Government proposals to help SMEs in procurement

The UK’s annual public spending stands at approximately £230 billion, the majority of which is subject to public procurement obligations. The Government wants at least 25% of it to go to Small and Medium Enterprises (SMEs) and has committed to that figure by 2015. Its guidance note 'Small business: GREAT ambition' of 7 December 2013, sets out some proposals on how it intends to achieve this (and wraps up recommendations on public procurement from Lord Young and the responses to recent consultation on improving the procurement experience for SMEs).

Commitments include:

• To overhaul the consistency and use of PQQs by:
  • abolishing PQQs for low value contracts (below the EU threshold of £173,934) to reduce the administrative burden on SMEs; and
  • requiring the use of standard core PQQs for high value contracts which should be more SME friendly
• To mandate prompt payments terms all the way down a public procurement supply chain as part of the implementation of the new EU procurement directives in 2014 (see for example our article European Procurement Reform gathers pace), to ensure SMEs do not suffer damaging cash flow issues;
• To publish all contract opportunities on a single online portal (again to reduce administration for those with limited spare resources including SMEs).  Some might say this is an obvious improvement for all parties which is overdue in any event;
• Requiring public bodies to report on their procurement spend to identify the proportion going to SMEs;
• To introduce a rating service for public bodies to rate bidders (to build up a reputation) and for bidders to rate Public Bodies on their procurement processes;
• Introducing “Solutions Exchange” from January 2014 as a forum for public bodies to engage with the market for innovation and ideas prior to commencing formal procurement;
• Extending ‘mystery shopper’ reports to check up on public bodies’ procurement processes.

These ideas (although in some cases long-trailed) are welcome innovation and may actually make the experience for SMEs and other bidders (as well as authorities themselves) smoother which must be a good thing.

Ian Tucker is a member of Burges Salmon’s contentious and non-contentious procurement team led by John Houlden.