Shake-up to help SMEs win public contracts

The Government wants a quarter of its business to go to small and medium-sized businesses but believes they are excluded because of expensive red tape.

A raft of measures have now been unveiled to help them, including efforts to eliminate the need to fill in pre-qualification questionnaires for contracts worth less than £100,000.

Firms will also be invited to pitch ideas at Dragons’ Den-style sessions led by a new Crown Commercial Representative whose job will be to give smaller suppliers a bigger voice in Whitehall.

Stephen Allott, a Cambridge-educated qualified barrister with a long history in smaller technology firms, has been appointed to the role.

Other changes include making all £10,000-plus opportunities freely available online on a ‘Contracts Finder’ website and stopping firms having to resubmit the same data several times.

Mr Cameron said: “We are announcing big changes to the way government does business. It will provide billions of pounds worth of new business opportunities for small and medium-sized enterprises, charities and social enterprises.

“We need to make the system more open to new providers, more competitive between suppliers and more transparent for the taxpayer. This is vital as we get to grip with our deficit – helping us tackle waste, control public spending and boost enterprise and growth.

“It will also help modernise our public services, opening them up to the forces of competition and innovation and give our great charities and social enterprises the opportunity to deliver services too.

“I call on all those who think they can provide a great service for government, to take advantage of these opportunities, to go online and start searching for contracts now.”

Francis Maude, minister for the Cabinet Office, added: “This marks the end of what I call the procurement oligopoly – where innovative small businesses and organisations are too often shut out of contract processes early on because of ridiculous rules and unnecessary bureaucracy. This is not only bad for those affected, it’s also bad for Government as it stifles competition.

“These changes will help create a system which is transparent and allows small businesses and voluntary sector organisations to compete more fairly for Government contracts – helping to drive economic growth at national and regional level, while delivering better deals for the taxpayer.”

The Federation of Small Businesses (FSB) welcomed the Government’s commitment. It said that 70 per cent of SMEs rarely bid for public sector contracts due to a lack of awareness of the opportunities that are available and the red tape surrounding the application process.

Research into small firms’ access to public procurement markets across the EU places the UK 24th out of 27 member states, with only 24 per cent of contracts going to small firms, compared to 44 per cent in France.

John Walker, national chairman of the FSB, said: “We have worked hard to ensure that small firms have the same access to public sector contracts as big businesses.

“These measures will now need to be accompanied by a genuine cultural change within Government procurement in terms of its approach to dealing with small businesses.

“Removing the need to fill in a pre-qualification questionnaire for smaller contracts is a bold move but it is vital that something more bureaucratic or confusing does not emerge in its place. We hope the promise of a dedicated voice for small suppliers within Government will help to prevent this.

“The good thing is that the Government is going to publish figures on the amount of contracts going to SMEs so we will be able to measure its success and hold the Government to account if it is not working.

“That type of measurement and transparency is something we’d like to see adopted more widely across the public sector.”

The Institute of Directors also welcomed the announcement, but added a note of caution.

Alexander Ehmann, a spokesman, said: “Making procurement easier for small and medium-sized businesses is long overdue.

“However, it remains to be seen whether the changes will benefit small businesses or whether risk-averse bureaucrats in Whitehall will soldier on with ‘safe’ choices of big brands.”