changes Introduced by Circular 05/2023
Revised Advertising Thresholds
Goods and Services: Under the new circular, all contracts for goods and services valued at or above €50,000 (exclusive of VAT) must be advertised on eTenders. Previously, the threshold was €25,000, so this increase allows more flexibility for smaller purchases below €50,000.
Works Contracts: For works contracts, the threshold has risen from €50,000 to €200,000 (exclusive of VAT). This significant jump reflects the often higher values associated with construction or infrastructure-related contracts, offering SMEs greater clarity about when a formal tender must be publicly advertised.
Works-Related Services: The threshold for works-related services remains at €50,000 (exclusive of VAT). This ensures consistency between the procurement of general services and works-related services, minimising confusion for contracting authorities and suppliers.
Publication of Contract Award Information
Contracting authorities now must publish contract award information for all procurements exceeding €25,000 (exclusive of VAT) on eTenders. This requirement seeks to increase transparency around how public funds are spent, giving suppliers, oversight bodies, and the general public insight into contract awards. Whether the procurement was handled within eTenders or through a different method (e.g., email-based quotations), details of the awarded contract must be listed on eTenders once the competition concludes.
This step is likely to promote accountability and encourage confidence in public procurement by showing that each award decision has been made transparently and fairly.
General Measures to Reaffirm Existing Principles
Circular 05/2023 reaffirms the core principles underlining public procurement: fairness, openness, and proportionality. Contracting authorities are reminded of the importance of adhering to both national and EU procurement regulations. These general measures apply across all contract types, goods, services, and works, they are vital for maintaining trust in the system.
The circular also clarifies that, while there are mandatory elements, contracting authorities are advised to tailor additional measures to fit the nature of each procurement. By balancing risk management with the need to keep entry barriers low, public bodies can help a wider range of suppliers, including SMEs, access government contract opportunities.
Enhanced Transparency and the Role of eTenders
Transparency Measures: Circular 05/2023 encourages public bodies to take active steps to increase transparency throughout the procurement lifecycle. These include proper advertising of tenders, publishing clear award notices, and maintaining accurate records of contract outcomes.
eTenders Platform: The circular highlights the eTenders platform as a central tool to achieve these goals. Public bodies are urged to use eTenders for both high- and lower-value contracts (where possible), particularly leveraging features such as Quick Quotes (electronic requests for quotations) for small-scale purchases under the new advertising threshold. This functionality allows a streamlined approach for inviting and comparing offers, making it easier for SMEs to spot and respond to opportunities.
Specific Measures to Promote SME Participation
Proportional Turnover Requirements: One recurring obstacle for SMEs is overly high turnover requirements. Circular 05/2023 stipulates that the minimum yearly turnover demanded from a bidder should typically not exceed twice the estimated contract value, except in exceptional cases where additional justification can be provided. This aims to prevent smaller businesses from being excluded solely based on size rather than ability.
Insurance Guidance: Ensuring the right level of insurance coverage can be another challenge for SMEs. Under the circular, contracting authorities not covered by the State Claims Agency should consult their own risk management teams or insurance advisers to determine appropriately scaled insurance requirements. Again, the principle is proportionality, avoiding burdensome conditions that might unnecessarily deter SMEs.
No Pay-to-Access Competitions: Another explicit rule within Circular 05/2023 is that contractors or tenderers must not be required to pay to access public procurement competitions. This provision seeks to eliminate any barriers that unfairly add costs to the procurement process, thereby maintaining open and inclusive bidding channels.
Central Procurement Arrangements
Circular 05/2023 does not change existing policy regarding central procurement arrangements set out under Circular 16/13. Contracting authorities must continue to use these arrangements, for example, framework agreements, wherever they are available. These arrangements are not only intended to ensure value for money but also to streamline the procurement process and maintain consistent standards across the public sector.
Interaction with Other Circulars
Circular 40/2002: Under Circular 40/2002, Government Departments and Offices must still report to the Office of the Comptroller & Auditor General on any contracts above €25,000 awarded without a competitive process. The increased thresholds for advertising in Circular 05/2023 do not alter these reporting requirements.
Circular 14/2021: Circular 14/2021 mandates specific approval for digital or ICT-related initiatives that may exceed €25,000 (excluding VAT and internal staff costs). This threshold remains separate from the advertising thresholds in Circular 05/2023 and continues to apply regardless of changes in national advertising limits for goods and services.
Ongoing Review and Future Considerations
The Department of Public Expenditure, NDP Delivery and Reform has indicated that the measures set out in Circular 05/2023 will be kept under review. This is to ensure that they remain fit for purpose, effectively encouraging greater SME participation without imposing undue burdens on contracting authorities. Any further amendments or clarifications will be guided by ongoing monitoring, market feedback, and stakeholder engagement.
By setting a framework that emphasises both compliance and fairness, Circular 05/2023 marks another significant step in promoting small business growth, innovation, and competition in the public sector
Circular 05/2023 represents a substantial shift in Ireland’s public procurement landscape, offering clearer, more accessible pathways for SMEs to participate. Through higher advertising thresholds, mandatory publication of awards above €25,000, and renewed calls for transparency and proportionality, it lays the groundwork for a more inclusive procurement environment.
Contracting authorities are encouraged to integrate these measures into their procurement strategies immediately. By doing so, they will help unlock the potential benefits of broader supplier pools, driving competition, value, and innovation in delivering public services and projects.
Sources:
Office of Government Procurement: http://ogp.gov.ie/
eTenders: https://www.etenders.gov.ie/
Circular 05/2023 text and FAQs: https://www.gov.ie/en/organisation/department-of-public-expenditure-ndp-delivery-and-reform
Capital Works Management Framework: https://www.gov.ie/en/publication/915d2-capital-works-management-framework/
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