Original URL: http://www.theregister.co.uk/2005/09/12/uk_gov_backs_smes_for_public_sector_procurement/

UK.gov backs SMEs for public sector contracts

Small is beautiful

By eGov Monitor Weekly

Posted in Small Biz, 12th September 2005 07:02 GMT

The Government has given its strongest show of support yet towards helping smaller suppliers win more business in the public sector IT marketplace.

Alun Michael, the small business minister, has "urged" councils to open their doors wider to small firms and take advantage of the expertise, innovation and value for money gains potentially on offer.

The minister's call came in light of a new report on the "benefits of public sector procurement from small business" which concludes that government buyers should "seriously consider" bids from smaller firms.

The 122-page study reels off a list of success stories where forward-thinking public bodies received huge benefits through working with small and medium-sized enterprises.

Around half of the 20 case studies featured show how SMEs, acting either as a prime or sub-contractor, helped to deliver IT-enabled business change projects successfully for clients ranging from councils to large government departments.

One such example is a typical 'David and Goliath' story, where a small consultancy beat a large, incumbent supplier to win an important contract from a "major intergovernment body", with the resulting project proving "highly successful".

The cases studies in question were provided by the suppliers or buyers "with a good story to tell", the report acknowledges.

The study, however, highlights some consistent themes, notably that time and again, procurers effused about the extra qualities provided by the smaller supplier. In most cases this extra quality was due to the firm's "exceptional commitment" to the project in hand.

It comments: "This suggests that, in almost any field… where there has not been a significant, well directed effort by a procurer to explore the potential for more use of smaller businesses, a small business initiative should be seriously considered, and rejected or postponed only with good reason."

From the case studies, the report concludes that there is no "optimal" level of procurement from SMEs and each case needs to be judged on its own merits – dampening prospects that the Government will introduce SME 'quotas' or targets.

But it adds: "The case studies do however suggest that there is scope for achieving net benefits from more use of small businesses across very wide areas of procurement."

Many of the case studies involved the buyer taking proactive steps to widen their supplier base by including smaller firms.

The greatest scope for improving the use of SMEs in government procurement "lies in increasing procurement professionalism", says the report.

Its findings are due to be incorporated into updated government guidance.

© eGov monitor Weekly

eGov monitor Weekly is a free e-newsletter covering developments in UK eGovernment and public sector IT over the last seven days. To register go here.

Related link

A Study of the Benefits of Public Sector Procurement from Small Business (PDF: 929KB)