News - Construction News

SMEs benefit from Government procurement spending

Latest figures show £11.4Bn Government procurement budget allocated to SMEs

Central Government has spent £11.4Bn with small and medium-sized enterprises (SMEs) in 2013 and 2014. This equates to 26.1% of the total Government procurement spend, which is the largest recorded spend that has gone to SMEs.

This means that the target set out in 2010 of 25% in Government procurement spend going to SMEs has now been hit. The total reported today was made up of 10.3% direct Government spend and 15.8% indirect Government spend.

The news arrives on the same day that the Government have launched a refreshed Contracts Finder website, which features a better search function – including the ability to search by location. The website covers current and future public sector contracts above £10,000 in Central Government and above £25,000 in the wider public sector. It’s free to use and can be accessed via desktop, mobile and tablet.

Also today the Government has announced new legislation which will have an affect on SMEs within the construction industry. This legislation means that:

  • everyone in the supply chain must comply with 30 day payment terms, including suppliers and subcontractors
  • public bodies must publish an annual late payment report, making their accountability more transparent
  • there will be an easier bidding process in the wider public sector – achieved through the complex forms, such as Pre-Qualification Questionnaires, being abolished for low value contracts
  • there will be a quicker procurement process for public sector contracts

Minister for the Cabinet Office Francis Maude said: “As part of our long term economic plan this Government is overhauling public procurement to open things up to businesses of all sizes. I am so pleased that our reforms have ensured that innovative SMEs benefited from £11.4Bn 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.”

Lord Young, the Prime Minister’s Enterprise Adviser said: “Contracts Finder is a world first in terms of scale and ambition. It 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.”

Piers Linney, Co-CEO of Outsourcery and member of the Government’s SME panel, added: “We know Government business has been incredibly complicated and costly to bid for in the past, and that was reflected in the tiny proportion of spend going to SMEs. This new legislation and the new site create a huge opportunity for SME businesses with reduced cash flow risk. They need to educate themselves on their rights under the new legislation and really get under the skin of Contracts Finder to make sure they can seize that opportunity.”

The regulations implement new EU rules for public sector contracts which will speed up the procurement process. The UK is the first EU member state to implement these rules, doing so in just ten months, 14 months earlier than the EU deadline.