Can Small to Medium Sized Businesses (SMEs) and Public Sector Buyers Work Together to Promote UK Economic Growth? by David Shields

Posted on March 5, 2015 by

0


Even in the context of recession and budget cuts, in 2013 /14 UK Government total spending accounted for 43.8% of UK GDP (Source: HM Treasury PESA Table 4.1) with procurement expenditure being approximately a third of the total expenditure at £230bn.  According to figures from Department of Business Innovation and Skills, 99.9% of the estimated 4.9 million businesses in the UK are SMEs, and they employ in excess of 24 million people with a combined turnover of £3.3 trillion.

With these statistics, and in order to stimulate the UK economy, you can easily understand why Government has established a whole series of initiatives to enable SME’s to compete more effectively and to obtain a greater share of Public Sector expenditure. Regulation, scale and complexity makes this a difficult task to centrally stimulate and to drive effective Policies across both Central Government and the Wider Public Sector. There is still a lot more that could be done to make this easier.  However, to achieve the desired economic impact, this continued focus is positive and essential.

Having advised both buying organisations and suppliers, being a relatively new SME and having managed procurement teams in both the public and private sectors, I have a specific interest in seeing how suppliers and buyers can help support the policy intent of Government.  This includes the encouragement of transparent competition, as well as the introduction of new suppliers into Government and ongoing innovation improvement.

On the buy side there are a number of opportunities to help improve and SME’s ability to bid effectively:

  1. Do the basics well

There are still opportunities to improve some fundamentals  including early market engagement, the provision of simplified procurement documents, and limiting the negative impact of onerous terms and conditions. While it can be noted, that there are specific challenges and difficulties in some of these areas within the Public Sector, if buyers continually try and improve these areas, reduce the costs and time to respond, it will have a positive impact.

  1. Quality with open dialogue

In advising  a number of new bidders to Government, one of the biggest differences they articulate is centred around the lack of dialogue compared to Private Sector. Even when procurements have been managed via on-line tools, there are many examples of bidders questions going answered.  This is inexcusable as it opens up the buying organisation to unwanted challenge. Beyond regulations there is a need for transparency.  What I am talking about is open communication through venues such as pre-procurement conferences, that seek to facilitate a two-way dialogue.  Unfortunately, over the last 18 months I have seen little movement in this critical area.

  1. More Competition

In the vast majority of instances, there is no need to limit competition by elongating timeframes for existing contracts within the Public Sector.  An increase in competition without contravening the Value for Money edict is possible, which means that opportunities – especially in the area of technology spend – should be subject to increased competition.

  1. Use technology

For well managed and well structured procurements, using eSourcing tools, eAuctions, as well as marketplace contract postings,  are all helpful to the SME cause.  This is due to the fact that such tools open up previously inaccessible markets, making competition easier and more transparent.

supplier-engagement

Of equal importance is the role that can play in helping the buying organisation be more effective in terms of the procurement process:

  1. Gain an understanding of the process and regulations

The Public Sector is obviously regulated in the way that they conduct procurements.  Having an understanding of these regulations will enable suppliers to respond in a manner that is conducive to said regulations and thus make it easier for the buyer to evaluate their offering.

  1. Respond effectively to the questions

Recognizing that there are buyer-side constraints from the standpoint of evaluating a supplier bid, it is critical to be professional in responding to opportunities.  This means answering the questions in a concise manner, adhering to the prescribed response guidelines, and ensuring that what is being provided is essential to the buyers decision-making process.  By doing so, the supplier helps to streamline the process whilst reducing  costs and the potential for unnecessary delay.

  1. Be genuine in submitting any challenge

There is a proliferation of formal and informal challenges to Public Contract Awards. Clearly if there is a breach of process, a lack of transparency in the award decision or a genuine reason to challenge, it is the right of every supplier to challenge an award. However, the majority of challenges (informal or formal) appear, at best, to be speculative and even punitive so as to unduly influence the buying decision. The impact of this is clear – a more elongated and stringent procurement processes,  in which buyers seek to limit risk in the procurement process.  This aversion to risk, which in the public sector world is already an inherent characteristic, has many negative impacts including the introduction of more stringent terms and conditions.

Continued consideration of these key points, together with the focus and recognition of the value SMEs bring to the delivery of public services is essential.  Through continued development and dialogue surround the further development of the SME opportunity in the public sector will help to promote UK economic growth.

David Shields, Director, Apsiz Services Ltd      www.apsiz.co.uk

30

Posted in: Guest Columnist