The Olympic Games have begun to throw London into turmoil, with an extra three million people planning to head to the city for the 17-day event next year. For such a large event, it is no surprise that the planning and organisation has spanned nearly five years.
Prime minister David Cameron, the rest of the government, and the Olympic bodies themselves, have repeatedly backed the idea that SMBs in the UK should be able to win contracts - including technology deployments - for the Games. However, SMBs have come forward to suggest it may not have been that easy after all to gain such contracts. CRN investigated how this may have affected the channel.
Olympic Delivery Authority (ODA) chairman John Armitt announced in 2008 that small businesses would have every chance of gaining contracts for the 2012 Games. This was reiterated by the prime minister in March 2011, when he told the House of Commons he wanted to “throw open the bidding process to every single business in our country”.
Cameron has also suggested that he wanted to give SMBs the chance to gain contracts with the Olympic Games without being overshadowed by large corporations.
Reports from the industry of their experiences have been more mixed, however. One channel player, who must remain unnamed, says: “I know how difficult is has been for smaller companies to gain contracts. It seems there is a long and arduous application process for which many companies do not have the resources.”
And Sharmilia Wijeyakumar, channels manager at business intelligence software vendor Pentaho, claims that her business went with a channel partner to meet the Olympic committee, but decided against the bid because she believed a large vendor was understood to be undercutting some players.
Wijeyakumar adds: “The process of application was very complex and bureaucratic. It came with a whole guidebook that only companies with huge resources could feasibly follow.”
At the beginning of 2008, 18,000 companies registered with the ODA’s website, CompeteFor, which was positioned as a vehicle linking small businesses with Olympics opportunities. ODA Equality staff were also employed to work with higher-end contractors to promote and enforce good practice - both in their own organisations and the supply chain.
A Kingston University report published in 2008, Procurement and Supplier Diversity, examined the situation for SMBs applying for such public sector contracts. It investigated the mistreatment of applications in terms of subgroups (women, ethnic minorities and the disabled), and also the role that the five Olympic boroughs are playing in the run-up to the event. The study incorporated the experiences of 41,527 SMBs throughout London, involving desk-based reviews, and face-to-face and phone interviews.
The results of the study showed the ODA was in fact attempting to increase supplier diversity, giving an access route for all SMBs to apply through the CompeteFor website.
The Kingston report, however, also suggested that even contract winners had been fairly critical of the application process. It went on to allege that details were poorly specified, responding to contract opportunities was very difficult and, because of this, assumptions were made on the contract size, duration and other particulars in the process. This may, the report suggested, have resulted in many businesses feeling they were unfairly represented.
Both CompeteFor and ODA Equality have been providing easier access for excluded groups, through implementing “meet the buyer” schemes among a variety of other initiatives, ensuring a fair and accurate representation of the businesses applying for Games contracts.
SMB gripes come to light
Yet according to Parliament.uk, the official site for information on the House of Commons, House of Lords and all national parliamentary services, “numerous claims of mistreatment” from SMBs have come to light.
The Parliament.uk website says, in terms familiar to many in the channel: “When SMEs subcontract with a large SI [systems integrator], they do not always enjoy the same payment terms that the SI has secured.”
But there may still be opportunities to come. According to CompeteFor, London 2012 has anticipated it will procure another £700m of goods and services for the Games. It continues to encourage its supply chains to use CompeteFor to identify subcontractors.
However, James Harris, product manager at ZyXEL Communications UK, agrees this may not have been not so good a promise as it seemed on the surface. “Such opportunities for SMBs are issued to vendors and resellers that have already provided solutions to the customers,” he adds.
Statistics on the Federation of Small Business website show that throughout Europe, 91.8 per cent of businesses are micro businesses, employing 10 staff or fewer. This figure highlights the importance of small businesses everywhere - not least the role they play in economic activity. And access routes were there, so why do some claim there has been no equal success for businesses of all sizes?
The Kingston report, from the start of the whole process, commented on more potential problems. It claimed: “None of the first-tier contractors have subcontracted to small, local businesses. First-tier contractors reported a willingness to engage with small firms and disadvantaged groups, and to help them enter mainstream supply chains, but provided no evidence of anything more than good intentions.”
A House of Commons document seen by CRN suggested that larger companies which chose to subcontract SMBs could lead to the government paying a higher price for an implementation overall. This is because it would have to cover the margin of both the subcontractor and prime contractor. This would appear to create a potential barrier to entry for many small businesses.
Employing SMBs as partners of larger businesses or in larger contracts may risk adding extra pressure to government departments as well. On Parliament.uk, Phil Pavitt, chief information officer at HM Revenue & Customs, is quoted as saying that “managing those individually can be a heavy bandwidth for a government department”.
Larger businesses will, however, team up with an SMB if it means they will meet a government quota, it has also been claimed. On Parliament.uk, one representative is reported as saying: “We have, as you know, an ‘interest’ in having SMBs present and working in the department for good political reasons. So you have other value to us [which is] purely political.
“You guys need to be realistic. I will be very candid with you... it is a huge amount of bother to deal with smaller organisations and we would not necessarily do that because it does not make our lives simpler.”
One channel player commented to CRN on this claim, saying: “We are involved with the Olympics at the moment; however, we did not use the CompeteFor website. We were lucky we had already been working with Lee Valley, which has the white water rafting there at the moment.”
He goes on to say he “knows” that a lot of contracts were given to larger companies. “But I think that had a lot to do with their sponsor, and I know that some local businesses have been chosen to work with us in Lee Valley. One local company helped install the electricity lines. However, it was obvious how difficult some companies may have found it to be,” he adds.
Conversely, Parliament.uk states that: “We take seriously the concerns expressed by many SMBs, that by speaking openly to the government about innovative ideas they risk losing future business, particularly if they are already in a subcontracting relationship with a larger business.
“We recommend that the government establish a permanent mechanism that enables SMBs to bring innovative ideas directly to government in confidence, thereby minimising the risk of losing business with prime contractors.”
Some have reportedly claimed the application process itself was, at times, very unclear, and that this has resulted in the business plans SMBs have submitted being vague and unrepresentative.
SMBs are undoubtedly important. Phil Hambly, group marketing editor at InTechnology (pictured, right), says: “In today’s economic climate, SMBs have so much more to offer in competitiveness of solution and potential price competition that you would hope good references and case studies of previously installed solutions in similar environments would have more weight.
"By no means does larger and longer trading mean security -- we have some good examples of this in the UK’s financial sector.”
Hambly points to the Olympics competitors themselves as examples of perseverance and passion. Those, he says, are the essential ingredients of a gold medal performance.
“And SMBs are just as capable of delivering these as any larger provider,” he adds.
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