'Significant' barriers blocking SMEs from public sector work

8 December 2008

8 December 2008 | Jake Kanter

Public sector buyers are missing out on savings and innovative suppliers because SMEs can't access contracts effectively, according to a review commissioned by the government.

A committee led by Anne Glover, chief executive of investment firm Amadeus Capital Partners, found small vendors face "significant" barriers when competing for public sector work. The group's findings were presented to the government in the report Accelerating the SME economic engine: through transparent, simple and strategic procurement.

The 1,251 small firms questioned said public sector organisations must make opportunities as open and transparent as possible, ensure procurement processes are simple and encourage innovation through strategic purchasing.

The report called on the government to reduce the number of websites advertising contracts and hold more 'meet the buyer' events. It also said pre-qualification questionnaires should be standardised across the public sector.

The study urged departments to use their Innovation Procurement Plans to demonstrate how purchasing is linked to their commercial strategy, and explain long-term buying decisions to encourage innovation.

"The whole public sector needs to step up to the plate. The more contracting authorities that adopt these actions, the greater the difference small businesses will see and the greater the value-for-money the public sector will secure," said Glover.

The Federation of Small Businesses welcomed the review, but said its recommendations would not be effective if the public sector did not embrace them at all levels. The Professional Contractors Group said it would be watching closely to ensure changes were made.

Chancellor Alistair Darling responded to the proposals in the Pre-Budget Report last month. He promised to advertise public sector contracts worth more than £20,000 in a single, free online portal and standardise qualification criteria. The Treasury is "considering" Glover's other recommendations.

Darling also announced the government aims to make an extra £5 billion efficiency savings over the next two years. He said the public sector could secure cost reductions of £35 billion by 2010-11 to help support the financial backing given to families and businesses during a recession.

The savings were identified in July as part of the Treasury's Operational Efficiency Programme (News, 17 July).

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