Government already SME-friendly

15 May 2014 | Kristian Smith

Kristian Smith, ESPO We recently heard from data specialist Spend Network on how £22 million of UK government spend is being delayed by an inefficient tendering system.

The company was the latest to 
stoke the fires around government procurement processes, including frameworks not being fair to SMEs – despite policy being to encourage smaller firms to do business with the sector. By no means is this the first 
time that the ‘SME unfriendliness’ 
card has been played, and I’m sure it won’t be the last.

But is a blanket view that public sector and SMEs don’t mix accurate? My answer is no. Of course, more can be done to give SMEs extra support, but government procurement is striving to be SME-friendly and this is backed by solid evidence.

As a procurement organisation ESPO operates over 250 frameworks for the public sector (more than any other organisation barring the Crown Commercial Service), alongside a catalogue of over 27,000 products.

Routinely SMEs make up around 50 per cent of our supply chain. The recent report by MPs on the Communities and Local Government Committee puts the national SME figure at 47 per cent.

Yes, frameworks have been criticised for their scale, causing restrictions and some hurdles for smaller suppliers.

But as these figures show, frameworks have become more flexible. Not only does winning a place on a framework mean access to a huge potential customer base as opposed to bidding each time for individual public contracts, but frameworks are also increasingly using lots as a strategy to break up a national service into regional chunks, which allows for smaller SME-friendly awards.

Likewise, public bodies are increasingly running their own mini-competitions within frameworks, freeing both them and the SME supplier from the bureaucracy of establishing separate tenders.

The real question for the government is not how many small firms are on public sector contracts but what proportion are actually winning a place.

A blanket view that public sector and SMEs don’t mix is flawed and self-fulfilling – and will simply discourage SMEs from taking part, which is the last thing either the public sector or small firms need.

☛ Kristian Smith is the assistant director of procurement and compliance at ESPO

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