Government will have to redouble its efforts if it is to achieve its target of 25% of SME public sector procurements by 2015, the prime minister’s enterprise adviser David Young has warned.
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In the Growing Your Business report, Young praised the “extraordinary value” IT SMEs were providing the government through the G-Cloud programme, citing a recent Home Office hosting and server procurement that saw a 90% reduction in cost from £73,000 to £7,000, by awarding the contract to an SME provider.
But Young added: “Despite the extraordinary savings small suppliers like these are offering, I am not convinced that the value of SMEs is being fully exploited across the whole public sector.
“What I want is a more direct route for innovative SMEs into procurement.”
He said small suppliers – particularly in the area of IT – were often put at a disadvantage when contracting authorities stipulate existing security clearance as a prerequisite for recruiting a contractor.
"I am pleased that new guidance has been issued to all departments that makes it clear that pre-security clearance should not be made a condition of a procurement unless there are exceptional circumstances," he said.
Rob Downes, spokesman for the Forum of Private Business said: “We can’t knock the current government now that it’s come round to this way of thinking, but it’s going to take a long time for them to realise their ambitions of 25% market share for SMEs, the worst we can say is that their targets were unrealistic to start with."
In the report, Young outlined cheap and easy access to "enabling technology" as a key reason for people to start their own business, a report from the prime minister's enterprise adviser Lord Young has urged.
“At a very simple level, small ‘cottage’ businesses are forming in people’s homes using low-cost trading platforms like eBay, free social media marketing tools like Facebook and payment mechanisms such as PayPal," he said.
"SMEs may then move on to more specialist online sales platforms like notonthehighstreet.com and Etsy, which enable creative individuals and businesses to showcase their goods worldwide.”