Government bans pre-qualifying stage for smaller contracts

Crown Commercial Service unveils range of measures designed to improve SMB access to public sector deals

Public sector bodies will be barred from running a pre-qualifying stage on smaller contracts and will be forced to pay up within 30 days, under new reforms designed to make public procurement more accessible to SMBs.

In a procurement policy note published yesterday, Crown Commercial Service (CCS) unveiled a number of new reforms designed to improve SMB access to contracts and prompt payment of suppliers.

As of 26 February, running a pre-qualifying stage will be banned for central government contracts with a value of less than £111,676 and non-central government contracts below £172,514 – in line with EU thresholds.

"In practical terms, this means that PQQs used as part of a pre-qualification stage are not permitted," CCS explained.

From the same date, all public sector contracts must make clear that valid undisputed invoices will be paid within 30 days.

Not only this, a condition must also be included requiring contractors to include similar provision in their contracts, something it wants replicated down the supply chain. And to top it off, contracting authorities must publish statistics showing the proportion of invoices paid in accordance with these obligations.

Dennis Armstrong, managing director of IT supplier CCL, was reserving judgement on whether the reforms would help SMBs such as his and urged the government to embrace more radical ideas to level the playing field.

"[Regarding the PQQ changes], they need to elaborate on what they mean. How will this help SMEs?," Armstrong said.

"One idea that would open up opportunities for SMEs would be to exclude companies that exceed a certain turnover from these smaller contracts. All I'm suggesting is that the market be balanced out, as whenever there's a large contract, the conditions they apply exclude smaller companies from participating. They filter out smaller companies in the first phase by asking for audited accounts, which smaller firms don't have to, and can't afford to, do."

The reforms follow a two-year consultation between the government, public sector bodies and small businesses in response to a 2013 report by Lord Young that examined the barriers stopping SMBs growing.

CCS said they would boost not only SMBs but also the contracting authorities themselves.

"These reforms improve the way public bodies administer PQQs, the accessibility of contract opportunities and prompt payment of suppliers," it said.

"They provide a valuable opportunity for contracting authorities to achieve increased quality and value for money in the procurement of goods and services, in particular by making procurement opportunities more accessible to smaller businesses and voluntary organisations."