Small technology businesses 'underused' for public sector contracts

The vast majority of small businesses working on or aspiring to deliver public sector contracts do not believe the government fully understands how small firms can meet their needs. That's the finding of a new report by TechUK.

The business group's seventh annual survey focusing on the representation of smaller companies in public sector procurement found that 91.2% of SMEs do not think ministers have strong knowledge of the benefits of small firms delivering projects.

TechUK said it is "a worrying statistic and has remained largely the same over the past couple of years".

Although 59% of respondents said that the Digital Marketplace boosts SME access to contracts, only 27% felt that the government has acted effectively on its commitment to helping small businesses break into the public sector over the last five years. The figure is down on 40% in the previous survey.

Social value

In 2021, rules were introduced requiring that social value contributions account for at least 10% of the overall score when assessing pitches for contracts.

TechUK said the implementation of the policy has "proven challenging for SMEs as they often do not have the excess capacity or financial resources that larger companies use to address social value questions".

In the survey, 76% of small businesses said that addressing social value in contracts is an administrative burden.

TechUK shared five recommendations for the government:

• Engage in more early pre-procurement market engagement.

• Provide more support around social value.

• Apply fewer frameworks.

• Appoint ministerial SME champions who can understand the way SMEs operate and their needs.

• Identify opportunities for collaborative bids and partnerships to support SMEs.

The recommendations echo a report by Enterprise Nation and the Entrepreneurs Network which called on the government to dramatically increase spending with UK small businesses to unlock economic growth and create a more dynamic economy.

It found that despite policy ambition to increase spending with SMEs to 25%, over the past five years the government had managed to spend just 10% of its total procurement budget directly with small businesses.

Enterprise Nation founder Emma Jones has also contributed to The Entrepreneurs Network essay collection exploring how to build an innovative economy which benefits everyone in society.

Her Pioneering Procurement essay explains that by allowing more small businesses to access public sector contracts, the government and taxpayers could benefit from entrepreneurial innovation.

"By injecting investment into these types of companies, we could be delivering better services and saving taxpayers' money along the way," she writes.

Procurement Bill

The government's Procurement Bill, which aims to improve small businesses' access to public sector contracts, is currently working its way through Parliament.

Features of the Bill include requiring procurement teams to make sure there are no unnecessary barriers that might hinder smaller companies in a contract, as well as ensuring bidding timelines are realistic and giving more consistent and helpful feedback to unsuccessful bidders.

Other key elements are forcing public sector organisations to pay suppliers within 30 days, and the creation of one single website for small businesses to register on, rather than the multiple sites founders currently have to use before bidding for work.

At an event run by Enterprise Nation and Deloitte earlier this year, Cabinet Office minister Baroness Neville-Rolfe said:

"The platform, which will be free for all to access, will make life easier for suppliers in a range of ways. For example, it will let suppliers see forward pipelines. This will allow them to find out more, plan which contracts to go for, where to invest, and when to prepare to bid or work with partners to develop consortia and joint bids.

"It will establish a single place for suppliers to register and self-authenticate their key bidding information – a "tell us once" approach that will cut out needless repetitive bureaucracy."

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