Government to spend £6 billion with SMEs by March

9 March 2012

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9 March 2012 | Adam Leach

Money spent by government with small businesses will reach more than £6 billion by the end of March, Cabinet Office minister Francis Maude announced today.

A year ago, Maude and Prime Minister David Cameron announced a number of measures such as scrapping PQQs for contracts under £100,000 and establishing quick payment schemes to boost the amount spent with SMEs through the supply chain to 25 per cent of overall spend on goods and services.

This morning Maude revealed the government is on track to more than double direct spend with SMEs from 6.7 per cent in 2010 to 13.7 per cent. “We said we wanted to improve things for smaller businesses and today we have shown that the measures we introduced a year ago are making a difference,” he said in his speech at the Public Procurement Briefing 2012.

Speaking to SM at the event John Collington, the government’s chief procurement officer, revealed the figure rises when including the spend by the largest departments through their supply chain. “All of that £6 billion is directly through SMEs. But what we’ve also started to do is to ask three departments, the Home Office, HM Revenue & Customs and the Department for Work and Pensions, to record their expenditure with SMEs through their supply chain. If we added their spend it takes that 13.7 per cent to 14.5 per cent.”

During the event, Maude also announced further procurement reforms and initiatives to drive SME involvement, in pursuit of the aspiration for 25 per cent of government expenditure to go to the sector.

These included setting a maximum value for IT contracts that can be awarded so they are broken down into smaller deals that are more attractive to SMEs. Expanding the Project Bank Accounts initiative where the government pays subcontractors on public sector construction projects directly within five days from the due date to cover defence and construction deals

There are also plans to open up the mystery shopper scheme to the entire central government supply chain so that sub-contractors can lodge complaints against either the government or its prime contractors. An online matchmaking tool for public sector buyers and suppliers will also be launched. The service will allow buyers to put up informal posts about what they need to buy and invite SMEs to respond with ideas and information on what they can offer. Some nine major government contractors (see below) have also agreed to publish their subcontracting opportunities on the government’s Contracts Finder website.

At the event, Mark Thompson, a lecturer on information systems at Judge Business School, Cambridge, highlighted the need for both government and the private sector to think about the long-term repercussions on areas such as employment of shifting business away from large corporates to SMEs.


Companies that have agreed to post contract opportunities on Contracts Finder

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