Public sector tender delays 'starve economy of £22 billion'

Will Green is news editor of Supply Management
10 March 2014

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10 March 2014 | Will Green

Data company Spend Network claims £22 billion of UK government spend is being “delayed by an inefficient tendering system” that takes 53 days longer than the EU average.

The company has analysed 1.8 million tenders across the EU over the past five years and compared the time taken between when OJEU notices are posted and when contract awards are published.

Spend Network, in partnership with the Open Data Institute, claims UK government, both local and central, takes 172 days to award a contract, 53 more than the EU average of 119 days.

The firm has calculated the daily amount spent by local and central government by dividing total spend between November 2012 and November 2013 (£94.76 billion) by total working days (227). This was then multiplied by 53 to arrive at the figure of £22 billion, which is being "starved" from the economy.

Spend Network said the UK was the third slowest in the EU for completing tenders, behind only Greece and Ireland, and that SMEs were particularly hard hit by delays.

Ian Makgill, managing director at Spend Network, said: “Delays such as this not only create an unnecessarily challenging environment for SMEs, but also dissuade SMEs from engaging with government in the first place. Having to wait nine months to know if you’ve won a contract is really only feasible for larger companies, SMEs simply can’t operate with a nine-month delay on cash flow.”

Makgill also said while government frameworks did speed up the procurement process, they were not encouraging to SMEs.

“With so little guarantee of money coming out at the end, a lot of SMEs won’t tender,” he said. “I understand the pressures on procurement people and they have to save money, but frameworks don’t make life easier for SMEs.”

A Cabinet Office spokesman said: “Part of this government’s long-term economic plan is to make it easier for a diverse mix of suppliers to win public service contracts. Our own figures show that our radical programme of reform has seen average procurement timescales halved from 208 to 102 working days and our spend with SMEs has increased from £3 billion in 2009/10 to £4.5 billion in 2012/13.”

 

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