An Post named as Preferred Bidder for Department of Social Protection cash services contract


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The Minister for Social Protection, Joan Burton T.D, has today (Wednesday, 26th June, 2013) announced that An Post is the preferred bidder for the delivery of over-the-counter cash services to Department of Social Protection customers on foot of a public procurement competition commenced in December 2012.

An Post holds the existing contract for the services, which is due to expire at the end of this year, and the company’s preferred bidder status means negotiations will now proceed with a view to finalising a new contract.

Minister Burton said: "Last year, some 43.7 million payments – or 50% of all payments made by the Department – were issued in cash through An Post’s network of 1,152 post offices nationwide. These cash payments had a total value of €9.5 billion and benefitted almost 1 million customers. 

"These figures demonstrate the massive scale and importance of this contract, not alone in terms of ensuring customers get their payments in a consistent and timely manner, but in supporting jobs throughout the country. The value of the existing contract was worth approximately €58 million to An Post last year, which spreads across the network into local communities in every corner of Ireland. 

"Although negotiations remain to be concluded, An Post’s selection as preferred bidder for the new contract, following a competitive tendering process, should be welcome news for the company at large and also individual postmasters. Those postmasters provide a trusted and invaluable service to their local communities on a daily basis. 

"It is important to stress that the contract remains to be finalised, but if negotiations can be concluded successfully, it will ensure that arrangements currently in place for customers will remain unchanged."

The public procurement competition was advertised in December 2012.  This was the first time that the Department has publicly specified the scope and scale of its services to customers throughout the post office network.  

It is envisaged that, once completed, the term of the new contract will be for a minimum period of 2 years with the option to extend the contract for one or more periods of 12 months each, up to a maximum of 6 years in aggregate.

 

Minister Burton said: "My Department is the largest single issuer of payments in the State and the arrangements we make for payments to customers have a significant impact on the payments landscape in Ireland. As consumer behaviour shows a very high movement towards online and electronic payments, we must look to opportunities to provide better and more secure customer services in this area. 

"Therefore, as part of the Payment Strategy to be brought to Government shortly, it is envisaged that we will move to a system over time where all payments will be delivered to customers electronically. However, high-risk customers will not be migrated to an electronic payment until appropriate and robust measures are defined and implemented to mitigate any increased risk of fraud with an electronic payment."   

The Payment Strategy will set out a plan for the reform of the payment arrangements over the medium term. This goal of electronic payments is in line with wider Government policies and objectives, including the Public Service Reform Plan and eGovernment Strategy 2012-2015, the Action Plan for Jobs, the National Digital Strategy and the recently published National Payments Plan. 

Note to Editors:
Last year, some fifty per cent of all transactions (43.7 million payments) were paid in cash through the post office network. The current contract with An Post expires at the end of 2013. The value of the contract last year was approximately €58m to An Post.

In accordance with the law, the award of public sector contracts with a significant financial value is subject to various EU Directives. Because of the financial value of this particular service, the Department is required to publicly invite tenders for any new contract to deliver social welfare payments. This ensures that the taxpayer receives value for money and ensures that all potential suppliers are given the opportunity to put forward the most efficient, effective and competitive solutions for consideration and evaluation. 

As part of the Payment Strategy, the Department is undertaking two procurements, which will reform the payment arrangements for the delivery of welfare payments. 

The first procurement for over-the-counter cash services for social welfare customers commenced in December 2012 and An Post have now been named as the preferred bidder.  The new arrangements will replace the existing service contract with An Post and will ensure continuity in the delivery of cash payments to the Department’s almost 1 million cash payment customers.  Under the competition, An Post had to commit to assist the Department in migrating customers to electronic payments over the contract term. The term of the contract will be for a minimum period of 2 years.  The Department may extend the contract for one or more periods of 12 months each, up to a maximum of 6 years in aggregate.

Under the procurement competition, the RFT described the services as being for a transitional period as the Department progressively increases levels of electronic payments and consequently enhances levels of financial inclusion. An Post will be required to assist the Department in this migration, including assisting in customer facing activities to facilitate the transition from the cash-based system to electronic payments for customers.

The Department will be advertising a second procurement later this year for an ePayment solution.  This ePayment solution will supplement existing levels of payments made directly by Electronic Funds Transfer (EFT) into customer accounts in financial institutions.  It is anticipated that the notification regarding this procurement will be published shortly. The payment programme will contribute to strengthening the Department’s approaches to fraud and control.  

The key elements of services to be delivered under the cash services arrangements are:

  • A facility in an outlet whereby payments can be paid directly to customers in person;
  • Robust treasury management systems; 
  • Excellent accounting and reconciliation arrangements; 
  • Systems to handle payment exception and associated liability; 
  • Customer identity management and fraud prevention and detection services;
  • Emergency same day services; 
  • A micro budgeting service;
  • Provision for statutory deductions at source from welfare payments;   
  • Nominated agents can collect a payment on behalf of a customer;  
  • Appropriate security, risk management and contingency plans; 
  • Implementation of customer migration to electronic payments; 
  • Management Information Reports on services; 
  • Excellent contract governance; 
  • Services to be delivered meet standards defined in the Contract and a Service Level Schedule, and 
  • Necessary inspection of the services, supports, transactions and accounts are facilitated.

ENDS

Last modified:26/06/2013
 

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