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Government warns public sector to prepare for SME procurement legislation

Caroline Baldwin

The government is warning the wider public sector to be ready for changes in legislation that will make it easier for small to medium-sized enterprises (SMEs) to serve government.

The changes, scheduled to come into effect later this year, will help the government achieve its goal of spending 25% of central government expenditure on SMEs by 2015.

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The changes include breaking contracts down into smaller lots, and allowing companies to bid as long as their annual revenue is twice the value of the deal in question – previously these thresholds were much higher.

The legislation will see the abolishment of pre-qualification questionnaires for low-value contracts and ensure all opportunities valued more than £10,000 (for central government) and £25,000 (for other authorities) to be published on Contracts Finder.

“Change is coming  – be ready for it, because we need to deal with it when it happens,” warned the Rt Hon Francis Maude MP and minister for the Cabinet Office. “There’s nothing stopping the public sector adopting these changes straight away.”

Speaking at the Public Sector Show in London yesterday, Maude said the government is doing everything in its power to help British SMEs succeed by “leveling the playing field which was previously stacked against them”.

Late payments

Maude demonstrated how not all of government is treating SMEs fairly, using the example of one government department owing an SME £70,000 for a service it had delivered. Maude noted the invoice may not seem a lot in terms of government spend, but to that business was a crucial amount of money.

Mystery Shopper

The government set up its Mystery Shopper scheme in March 2011, and it has since tackled 620 cases, where four out of five were able to make a change to resolve issues.

According to GOV.UK, the Mystery Shopper Scheme aims to “provide a clear, structured and direct route for suppliers to raise concerns about public procurement practice even when attempts at resolving issues with a contracting authority or a first-tier supplier have failed and provides feedback to enquirers on their concerns”.

The government is now extending the scheme to conduct spot checks on procurement processes across the public sector. These results will be published on GOV.UK, to challenge poor practice and identify good practice. “We want to get to the point where we have a kind of Trip Advisor system for public procurers,” said Maude.

The government’s Mystery Shopper team contacted the department, unblocked the payment and fixed the problem. But Maude said, on deeper investigation, it was discovered that the the problem had occurred because the government department didn’t know how to use the payment system.

“Too often in the past, government seemed to be oblivious to the basic needs of SMEs,” he said. “The government can set an example by paying on time.”

One of the new pieces of legislation will stop this by requiring late payers to publish cases where they fail to pay within 30 days.

“There will be absolutely no hiding place for late payers,” he said.

“The way in which the public sector goes about buying goods and services can make or break a small business,” said Maude. “But equally, the success of SMEs will make or break Britain’s mounting economic recovery.”

The show’s main theme concentrated on public sector procurement, with both Stephen Kelly, chief operating officer, HM Government and Sally Collier chief executive, Crown Commercial Service praising the likes of G-Cloud as well as pointing out how the government can continue to work with large traditional suppliers.

“SMEs drive huge innovation, but big business can be beautiful too,” said Kelly.


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