Public procurement and the protection of SMEs

Neville-Rolfe argues it’s time to give smaller companies a bigger slice of the procurement pie as global procurement transforms under various pressures

In a recent article published in The Times, Minister Neville-Rolfe argued that “it’s time to give smaller companies a bigger slice of the procurement pie.”

Prior to her political career, Neville-Rolfe was a sitting executive on the main board at Tesco, and points out that she’s also worked “at much smaller companies, including Dobbies, Red Tractor and Crown Agents,” and so she knows “very well, the challenges faced by small and medium-sized enterprises and the opportunities that we can unlock in government by making the right changes.”

The article takes up a chance to once again shine a light on the critical (Public) Procurement Bill that’s making its way through the corridors of power at this very moment.

Considering that one in every three pounds of public money - some £300bn a year - is spent on public procurement according to the UK government, it’s not difficult to see why so many eyes are on its journey to ratification.  

Set to transform national procurement from the bottom up, the bill has not been without controversy, being accused of ‘vague wording’ which focuses on ‘value for money’ over ‘social value’.

Covering the bill in an Op-ed, Neville-Rolfe states: “Complex procurement regulations, for example, have long been the bane of small companies. The government, likewise, wants to make it easier for such businesses to work with the public sector by ripping up unnecessary rules.”

She says: “The bill will slash through red tape, replacing 350 European Union regulations with one simple and flexible framework for the five million UK SMEs that could compete for public sector contracts. It also will tackle late payment in the supply chain.”

According to the article, SMEs have in the past year, won a record £19.3bn in government procurement spending, “with the overall procurement pie worth £300 billion.”

Neville-Rolfe states: “I know from hosting many round tables and from speaking to entrepreneurs and business people that the bill can do more to help SMEs across the country to get a bigger slice. From those conversations, I believe we should use the bill to strengthen three areas.”

She points to:

  1. To put contracting authorities in the frame for reducing the challenges for small businesses

“Procurement teams will have to make sure there are no unnecessary barriers that might hinder smaller companies in the contract; that bidding timelines are realistic; and that there is a clear timeline so that SMEs can plan accordingly.”

  1. Accounting

“Another burden on smaller suppliers is having to provide audited accounts as a test of their financial standing. We will require contracting authorities to accept alternative evidence where audited accounts are unavailable: this will prevent some businesses being excluded from bidding.”

  1. Insurance

“A part of the procurement process unfairly penalises businesses that lack the war chests of big corporations. We will make it explicitly clear that contracting authorities must accept evidence that required insurance cover will be in place when a contract is awarded, rather than at the point of bidding. This will save SMEs from having to incur unnecessary upfront costs, a burden they shoulder at present.”

SMEs make up 99% of UK businesses with an estimated turnover of £2.1tn. 

The UK is embarking on its Procurement Bill as a result of Britain’s Exit (Brexit) from the European Union, effectively revoking it’s dispensation to the free movement of goods and services - but the face of procurement is changing on a global scale due to diverse galvanising factors such as the pandemic, the war in Ukraine and an unbridled inflation rate that’s challenging the entire infrastructure and redefining procurement’s role.

Strategies such as reshoring and nearshoring have emerged from the fray of chaos to assert themselves in a newly-wrought procurement machine, and Minister Neville-Rolfe is only voicing the concerns of millions of procurement professionals the world-over - that is the movement towards alternatives to gigantic and oligopolistic procurement nodes.

Diversity is not just about colour, culture or gender, but must also be extended to organisations as bodies, and in this movement, a fairer and more effective procurement landscape is all the more likely to surface.

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