The Government has pledged to open up public sector contracts to SMEs, but how does it work in practice?

As part of its stated commitment to the UK’s SMEs, the Government has set targets for 25 per cent of all public sector contracts to be given to SMEs.

Public sector bodies, including central government, the armed forces and the NHS, spend around £220 billion a year on goods and services—everything from stationery and office furniture to medical equipment and catering services. So up to £55 billion of contracts are up for grabs.

Gaining public contracts has long been a source of complaint amongst the country’s small businesses. It’s usually a complicated process – there are mountains of documents to get through, often in a language that is incomprehensible to most normal people. And the requirements – the insurances, the employee requirements, the financial stability are often beyond many SMEs – or at least, are difficult to prove.

However, a package of measures to open up the way that Government does business and to make sure that small companies, charities and voluntary organisations are in the best possible position to compete for billions of pounds worth of contracts has been outlined by the Government.

After listening to the views of hundreds of small business owners, the Government has taken action to ensure that small firms and organisations, which it considers to be vital to the economy and promoting growth, are no longer shut out of procurement processes because of excessive bureaucracy and petty regulation.

The new procurement opportunities will be available for everyone to see, free of charge, meaning Government deals are more transparent than ever before.

Key measures include:

• The launch of a Contracts Finder website. The new online facility will become the place to find public sector contracting opportunities over £10,000 and will make the Government’s procurement process totally transparent. From now on, all organisations need to do is to specify which contracts they are interested in and details will be emailed free of charge.
• The appointment of Stephen Allott as a new Crown Commercial Representative (CCR) for SMEs. His task will be to build a more strategic dialogue between HM Government and smaller suppliers – giving those suppliers a strong voice at the top table.
• The launch of SME (Small Medium Enterprise) product surgeries. These events will be led by the new CCR and will give SMEs the opportunity to pitch innovative products and services direct to a panel of senior procurement and operational professionals from central government and the wider public sector.
• A completely new approach to assessing companies and organisations who want to do business with Government, so that SMEs are not disadvantaged including:
• Seeking to eliminate PQQs (Pre-Qualification Questionnaires) for all central government procurements under £100,000. This represents a radical change in the way pre-qualification is carried out and means that from now on procurers will be free to choose the best route to market for their individual circumstances.
• Allowing firms to submit their prequalification data once for all procurements in common commodities. This will put an end to companies having to submit the same data time and time again, saving time and money for the suppliers and for government.
• Publication of the findings of the Cabinet Office’s LEAN Review into procurement processes. This will show the Government is doing all it can to reduce waste, tackle bureaucracy and lower the cost of doing business with government.

Prime Minister, David Cameron, said:

“We are announcing big changes to the way government does business. It will provide billions of pounds worth of new business opportunities for small and medium-sized enterprises, charities and social enterprises.

“We need to make the system more open to new providers, more competitive between suppliers and more transparent for the taxpayer. This is vital as we get to grip with our deficit – helping us tackle waste, control public spending and boost enterprise and growth.

“It will also help modernise our public services, opening them up to the forces of competition and innovation and give our great charities and social enterprises the opportunity to deliver services too.

“I call on all those who think they can provide a great service for government, to take advantage of these opportunities, to go online and start searching for contracts now.”

Minister for the Cabinet Office, Francis Maude, said: “This marks the end of what I call the procurement oligopoly – where innovative small businesses and organisations are too often shut out of contract processes early on because of ridiculous rules and unnecessary bureaucracy. This is not only bad for those affected, it’s also bad for Government as it stifles competition.

“Today’s changes will help create a system which is transparent and allows small businesses and voluntary sector organisations to compete more fairly for Government contracts – helping to drive economic growth at national and regional level, while delivering better deals for the taxpayer.”

Additional measures include:

• The launch of an interchange programme. This will enable the Government to get secondees from the business world into its procurement teams and allow civil servants to get real commercial experience.
• Local Government Support. Today, Baroness Eaton, Chair of the Local Government Group has also announced her support for the new measures and the intention that Local Government will also make their opportunities available on Contracts Finder and use a simplified pre-qualification questionnaire.
• An extended Supplier Feedback Service so businesses can continue to tell government where there are still issues.

Assessment

The Government has also changed the way it will assess the firms it does business with by changing the policy and the process.

For all procurements in common commodities it has put in place systems to allow suppliers to tell the state their prequalification data once – and not submit the same data time and time again. For all central government procurements under £100,000 (the EU threshold), the plan is to eliminate pre qualification questionnaires entirely, with procurers free to choose the best route to market for their individual circumstances.

For larger procurements the government is moving towards greater use of the ‘open procedure’, thus eliminating a separate selection stage early on in the process.

Where procurements require the completion of a pre-qualification questionnaire a further slimmed down version has been released for use across government.

The Government has said this is not the end of the changes it will be making, and to ensure the best of private sector practice, it is launching an interchange programme to bring in secondees from business into our procurement teams, to transfer skills and provide civil servants with broader experience in the commercial world as well as sharing their expertise about working with government.

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4. FSB hails public procurement revamp
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Comments

One Response to “Going public”

1. Anita says:

   June 25, 2012 at 8:36 pm

   I think it is definitely true that many hard costs are next to zero very low.The one area I would push back against Paul Graham on is marketing. It’s not entirely true that marketing costs are zero. In fact, it costs something to market online, what with SEO and Google ads and content creation and other techniques.It may be setting up entrepreneurs for unrealistic expectations for Graham to say that the Web has made marketing free. Most startups either have to spend a lot of time or a lot of money or both to build a presence online. One way or another, it costs something. It did for me.