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Calls continue for public sector procurement to open wider to SMEs

Open letter adds to recent NAO report in drawing attention to risks of focusing on cosy relationships and low costs rather than value

Simon Quicke
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Published: 25 Feb 2025 14:45

The recent report from the National Audit Office (NAO) calling for changes in technology procurement across the public sector has sparked debate across the industry.

The NAO’s recently published report, Government’s approach to technology suppliers: Addressing the challenges, recommends increasing the level of digital skills in government departments, and a recognition that big tech players were not always the answer.

The report stressed that around £14bn was being spent by the government on digital procurement annually, and there was mixed success with the results of much of those investments.

The government was warned the shift to the managed services model had caught it largely unawares, and it continued to take comfort in working with just a handful of suppliers.

Many across the channel have long believed specialist suppliers among their ranks could deliver a solid service to the government, but were often excluded because they were classed as small and medium-sized enterprises (SMEs), and viewed as less attractive than the tech behemoths that were granted deals.

That view continues to be shared, and a number of organisations have signed an open letter – which has been gathering steam over the past couple of months – to demand reform in public sector procurement.

The move has been led by research and design studio Paper, and has called for public sector procurement to be guided by the best outcomes, and not always driven by a desire to get the cheapest deal. “Public sector procurement is in a troubling state,” the letter stated. “Today, the approach, it seems, is to deliver the lowest cost, without an understanding of what ‘value for money’ means, and that focus is reshaping public services for the worse, and is delivering a poor return on that investment.

“High-price weightings, which have crept up from a usual 20-30% to as much as 40-50%, are leading to a race to the bottom,” it added. “This shift isn’t about improving services; it’s about cutting costs, and creates a false sense of security, often at the expense of quality.”

Face-to-face meetings

The Paper letter also called for a return to more face-to-face meetings to increase trust and transparency, which are both attributes that would support more SME business.

Mark Goddard, co-founder of Paper, said it was adding its voice to the debate around public sector tech deals.

“We created this letter because we believe public sector procurement should be about delivering real value and improving services, not just finding the cheapest option,” he said. “A system that prioritises expertise and long-term outcomes will ultimately serve the public better.”

Some channel players are successful in getting named on government frameworks, but the letter argues that increased transparency would extend that opportunity to a greater number of suppliers.

There is a call, supported by numerous signatories, for the government to rethink the approach to public sector procurement and involve more SMEs to ensure value for taxpayers’ money.

Shaun Gomm, commercial director at Nexer Digital, has been one of those prepared to put their names to the letter.

“SMEs have a huge role to play in delivering high-quality public services, but the current system makes it difficult for them to compete,” he said. “By making procurement more transparent and fair, we can unlock expertise, drive innovation, and ultimately improve outcomes for the users of these services.”

Further analysis of the channel’s reaction to the NAO report will be published in the forthcoming MicroScope ezine.

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