Public sector breakthrough for SMEs promised

9 March 2012

Small-to-medium contractors should find new public-sector work opportunities easier to source following the launch today of Government initiatives aimed at supporting SMEs.

Chief of the measures announced by Minister for the Cabinet Office, Francis Maude, was a deal with nine companies including Amey and Balfour Beatty which will see them publish their government subcontracting opportunities on the Government’s searchable and transparent website, Contracts Finder. Government claims this will give SMEs more visibility than ever before on the government subcontracting work available.

Other new measures include prompter payment for SMEs and a ratings system that will allow SMEs to judge how efficient and business-friendly Government departments are to work with. The Government will also pilot new approaches to make it easier for SMEs to form consortia to successfully win government business and will appoint new SME champions in every government department to drive further change.

Maude is promising:

Prompter payment for SMEs. Timely access to cash is critical for the survival of many SMEs. The Minister will announce that new ways of paying SMEs are being explored to ensure SMEs within the supply chain receive payment at the same time as the prime suppliers. This will include rolling out Project Bank Accounts, which are already being used successfully in the construction sector to sectors such as defence and considering the role of structured finance to facilitate faster payments.

Greater transparency. Departments will be judged by smaller businesses and given a star rating to show how effective they are at working with smaller players. The first department to be rated by smaller businesses will be the Cabinet Office in May.

Extending the investigative Mystery Shopper service. Following the success of the Cabinet Office’s Mystery Shopper service where SMEs can complain about procurements and trigger an investigation, the Cabinet Office will now investigate complaints about unfair practices in the supply chain of government contracts. By mid-February 2012 the existing system had received 151 cases, of which 111 had been closed with 75% of them resulting in a positive outcome. 

Better dialogue between Government and smaller businesses. From April, a new online tool will help government buyers to engage earlier with SMEs by allowing them to put informal postings about what they need to buy in future online and for SMEs to respond and explain what they can offer.

The announcements follow the publication of a major survey in this month’s Construction Manager highlighting the problems SMEs have in winning public sector work.

Government’s Chief Construction Advisor, Paul Morrell, commented:“Over 99% of the firms in the  construction industry are SMEs and they are critical to the delivery of an effective public works programme. Construction has lead the way on innovative solutions like Project Bank Accounts, addressing the number one problem for companies operating in the supply chain - secure and timely payment, and the Government is now looking to extend this kind of measure to other sectors.

“While in some areas we are leading the way, in others we face unique circumstances. The Government is clear that while initiatives such as limiting contract size will deliver great benefit in IT, for example, it is working together to unlock the potential in the supply chain that will deliver the greatest benefit in our industry. That’s why supply chain integration runs right through the construction strategy.”

Stephen Allott, Crown Representative for SMEs, said: “Having been in post as the voice of SMEs in government for a year, I’m pleased to be able to say I’ve seen real progress. Today’s announcements show that the level of commitment to the whole agenda is going even further – the Government is committing to a range of innovative policy ideas, including getting SMEs to rate buying departments and hold their feet to the fire. Having such a spotlight on the agenda will help us make even more progress this year.”

John Collington Governments Chief Procurement Officer, added: “Our reforms are working, as reflected in the progress reported today. SMEs are at the forefront of all our procurement activity and we’re pleased to see that all Departments are now able to accurately measure and report the volume of spend being awarded to SMEs. We are now working with the top suppliers to Government to ensure they too are opening up Governments supply chain to SMEs. 
“We are achieving these impressive results through improving civil service procurement across Government, where we've invested significantly in simplified processes, training staff and deploying best in class technology.”

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