SMEs to increase share of public contracts

2 November 2010
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2 November 2010 | Angeline Albert

A quarter of UK central government procurement is to be directed to small and medium-sized (SMEs) firms, government ministers have announced.

Led by the Cabinet Office, the government has announced policies to make it easier for SMEs to do business with the public sector.   

In a bid to break away from the trend of government contracts being “the preserve of big business”, the Cabinet Office will work with departments to meet the 25 per cent target.

Government departments are expected to increase the money spent with SMEs every year.

Small business minister Mark Prisk said he will also work with government agencies to remove the barriers that prevent small businesses accessing government contracts.

From December, the government will introduce a standardised pre-qualification questionnaire, developed in co-operation with the Federation of Small Businesses, and make its use mandatory across central government.

The Cabinet Office also announced a “lean review” to uncover the causes of delay in the procurement process and find solutions. Recommendations will be announced on 1 December.

A system to help find contracts will be launched in March 2011. This will be a free web-based service for small businesses to help them find public sector deals, and sub contracting opportunities.   

The government repeated its commitment to pay 80 per cent of prime contractors within five working days. All government contractors will be required to pay their suppliers within 30 days if they wish to benefit from central government deals.

Cabinet Office minister Francis Maude said: “We are committed to making it easier for these organisations to compete for government business. These measures will help to remove the barriers many small businesses face and eliminate complexities and waste in the procurement process. They will also ensure we are on our way to hitting our aspiration that 25 per cent of government contracts go to small and medium enterprises.”

The UK’s 4.8 million SMEs provide 60 per cent of jobs and half of GDP.

Lord David Young has been appointed as enterprise adviser to the prime minister, to propose new ways of maximising procurement opportunities, encouraging business start-ups and reducing burdens in relation to small businesses.

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