The 40 strategic suppliers to the UK government earned £19bn from contracts with the public sector in 2020-21, up 24% year-on-year, according to a report.
The report, from data company Tussell, said being designated as strategic by the Cabinet Office was a “sign of success” but also came with “greater scrutiny of the suppliers to ensure that public funds are being well spent”.
Tussell said two new companies – BAE Systems and Thales – were added to the list of strategic suppliers in 2021.
The Ministry of Defence had the largest amount of spend with the strategic suppliers in 2020-21, with £4.2bn, followed by the Department of Health and Social Care (£2.5bn) and Network Rail (£1.4bn).
The top 20 spenders with strategic suppliers included four local authorities – Kent County Council (£200m), Lincolnshire County Council (£200m), Staffordshire County Council (£100m) and Wokingham Borough Council (£100m) – and one NHS trust – Sandwell & West Birmingham Hospitals NHS Trust (£200m). The top 20 spenders accounted for £14bn of the £19bn spent with strategic suppliers. These suppliers' share of the total procurement market was 11%.
The biggest area of spend for the public sector was outsourcing and facilities management (FM) (£6.3bn), followed by construction and engineering (£4.7bn) and technology (£4.7bn).
“Six of the 40 strategic suppliers now earn more than £1bn,” said Tussell.
“While the biggest sector by revenue is outsourcing and FM, the sector with the fastest growth is consulting – where revenue almost doubled year on year. Telecoms is the only sector where the revenue to strategic suppliers has declined.”
The biggest recipients of procurement spend were Amey (£1.5bn), Balfour Beatty (£1.4bn) and Serco (£1.3bn).
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