Government’s spending with small and medium-sized enterprises

The National Audit Office (NAO) has recently published a report setting out the progress made by the UK government to increase spending with small and medium-sized enterprises (SMEs).

The Cabinet Office estimates that 27% of government’s procurement spending or £12.1 billion reached small and medium-sized enterprises (SMEs) in 2014-15, £4.9 billion direct spend and £7.3 billion indirect spend thus surpassing the aspirational target of 25% spend that the government had set in the previous parliament. As a result the Government now aims to increase its spending with SMEs to 33% by 2020. However, the NAO report states that it ‘cannot be certain whether the amount the government spends with SMEs has increased over the last Parliament’ and this is due to the fact that the reported increase by the government has coincided with efforts from the Crown Commercial Service (CCS’) to ‘improve its data’. Therefore, the NAO has not been able to establish that the increase in spend has happened as a result of a change in data collection methodology or that there has been an actual increase in SME spending.

The report highlights some of the efforts the government has made to facilitate SME engagement in public procurement. These include the removal of pre-qualification questionnaires for low-value contracts, the introduction of ‘Contracts Finder’, an online portal for advertising government tenders and the ‘Social Value Act’ which requires government procurement activity to take into account social, environmental and economic benefits.

Despite these efforts, the report points out that more needs to be done to ensure SMEs’ are able to access government contracts. Some of the recommendations that are put forward suggest that CCS should focus on identifying:

  • Areas of government where different providers can bring the most benefits
  • Use best practice to inform future decisions
  • Identify where government needs to have oversight of the relationship between prime contractors and their subcontractors
  • Assess the feasibility of an integrated cross-government procurement platform to support its commercial strategy
  • Improve the quality of data in Contracts Finder

To access the full report click here