Small suppliers pose no big risk to government

11 April 2012

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11 April 2012 | Adam Leach

Contracting with small businesses does not present a greater risk than with large, established companies, even if some may overextend themselves to win government deals, according to Cabinet Office minister Francis Maude.

In an interview with The Daily Telegraph published yesterday, Maude said that although some SMEs may “come a cropper” having won government deals, it should not halt the government’s push to give more business to small firms.

“Will some small companies seeing a big prize push the boat out more than is prudent and come a cropper? Yes, probably,” he said. “But frankly, that happens with big suppliers as well, who desperate to get the business underbid and then sometimes you find they are desperate for changes – which is where they make money – and they don’t always give you the level of service you thought you had contracted for.”

At the start of 2011, Maude and Prime Minister David Cameron announced they aspire to have 25 per cent of Whitehall spending through the supply chain going to UK SMEs by 2015 and recently announced a rise from 6.5 per cent to 13.7 per cent over the past year.

“I challenge anyone to find a correlation between failure to perform and size,” he added, saying the prestige of winning government business would concentrate the supplier’s attention. “In fact, for an SME, the government contract is the big fantastic breakthrough where you are going to have absolute mega-focus from the team. Arguably the risk is less,” he said.

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