Council 'wake-up call' on e-procurement for SMEs

21 September 2005
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22 September 2005 | Anusha Bradley

The government is urging local authority buyers to help small firms to use e-procurement after a report revealed half a million jobs in England may be at risk.

Addressing council purchasers and regeneration teams at the House of Commons last week, Martin Scarfe, local e-government national projects director, warned that small businesses were likely to lose work because they lacked the resources to win government business. He said local economies could suffer as a result.

Stephen Timms, the Department for Work and Pensions minister, who hosted the meeting, said the study was a "wake-up call". He said councils should help more SMEs take part in e-procurement, although he admitted there was no central government funding to support this.

Scarfe, who is also a financial adviser at the London Borough of Newham, carried out a pilot study in 15 boroughs in the capital. It found that 17 per cent of local suppliers - representing 72,000 jobs - were "at risk". This, they said, was because a significant part of their income came from business with councils, and the Gershon drive to cut costs through aggregation and e-procurement put them at a disadvantage.

Scarfe highlighted the success of the KickStart pilot in Newham, which subsidised broadband and online training courses and offered a free or low-cost website to advertise work.

Peter Howarth, chief executive of the Society of Procurement Officers in Local Government, said it was not about subsidies but investing in SMEs in the long term by continuing to do business with them.

Amanda Deswarte, sustainable development manager for the London Borough of Haringey, said the aggregation of supply to reduce costs was likely to threaten SMEs more than increased use of e-procurement.

A report published by the Department for Trade and Industry this month, A Study of Benefits of Public Sector Procurement from Small Businesses, urged councils to make public procurement more accessible to small firms.

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