In a shrinking economy, the security provided by government contracts becomes more attractive than ever. For small and medium-sized enterprises (SMEs), public sector business offers a potential lifeline, especially when Chancellor Alistair Darling shows little sign of wanting to prune back the £175 billion spent a year on procurement.
The problem is winning the contract in the first place. The barriers facing SMEs wishing to tender for government work are notorious, with some business owners arguing they simply do not have time to jump through the administrative hoops.
Recognising these difficulties, the government last year asked Anne Glover, CEO of venture investor Amadeus Capital, to supervise an investigation into the current state of government procurement. There was even talk of a target for 30 per cent of government contracts (by value) to go to SMEs.
The Glover review emerged in November to little fanfare. Unsurprisingly, the idea of a target was not adopted. Nevertheless, the government has accepted the report’s 11 recommendations, which ought to offer some help to growing companies wanting to win government business. The key points of the review are set out below.
By 2010, contract opportunities are to be advertised through a single, free-to-use online portal, which will also carry details of contract awards above £20,000 across the whole public sector, as well as subcontract opportunities. Tender documentation will begin to be issued electronically, with an ambition to make this standard practice by 2012. Needless to say, it will still take time to trawl through all the opportunities available, so procuring authorities will be asked to highlight work particularly suitable for SMEs or consortia of SMEs. However, no timeline has been set for this.
The review recommends the introduction of a standard pre-qualification questionnaire to simplify the submission of basic information. Importantly, SMEs will be allowed to provide details of all previous relevant experience when bidding for contracts, not just public sector experience. This is a major improvement and there is no reason why it should not be implemented immediately by individual authorities.
Government bodies will be required to use their procurement strategy to ‘drive innovation’. More pragmatically, contracts will be managed to ensure that subcontractors obtain conditions no worse than those of the prime contract – including payment terms.
So, how quickly will this make a difference? Though the recommendations would be likely to benefit SMEs if fully implemented, many of the proposed measures come without a timeline for execution. An additional concern is that the reforms are unlikely to be effective if they remain simply as guidance. The entrenched habits of procurement managers are not likely to change overnight.
That said, the Glover review does show SMEs which way the wind is blowing. Well-advised businesses will read the review and adapt their tender responses accordingly.