The government now spends over a quarter of its budget with small and medium-sized enterprises, following a significant overhaul of public sector procurement practices.
New figures show that central government spent £11.4 billion with SMEs in 2013 to 2014. It means that 26% of government spending went to SMEs, exceeding the 25% target set by the government in 2010.
Francis Maude, minister for the Cabinet Office, said: “Five years ago, many small businesses would not even bother trying to win a contract from the public sector. Who could blame them? Why was government requiring all businesses to show three years of audited accounts? Why were departments insisting on bidders for small contracts submitting long, complex forms? Why did firms need to show they had insurance cover for a bid before it was even considered?”
These latest figures indicate that the government’s overhaul of public sector procurement has been successful. And new legislation passed this week promises to further protect and support SMEs that are bidding for public sector contracts.
Now everyone in the supply chain will have to comply with 30-day payment terms and public bodies will have to publish an annual late payment report. In addition, bidding processes are to be simplified and complex Pre-Qualification Questionnaires have been abolished for low value contracts.
Francis Maude said: “I am so pleased that our reforms have ensured that innovative SMEs benefited from £11.4 billion of business last year alone. Over a quarter of our spend now goes to SMEs but we know there’s much more to do, and these new reforms show just how determined we are to finish the job.”
The government has also improved its free online Contracts Finder tool to help more SMEs access information on public sector work. Contracts Finder covers current and future public sector contracts above £10,000 in central government and contracts above £25,000 in the wider public sector.
Lord Young, the prime minister’s enterprise adviser, said: “Contracts Finder opens up government business like never before and levels the playing field for SMEs who in the past, didn’t know how to find public sector contracts, let alone bid for them.”