How-to guide aims to open up billions of tech procurement opportunities for SMEs

Government publishes advice for smaller firms and promises ‘sweeping’ rule changes to open up billions of pounds of public contracts

Credit: InvestmentZen/CC BY 2.0

The government has published a how-to guide for SMEs selling into the public sector and promised to deliver “sweeping procurement rule changes” it hopes will open up billions of pounds of opportunities for smaller firms.

To coincide with the Small Business Saturday initiative, the Government Commercial Function this weekend published Selling to Government, a 25-page document intended to provide SMEs with advice on navigating the world of public-sector procurement.

The guidance covers areas such as where to find opportunities and events, considerations when responding to a tender, rules on prompt payment, and the role of the small business crown representative. 

Current postholder Martin Traynor supported the publication of the guide, writing in the foreword that diversifying the supplier landscape is a key way in which government can “achieve the best value for the UK taxpayer”.

“The government wants to see far more UK SMEs bidding for the contracts on offer,” he added. “This guide aims to inform SMEs on where they can find these opportunities and gives background information on doing business with government and top tips for tendering”.

The guide also provides advice on how to make the most of potential opportunities for SMEs to work as a sub-contractor “working with larger companies to help deliver things such as long-running IT or catering projects”.

The most recently published annual figures showed that, out of a total of £58.2bn spent across government with external suppliers, a little under £6.6bn – or 11.3% – was spent directly with SMEs. A further 15.4% of the total spend in the 2019/20 year – £8.1bn – was spent indirectly.

The overall 26.7% proportion of supplier spending that went to SMEs during the year is still some way short of the ‘one pound in every three’ target that the government has previously said it aims to deliver by 2022. The figure also lags the 27.1% high achieved in 2014/15 – after which the figure dropped off sharply during the following two years, before rebounding somewhat in the last three. 

The 2019/20 figures showed huge variance between the SME-friendliness of departments; the Department for Digital, Culture, Media and Sport spent 47.1% of its procurement outlay with SMEs – including 44.1% awarded directly to smaller firms.  The departments for Education, International Trade, and International Development also posted SME spending figures in excess of 40%.

At the other end of the spectrum, the Department for Work and Pensions spent less than one pound in every eight, 12.2%, with SMEs – and only 3.5% of contracts went direct to small and medium-sized businesses.

Other laggards included HM Treasury on 16.1% and the-then Foreign and Commonwealth Office on 16.4%.

The 2019/20 figures included only the first few weeks of the coronavirus crisis; it it yet to be seen how the vast sums of public money spent with external suppliers during the pandemic will affect the extent to which SMEs were able to win government business.

Minister for efficiency and transformation Lord Theodore Agnew said that, following the UK’s exit from the European Union, the government intends to make “sweeping procurement rules changes, to make it easier and more flexible for SMEs to win government work”.

“We want it to be easier for them to work with government and this guide, published in support of Small Business Saturday, will help small businesses navigate what can be a complex world of public procurement,” he added.

The promised rule changes, which were trailed in a green paper published by government a year ago, include doing away with four current separate sets of existing core public procurement regulation and replacing them with a single set of rules.

The government also wishes to streamline an existing array of eight different procurement procedures into just three: open procedure; competitive, flexible procedure; and limited tendering procedure.

Saturday marked the UK’s ninth annual Small Business Saturday, an initiative which describes itself as a “grassroots, non-commercial campaign, which highlights small business success and encourages consumers to ‘shop local’ and support small businesses in their communities”.

Small Business Saturday was founded by American Express, which continues to represent the initiative’s primary financial backer.


Sam Trendall

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