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Should the public sector be sourcing from small business?

IT transformation and change management company Brightman has launched a white paper aimed at addressing the challenges faced by SMEs when attempting to work with the public sector.

The paper, titled “Taking the brakes off: How SMEs can be unleashed to drive the rapid digitisation of the public sector,” provides an analysis of the government’s approach to IT procurement and focuses on ten recommendations to improve the fairness of procurement for businesses of all sizes in order to deliver better public services through the digitisation of the public sector.

The government has been openly committed to bringing more SMEs into the public sector for nearly a decade. In 2010 Prime Minister Cameron appointed Lord Young of Graffham as enterprise adviser with the remit of overcoming the government’s “institutional bias” against small and medium sized businesses. The government has since committed to spending 33% of public sector procurement directly with SMEs by 2022. The latest independent estimate by the FSB suggests that SMEs are involved in 19% of procurement, so more work needs to be done.

The advice from Brightman includes:

Don’t let rigid procurement procedures stand in the way of forging meaningful business relationships; you cannot remove the human element entirely from the tender process, so don’t force it.
An overhaul of the various framework agreements to make them more user-friendly and better at fulfilling their matchmaking role; many are unwieldy, difficult to navigate and often fail to match contracts to the most relevant suppliers. The paper looks specifically at the G-Cloud, Contracts Finder and Digital Outcomes & Specialists frameworks.
Introduce fairer terms of business for businesses of all sizes in order to prevent larger suppliers from using their size to negotiate much better payment terms than their SME competitors
Commit more government resources to manage a rising number of SME suppliers; despite government ambition to bring more SMEs into the supply chain, austerity has resulted in lower headcounts across government departments to manage these suppliers

“Despite the launch of numerous government policies and initiatives – and the introduction of the government’s own targets to direct more public sector expenditure directly to SMEs – most small and medium sized businesses remain locked out of public sector contracts altogether. This is not just detrimental to SMEs that feel they are unfairly discriminated against, but it is holding back the digitisation of the public sector,” comments Romy Hughes, director at Brightman. “SMEs can offer greater innovation, value-for-money and flexibility than much larger providers. It is time the government matched its ambitions with policies that genuinely help SMEs to compete for government contracts.”

“We have prepared this paper to shed light on the challenges faced by SMEs when engaging with the public sector, and to give the government actionable recommendations to address these issues. The UK already leads the world in delivering digital services to its citizens[1], but it has barely scratched the surface of the benefits available from the full-scale digitisation of the public sector. SMEs are often the best placed to lead digitisation projects because they are the most nimble, adaptive to change and keen to adopt new technologies. It is time for SMEs to be given a fair chance to digitise the UK public sector.”

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