Government launches simpler contract for SMEs

17 January 2018

UK government lawyers have created a shorter, more user-friendly public sector contract to encourage smaller businesses (SMEs) to bid for £12m worth of government contracts.

The Government Legal Department (GLD) said Chris Stanley, a lawyer from its commercial law group, spent the past year reducing around 50,000 words of the existing Crown Commercial Service (CCS) contract terms to produce the new slimline public sector contract. 

It said the new standard public sector contract, rolled out across government, would give smaller businesses an easier route to government work. It added that not having to wade through dense contracts would save both smaller businesses and the government money and resources.

The issue of public procurement and SMEs has been highlighted by the collapse of Carillion, with calls for small firms to be paid quicker and have more access to public contracts.

The CCS, Whitehall’s procurement arm, first commissioned the department to study existing government procurement contracts after a report by the Federation of Small Business found that many SMEs were reluctant to bid for public contracts because they were too confusing and complicated.

The review found that the standard public procurement contract given to SMEs contained hundreds of pages of terms and conditions that were irrelevant to many less complex deals being agreed.

The review suggested that lawyers could substantially reduce the length of contracts by moving the lengthy contract terms online, which could then be ‘plugged in’ where required.

Stanley said the core terms in the new slimline contract are now just over 20-pages and would not change, with extra terms that plug in if some tailoring is required.

He added another key change was the rewording of legal phrases into plain English to help SMEs understand the contract better.

“There are some smaller organisations that may not have extensive procurement experience – they are run by skilled people but they won’t always have the resources to deal with complex contracts,” he said.

“Without a user-friendly government framework, they are likely to pay a far higher price for goods and services using less favourable terms.”

The GLD said that the new contract's greater clarity would also help public sector bodies.

“Public sector buyers, which have greater legal capabilities, such as the Ministry of Justice, will still be able to adapt the contract to suit their more specialised requirements,” it said.

“The new contract will not only make it easier for companies to bid for government work but will also establish a benchmark for good business ethics by integrating some new corporate social responsibility obligations.”

The GLD added that it had developed the contract along with the CCS and the Government Digital Service, with assistance from legal firm DLA Piper. 

Jason Waterman, CCS director, said the contract was “a key initiative and will set a new standard for government contracts bringing our offering in line with the very best in commercial practice”.

The new contract comes three months after the Cabinet Office published figures which revealed government spending with smaller businesses had fallen from 27.1% in 2014-15 to 24% in 2015-16, despite the government’s target for small businesses to make up 33% of its procurement spend by 2022.

At the time, prime minister Theresa May told a gathering of small businesses and trade associations that the government had set a difficult target but it was the right move for the country.

“SMEs are the backbone of our country,” she said.

“I want to build an economy that works for all and that means working with and listening to smaller firms.”

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