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March 20, 2012

Government announces new measures to help small firms win more contracts

New measures to help small firms win more government IT contracts have been unveiled by Whitehall.

The plans, announced by Cabinet Office minister Francis Maude, include breaking up deals into smaller chunks to make it easier for smaller suppliers to bid for projects, and the introduction of breakpoints to limit the length of contracts. The changes are to start with IT hosting and application software contracts.

IT hosting deals will be limited to 12 months duration from now on, while application software deals will be reassessed every four months, “so there is less money locked into large lengthy contracts”, the Government said. 

In addition, the Government said a senior “SME champion” would be appointed in every major government department from now on, to make sure procurement remained accessible to smaller suppliers.

The measures are part of a wider push by central government to allocate more of public spending to small firms.   

According to a recently released Cabinet Office progress report — assessing its efforts over the past 12 months in opening up public procurement to small and medium-sized businesses  — the Government is on track to double the amount of business it does with small and medium-sized businesses to around 14% by the end of the financial year, up from 6.5% in 2010.   

Commenting, Maude said the doubling the amount of business going to small and medium-sized businesses was “no small feat”.

“We are determined to shake up public buying so radically that there is no turning back to old days of SMEs being shut out,” he added. 

The Federation of Small Businesses (FSB) called the changes “another step forward in addressing the issues that small firms faced when trying to access government contracts”.

“These steps will help to reduce red tape for small firms and improve communication and engagement on both sides,” a FSB spokeswoman said.

However, the lobby group wanted to see the measures adopted across all the entire public sector, not just in Whitehall. “The changes really need to be brought in to regional councils and government agencies across the board in order for most local firms to genuinely benefit,” she said.