News

Government announces steps to improve opportunities for SMEs to access public sector contracts

Released on 25/11/2008

The Government has announced a series of measures to help small firms win more business from the public sector.

The measures, announced in the Pre-Budget Report, follow the recommendations of an independent report by the Glover Committee, Accelerating the SME economic engine through transparent, simple and strategic procurement.   Led by Anne Glover CBE, the Committee examined what action could be taken to reduce the barriers small and medium-sized firms (SMEs) face when competing for public sector contracts.

The Committee was set up in Budget 2008 to provide advice on how the Government can help small firms win a greater share of public procurement. The Government will advertise Government contracts worth more than £20,000 in a single free online portal, it will introduce measures to reduce bureaucracy and will make opportunities more transparent for small businesses. 

Twelve key recommendations were made, all of which will be actioned by Government.  These include making it mandatory for Government to advertise electronically contract opportunities above £20,000, and making them accessible through a single, free and easy-to-search online portal.

Welcoming the report's recommendations, the Exchequer Secretary, Angela Eagle said:

"Supporting small and medium-sized businesses is more important than ever in the current financial climate. 

"This thorough review provides an excellent package of ambitious and deliverable recommendations to ensure these businesses have the right access and a fair deal in obtaining public sector contracts."

Business secretary Peter Mandelson said:

"Removing barriers is essential if we are to increase the number of small firms winning public sector contracts.

"Small businesses can offer innovative solutions and great value for money - these measures should help ensure they are better able to compete on equal terms with larger firms."

Anne Glover commented:

"Our work on this Committee showed that there is already much good practice in both central and local Government to celebrate.  We are pleased that the Government has agreed to accept our proposals in full. 

"If all  contracting authorities adopt these actions, then small businesses have the chance to gain a greater  share of the £175bn which the public sector procures , and the public sector will also secure greater the value for money." 

The Glover Committee report can be found on the HM Treasury website.

Notes to editors

Summary of recommendations
Improving SME participation in public procurement is best achieved by making the market work effectively to allow SMEs to compete effectively for contracts. This requires that opportunities should be transparent, the process as simple as possible, and that a strategic approach to procurement encourages innovation and gives SMEs a fair deal when they are sub-contractors. In detail:

Transparency
1. By 2010, contract opportunities above £20,000 across the whole public sector should be advertised electronically with standard indicative contract value ranges, and accessible through a single, free, easy to search online portal.
2. Government should issue all tender documentation electronically by 2010 and this should be kept as brief as possible. Businesses should be permitted to tender electronically for all public sector contracts by 2010; no "paper only" tenders should be required after this date, with an ambition for all tenders to be electronic by 2012.
3. Details of contract awardees should be published online in a standard format within 48 days of contract signature, accessible via the single portal by 2010.
4. Tendering opportunities thought especially suitable for SMEs or consortia of SMEs should be flagged by the procurer during the advertising process. Government should provide strategic and detailed guidance for procuring authorities on assessing suitable contracts for flagging, based on risk, value and market maturity.

Simplicity
5. Qualification criteria that are not specific to a sector should be standardised and incorporated in all pre-qualification questionnaires so that businesses do not need to repeatedly submit the same core information in different formats.
6. Procurers should give businesses the opportunity to provide details of all previous relevant experience when bidding for contracts, not just public sector experience. This should be taken into account when selecting successful tenderers.
7. Procurers should ensure that, where they rely on a particular accreditation scheme or standard as part of the process of prequalification or contract award, that they take a flexible approach. Businesses should be given the opportunity to provide evidence that they can meet the contract requirements by reference to other similar equivalent accreditations or standards they may already hold - especially where these have been recognised or required by other public sector procurers.

Strategic Procurement
8. Departments should use their Innovation Procurement Plans to set out how procurement aligns with their overall commercial strategy, encourages innovation and gives advanced notice of long-term procurement plans.
9. Government should encourage wider use of outcome-based specifications across the public sector, as a means of driving innovation.
10. Government should expect and enable prime contractors to make their subcontracting opportunities accessible through the single, online portal created in Recommendation 1.
11. Through contract management, Government should ensure that SMEs and other firms acting as sub-contractors obtain contract conditions, including promptness of payment terms, that are no worse than those applicable to the prime contractor.

Measurement
12. The Committee recommends that all central government departments should report annually on the value of their contract spend with SMEs, creating a reliable single source of quantitative data which can be used to inform future policy decisions and evaluate the recommendations in this report.

About the Office of Government Commerce

The Office of Government Commerce (OGC) is an independent office of HM Treasury, established to help Government deliver best value from its spending.  The OGC works with central Government departments and other public sector organisations to ensure the achievement of six key goals:

• Delivery of value for money from third party spend;  
• Delivery of projects to time, quality and cost, realising benefits;  
• Getting the best from the Government's £30bn estate; 
• Improving the sustainability of the Government estate and operations, including reducing carbon emissions by 12.5% by 2010-11, through stronger performance management and guidance; 
• Helping achieve delivery of further Government policy goals, including innovation, equality, and support for small and medium enterprises (SMEs);  
• And driving forward the improvement of central Government capability in procurement, project and programme management, and estates management through the development of people skills, processes and tools.

OGC provides policy standards and guidance on best practice in procurement, projects and estate management, and monitors and challenges departments' performance against these standards, grounded in an evidence base of information and assurance.  It promotes and fosters collaborative procurement across the public sector to deliver better value for money and better public services; and it provides innovative ways to develop Government's commercial and procurement capability, including leadership of the Government Procurement Service.

Media Contacts:
Michael Dunning, Media Relations Manager, OGC
T: 020 7271 1318
M: 07771 815245
E: michael.dunning@ogc.gsi.gov.uk

Sarah Davies, Press Office, Department for Business, Enterprise and Regulatory Reform
T: 020 7215 5614
M: 07810 050521
E: sarah.davies@BIS.gsi.gov.uk

Contact details:
OGC Service Desk
Tel: 0845 000 4999
E-mail: ServiceDesk@ogc.gsi.gov.uk