Government suppliers must report spend with SMEs

24 April 2018

The UK government’s largest suppliers will be forced to report on their spend with SMEs and charity subcontractors under new regulations due to come into force on May 1.

From that date suppliers with government contracts worth over £5m per year will have to report on the type and value of all subcontracts over £25,000 they advertise and award.

They will have to report on how much they spend on subcontracting, and how much they spend directly with SMEs or voluntary, community and social enterprise (VCSE) organisations.

The regulations will require suppliers to advertise all subcontracting opportunities on a government website. There are separate websites for contracts being tendered in Scotland, Wales and Northern Ireland.

However, suppliers will only have to report subcontracts worth over £100,000 if government departments or other public bodies consider the £25,000 threshold “overly burdensome” for a particular contract.

Exceptions to these regulations might occur in cases where there are issues of national security, which mean that subcontracts cannot be openly advertised.

Another possible exception could be where a contract is to be delivered overseas and the resulting subcontracts can only be delivered by in-country partners or where the supplier has confirmed there will be no subcontracted spend.

Other government plans include allowing subcontractors to have greater access to buying authorities to report poor payment performance.

“The government wants to level the playing field and increase the visibility of supply chain opportunities to assist suppliers, including SMEs, in bidding for work in its supply chains,” said a procurement policy note.

Cabinet Office minister Oliver Dowden said suppliers would be excluded from major government procurements if they fail to demonstrate fair and effective payment practices with their subcontractors.

He said: “We have set a challenging aspiration that 33 per cent of procurement spend should be with small businesses by 2022 – and are doing more than ever to break down barriers for smaller firms.”

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