Doubts cast over government's figures on business with SMEs

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A major talking point in the IT supplies sector is the issue of the UK government giving more business to SMEs.

This week a businessman involved in advising the government about how to get new suppliers involved in government procurement has resigned as co-chair of the New Suppliers to Government panel. This was over his scepticism around Cabinet Office figures claiming the amount of government business going to SMEs has doubled.

Mark Taylor, CEO at open source company Sirius, quit this week

He said: "I do have concerns about the direction of policy and am genuinely sceptical about the figures [which claim SME business has doubled from 6.7% to 13.7%].

"I think I have a right to be, as there are a number of SMEs I've to spoken to that are finding it more difficult to do business with government and that maps with my direct experience."

An oligarchy of large system integrators is said to be one of the reasons the government cannot get a good deal. So the current government set out to end this dominance by a few suppliers, which includes the likes of HP and Fujitsu, and open up business to a wider variety of suppliers. This would include significant supplies coming from SMEs.

The Public Administration Select Committee (PASC) even published a report titled:  "Government and IT - a recipe for rip-offs: time for a new approach."

The top 20 suppliers to government, including all types of products and services, included many IT suppliers. HP, BT, Capgemini, Fujitsu, Capita, IBM, Atos, CSC, Logica, Steria, Oracle, Microsoft and Accenture were all involved. Technology SMEs find it particularly difficult to win government business as buyers revert to the safe option of buying from the big incumbent suppliers.

But public sector bodies are missing out on good deals as a result. According to Computer Weekly a major systems integrator asked for more money to write a report on the options available for a government IT requirement than an SME supplier quoted to provide the actual service that was needed.

The government set itself a target to procure more its total products and services, not just IT, from SMES. And according to the government's chief procurement officer John Collington, speaking at The Crown and suppliers: A new way of working, procurement conference in London in November , it is having some success. He said that in the past, there were not enough SMEs winning business through the usual procurement channels but that things are changing. According to the government's figures in November 44% of government contracts signed in September 2011 were with SMEs. This compared to 5% in January 2011.

The Government's Cloudstore, where public sector organisations can buy cloud services, is another attempt to break away from a few large suppliers having a stranglehold on IT supplier to the public sector.

It also set up a new framework agreement for buying consultancy services worth up to £2bn over the next four years. The Consultancy One deal is designed to cut the levels of spending on consultants across Whitehall and make it easier for small businesses to win consulting contracts.

But is the government exaggerating its success?

Are you an IT SME trying to sell goods and services to the government? If so leave a comment telling us about you experience and whether things are getting better.

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About this Entry

This page contains a single entry by Karl Flinders published on March 16, 2012 3:01 PM.

Could new breed of Indian IT suppliers sneak under the radar again was the previous entry in this blog.

HP loses the moral high ground at Rolls Royce but not necessarily the business is the next entry in this blog.

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