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SMEs still struggle to get foothold in public sector market

TechUK survey shows there are still barriers to small companies gaining access to public sector procurement despite government efforts

Small and medium-sized enterprises (SMEs) continue to find it difficult to win business in the public sector, according to the annual TechUK SME survey.

SMEs surveyed cited procurement processes and contract terms and conditions as key barriers to gaining entry to the market, despite the government’s efforts to make access easier.

Government initiatives such as abolishing pre-qualifying questionnaires (PQQs) and introducing Contracts Finder, which aims to bring together all procurement contracts in one place, seem to have done little to improve the situation.

Some 65% of those surveyed said Contracts Finder did not help them gain access to the market, and had only 14% had used the government’s Mystery Shopper service.

Meanwhile, 94% said they did not think civil servant buyers had a good understanding of how SMEs could meet their needs, compared with 96% last year.  

Naureen Khan, TechUK’s director of public services, said SMEs had a key role in driving innovation in government.

“It is clear that changes must be made to develop simple and accessible procurement processes and our survey findings show that we need swift action to ensure the public sector benefits from harnessing the very best of UK tech,” said Khan.

Cabinet Office minister Ben Gummer said the government was committed to improving procurement spend on SMEs.

Read more about SMEs and government

“This government is firmly on the side of the entrepreneurs and small businesses that are the lifeblood of the UK economy – so we will do everything we can to make their lives easier,” he said.

The government reported its total spend with SMEs in 2014-15 as 27%, exceeding its target of 25% by 2015, and it has committed to increasing that spend to 33%, or £1 in every £3, by 2020.

But this includes both direct and indirect spending, which means contracts with large suppliers that pass on some of their government business to SMEs as subcontractors can be counted. 

Of the 27% spending on SMEs reported in 2014-15, only 10.9%, or £4.9bn, was direct expenditure, while 16.2%, or £7.3bn, of taxpayers’ money was spent indirectly, according to a National Audit Office report published in March this year. 

To improve its engagement with SMEs, the government has set up an SME advisory panel comprising 24 entrepreneurs from several industries. ........................................................................

Read more on IT for government and public sector

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