Government caps contracts to aid SME suppliers

The government has taken further steps to ensure that it becomes easier for small firms to sell into the public sector.

file0001073676107.jpgThe government has taken further steps to ensure that it becomes easier for small firms to sell into the public sector.

Francis Maude, the Cabinet Office Minister responsible for driving through changes about the way technology is sourced in government, has announced plans to cap the size of contracts to give SME suppliers a better chance of tendering for them.

He is also announcing a package of measures to make the way it does business "more competitive and 'transparent" as part of a series of changes to its procurement strategy.

Maude also said that the government's direct spend with SMEs was on track to double from £3bn to £6bn and it was also on track to double the amount of business going through smaller suppliers to 13.7% from 6.7% by the end of the financial year.

"Governments might be able to print money but it is SMEs who make it - successful SMEs are crucial to the future of this country and can save taxpayers' money with innovative new ideas. Doubling the amount of business going to these companies is no small feat but we will now go further. We are determined to shake up public buying so radically that there is no turning back to old days of SMEs being shut out," said Maude.

Two of the measures being announced will stand out for smaller suppliers, including the decision to cap contract sizes to ensure they are not beyond the abilities of an SME to manage.

Government IT contracts will be more flexible, starting with two areas - application software and infrastructure IT - with set breakpoints introduced into the contracts so there is less money locked into long commitments.

The other development, which should get a thumbs up from the SME community, is a pledge to be more prompt on payment.

Maude is set to announce that new ways of paying SMEs are being explored to ensure SMEs within the supply chain receive payment at the same time as the prime suppliers. This will include rolling out Project Bank Accounts.

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