Press Releases

Government project sends message to smaller suppliers - 'size doesn't matter'

A new government Report published today offers a major boost for around 3.75m Small and Medium Sized Enterprises (SMEs) seeking to do business with central and local government.

The evaluation of the West Midlands SME Procurement Pilot Project shows how government has been helping SMEs in the region to access the government marketplace and the real successes the project made in just one year.

Chief Secretary to the Treasury, Paul Boateng, welcomed the Report saying:

"The West Midlands Pilot was a great success in breaking down the barriers facing SMEs when they try to do business with Government, and offering practical help and advice. This has led to SMEs winning more business. But this is not just a one-off project. The help will now be made available nationally, as part of Government's continued commitment to helping SMEs."

The Companies House definition of a Small or Medium sized Enterprise is that to be a small company, at least two of the following conditions must be met:

• Annual turnover must be £2.8 million or less
• The balance sheet total assets must be £1.4 million or less
• The average number of employees must be 50 or less

To be a medium-sized company, at least two of the following conditions must be met:

• Annual turnover must be £11.2 million or less
• The balance sheet total assets must be £5.6 million or less
• The average number of employees must be 250 or less

The Office of Government Commerce (OGC) led the project, supported by the Small Business Service (SBS). The pilot was launched in response to the Better Regulation Task Force and Small Business Council Report titled Government: Supporter and Customer? This report stated that SMEs faced a number of barriers when trying to compete for government contracts and made 11 recommendations to help SMEs.

The pilot helped small businesses in the following ways:

• A web portal was established for government buyers to advertise low value contracts; this made opportunities more accessible to SMEs.
• Training workshops on how to put a tender together and how to find opportunities were delivered free of charge to SMEs.
• To support this training on the benefits of using SMEs was given to government procurers. Over 300 SME and Procurer training places were filled in total.
• At the start of the Pilot, 14% of the SMEs had successfully tendered for government contracts. Of contracts awarded through the portal as at 30th June 2004, 26% were won by Pilot SMEs.
• A simplified tender document was tested by government departments in the West Midlands to reduce the bureaucracy involved in the tender process. A standard pre-tender document has now been developed.
• The project worked with prime contractors in the area to encourage them to open up their supply chains. Ten large suppliers in the region are primed to open up opportunities in the supply chain.

These successes are supported by the positive feedback received from SMEs, such as:

"Prior to the pilot we were keen to bid for public sector work but were unsure as to where these opportunities were and how to approach tendering."

"Since participating in the pilot we have learnt much that has given us an opportunity to compete on a level playing field with larger organisations."

"It is rare in the private sector that a potential customer spends time and money making it easier for you to tender for their work."

Now the West Midlands Pilot Project has ended, key lessons learned from this are being used to inform further projects responding to the BRTF recommendations. The successes from the West Midlands will now start to be delivered nationwide.

About OGC

Established in April 2000 as an office of HM Treasury, the Office of Government Commerce was set up to act as a catalyst in procurement issues and to work with central civil government departments to achieve best value for money in their commercial activities.

Responsible for civil central government Procurement Policy and Best Practice including Construction, Property Management, IT, Supplier Relations including opening up access to government contracts to SMEs, eCommerce, the Gateway Review Process and OGCbuying.solutions, which is itself responsible for the Government Procurement Card, the Government buying catalogues such as G-Cat and S-Cat and developing strategic procurement partnerships, including Framework Agreements, with the private sector.

Notes to Editors

Regional Breakdown of SMEs in the UK:

• North East 97,000
• Yorkshire & Humberside 256,295
• North West 349,780
• East Midlands 236,365
• West Midlands 289,930
• East of England 386,530
• London 674,280
• South East 625,510
• South West 349,220

*Source: Small Business Service Statistics, 2001

This Report presents the final evaluation results of the West Midlands SME Procurement Pilot Project. The objectives of the Pilot Project were to:

• Realise the intent of recommendations 1, 3, 5, 6 and 9 of the Better Regulation Task Force (BRTF) and Small Business Council (SBC) report - 'Government: Supporter and Customer' (You can view the full report: http://www.brc.gov.uk/downloads/pdf/smeprocurement.pdf).
• Simplify the mechanism for small to medium sized businesses to find out and bid for government opportunities.
• Streamline the procurement processes to provide a simpler and more cost effective approach.