Government procurement changes could help SMBs win

Cabinet Office outlines new tools, plans and increased visibility of IT procurement regime

The government has outlined further measures aimed at helping SMBs win twice the number of public sector contracts awarded each year, placing emphasis on simplifying and widening accessibility in IT contracts.

Francis Maude, minister for the Cabinet Office, said large players – including HP, CapGemini, Capita and Logica – will have to publish their government subcontracting opportunities on the ContractsFinder website, making deal opportunities more visible to a wider range of players.

The government, he said, is already on track to double the number of contracts with SMBs from 6.5 per cent (the proportion won in 2010) to 13.7 per cent by the end of this financial year. Also, public sector IT contracts will become more flexible.

"Starting with two areas, application software and infrastructure IT, the government is introducing set breakpoints in IT contracts so there is less money locked into large, lengthy contracts," the Cabinet Office said in its official announcement.

"The government will look to disaggregate future contracts and deliver flexible, cheaper solutions. This opens up opportunities for SMEs and reduces the cost to taxpayers."

A spokesperson for SMB lobby group the Forum of Private Business (FPB) said the group welcomes the announcement, noting it is important to get procurement right at the start of a project.

"Choosing the right firm goes beyond choosing merely the cheapest. In areas such as IT, bigger is not always best," said the spokesperson. "If the job demands a degree of flexibility, smaller firms are often better equipped to accommodate changes, which can come out of the blue. Larger firms are often less flexible and take longer to adapt – and time is clearly money."

"It is only the start, though, if they want to hit their self-imposed 25 per cent target, which means this trend must be seen to continue. For too long government contracts have been unfairly dominated by big business, with just the crumbs left for SMEs," said the spokesperson.

A spokesperson for datacentre services provider to the public sector Secure IT Environments told Channelweb: "From an SME's perspective, this is good news and can alleviate some of the red tape often involved in the complex tender process for many new contracts now to be achieved.

"It is important to understand the value of SMEs to all public sector organisations, as they often offer a more personal approach to business than many of the larger corporate organisations."

Maude also promised that payment times will be shortened and measures explored that will achieve this across the whole supply chain, such as the possibility of expanding the project bank account system available for construction deals. Many small companies had been forced to wait up to 100 days for payment in public sector deals, and many SMBs simply cannot afford to wait that long, he said.

Departments will also be scored on the quality of their dealings with SMBs, and the SMB 'mystery shopper' complaints service will be extended. A new online tool is being rolled out in April aimed at helping government buyers engage with SMBs earlier in the procurement process.

"Then there is the recently launched Cloud Store, the online appstore for ICT services, which is allowing public sector organisations to purchase off-the-shelf IT services on a pay-as-you-go basis. The suppliers on the cloud are SMEs," said Maude.

Maude also said the government would also look at financing schemes, and at piloting ways to make it easier for SMBs to form consortia to bid for public sector deals.

"Governments might be able to print money, but it is SMEs that make it," Maude said. "We are determined to shake up public buying so radically that there is no turning back to the old days of SMEs being shut out."

The government spends £230bn a year on goods and services, representing 15 per cent of the UK economy, according to the Cabinet Office.

Stephen Allott, Crown representative for SMEs, said in a statement: "Having been in post as the voice of SMEs in government for a year, I'm pleased to say I've seen real progress. Today's announcements show that government is committing to a range of innovative policy ideas."

John Collington, government chief procurement officer, said: "SMEs are at the forefront of all our procurement activity, and we're pleased to see that all departments are now able to accurately measure and report the volume of spend being awarded to SMEs. We are now working with the top suppliers to government to ensure they too are opening up government's supply chain to SMEs."

"In the past, so-called SME-friendly initiatives haven't worked because departments have been able to pick them up as and when they preferred," said Maude. "Those that don't embrace this [new] agenda will be exposed."