Government moves to give small business more public sector work

Government Ministers have promised to get rid of the roadblocks which stop small firms from winning a bigger share of public sector contracts by accepting all the recommendations in a report about problems facing SMEs in public procurement from the Better Regulation Task Force which included a contribution from members of the UKTECH network.

In May 2003, the Better Regulation Task Force and the Small Business Council published a report, "Government: Supporter and Customer?", which exposed the mountain of paperwork and other bureaucratic obstacles that small firms often encounter when they try to compete for public sector business.

UKTECH was invited to contribute to the Better Regulation Task Force's research gathering and we ran a consultation among freelancers on our website, which we submitted to the consultation process.

About 50 freelancers contributed their comments and experiences on to UKTECH and Andy White and I were invited to meet the officials from the Better Regulation Task Force as part of their research to put forward the views of freelancers from the UKTECH network.

Ministers are reported, unusually, to have taken heed of all of the recommendations which should begin to break down some of the barriers small firms and freelancers have encountered when trying to bid for Government and local authority contracts.

The Government's response was co-ordinated across Whitehall Departments by Chief Secretary to the Treasury, Paul Boateng.

Teresa Graham, deputy chair of the Better Regulation Task Force and a member of the Small Business Council, said: "This means that for the first time small and medium-sized companies can look forward to a level playing field when public contracts are up for tender.

"Many are not even invited to bid for contracts, which tend to go to larger firms who are already well known at local or national level. There’s an underlying lack of confidence in their capability, usually without any supporting evidence."

Government accepts all recommendations

The Government has now accepted all the recommendations of the Task Force report. Ministers say they will:

• Develop one web portal advertising all lower value central government non-military contracts and urge local authorities to set up their own "Selling to the Council" websites.
  
• Provide support for small businesses to help them negotiate the public sector tender process.
  
• Develop one common pre-qualification information document for lower value contracts, so that small businesses no longer have to fight their way through a mountain of paperwork every time they apply to be considered for a public sector contract.

Some of the Task Force/Small Business Council’s eleven practical recommendations for change are being trialled in Haringey and the West Midlands. The Office of the Deputy Prime Minister and the Local Government Association have published a draft national procurement strategy which includes action on a number of the recommendations. A further recommendation was made to the Office of Fair Trading which is due to respond to the Task Force and the Small Business Council this autumn.

William Sargent, Chairman of the Small Business Council, said: "Great response - short and sweet - now let’s see it become a reality."

Susie Hughes, editor of UKTECH said: "There is no more important influencer than the experience and expertise of the people who are at the coal-face of having to live with Government decisions.

"Although the legislative process can sometimes seem slow and laborious, the fact that members of the UKTECH network were able to get their views and experiences directly into the decision-making machinery has helped to make a difference for the future.

"My thanks to all those who contributed to this process."

Recommendations

A full list of the report's recommendations is:

Recommendation 1 - Portal

The DTI should ensure adequate resources for the "Supplying Government" web portal project. The portal should advertise lower value contracts from across central government and include information on future opportunities. There should be a named contact for each advertised contract. The portal should be set up and piloted by spring 2005.

Recommendation 2 - local authority website

The Office of the Deputy Prime Minister and the Local Government Association should encourage local authorities to develop "selling to the council" websites by 2005. Websites should include information on contracts for tender, forthcoming contract opportunities and guidance on how to do business with the council. There should be a named contact for each advertised contract.

Recommendation 3 - advice and training

Within the context of small business support, the Small Business Service should provide advice and training for small and medium-sized enterprises on how to do business with central government and local councils. The Business Links Operators should deliver this by spring 2004.

Recommendation 4 - RDAs

Regional Development Agencies should ensure by spring 2004 that, as part of the supply chain development work for which they are already funded, they work with prime public sector contractors to develop opportunities for small and medium-sized enterprises.

Recommendation 5 - pre-qualification document

The public sector should develop a common core pre-qualification information document for lower value contracts so that businesses do not have to put together different information in different formats to get past the expression of interest stage. The Office of Government Commerce and the Office of the Deputy Prime Minister working with the Local Government Association should develop and pilot this by spring 2004.

Recommendation 6 - non-compliance

The Small Business Service should publicise the mechanism for reporting non-compliance with the Office of Government Commerce "Government Procurement Code of Good Practice" that firms can use to ensure that they receive adequate debriefing.

Recommendation 7 - Government procurement card

The Office of Government Commerce, the Office of the Deputy Prime Minister with the Local Government Association should consider how to promote the wider use of the Government Procurement Card, recently extended by the Office of Government Commerce, to include local authorities and other non central civil Government bodies, in order to improve prompt payment by the end of 2003.

Recommendation 8 - framework agreements

The Office of Fair Trading should carry out research to identify the characteristics of those markets where it is important to ensure that small and medium-sized enterprises are able to compete to ensure competition, particularly where this may have an impact on innovation and value for money achieved by public sector procurement. Within this, it should also assess the impact of framework agreements and contract aggregation on small and medium-sized enterprises. This research should be carried out by the end of 2003.

Recommendation 9 - prime contractors

Where public procurers opt for prime contractors, they should ensure that their business case for doing so in those particular markets brings value for money.

Public sector procurers should ask prime contractors during the procurement process to demonstrate their track record in achieving value for money through effective use of their supply chain - including use of small and medium-sized enterprises. This should also be examined as part of the on-going contract management. Public sector procurers should ensure that prime contractors pay subcontractors on time and that when paying progress payments to prime contractors the payments flow down through the supply chain.

In order to make subcontracting opportunities more transparent to small and medium-sized enterprises, government departments and local authorities should list details of prime contractors and contracts on their websites.

Recommendation 10 - local authorities

The Local Government Procurement Forum, with input from the Small Business Service, should develop an SME-friendly procurement concordat. All local authorities should be able to sign up to this by 2005.

Recommendation 11 - transparency

The Office of the Deputy Prime Minister and the Local Government Association should encourage local authorities to set out in their procurement strategies the steps they are taking to engage with small and medium-sized enterprises by the end of 2003.

Government Departments should include in their procurement policy statements the steps they take to engage with small and medium-sized enterprises by the end of 2003 or publish this information in their annual reports.

The Government's response is carried in detail in the post below entitled 'Government's Response'

For the background to this report, the UKTECH consultation and how we arrived here, see the following stories.

SMEs - Government told to put money where mouth is - (UKTECH, May 12, 2003)

UKTECH's online consultation: Public Procurement - Any experience? (UKTECH, March 3, 2003)

UKTECH's interview with the e-Minister - Is small beautiful? (UKTECH, Feb 12, 2003)