Local authority chief execs slam Government plans on procurement and SMEs

Government proposals intended to make public procurement more accessible to small and medium-sized enterprises (SMEs) are ‘anti-localist’ and could end up benefitting larger businesses, SOLACE has warned.

In a submission to a Cabinet Office consultation, the Society of Local Authority Chief Executives and Senior Managers argued that the Government “should learn from councils, not legislate”.

The Cabinet Office launched its consultation in September with proposals for new ‘single market’ principles for public sector procurement.

The reforms – aimed at simplifying and standardising the advertising, bidding and payment of public contracts – cover three areas:

1. Pre-qualification: eliminating the use of pre-qualification questionnaires (PQQs) for low value contracts; mandating a core PQQ with standard questions for relevant high value contracts (the Government would legislate to extend this to the whole of the public sector); and allowing suppliers to provide PQQ data only once (via a single online platform).
2. Transparency: ensuring all new contract opportunities (above £10,000) and contract awards are advertised online via the Contracts Finder site and the public sector reports its performance on spend with SMEs and centrally negotiated deals. Public bodies could be required to ‘comply or explain’ when choosing whether to use alternative procurement routes to centrally negotiated deals.
3. Payment and finance: ensuring contractors pay their suppliers on time; consideration of whether performance bonds can be an unnecessary barrier for SMEs; and encouraging the use of e-invoicing in the public sector.

SOLACE said the aim of the reforms was laudable and that it shared the Government’s desire to increase the amount of public sector work awarded to SMEs.

However, the Society criticised the plans as ‘anti-localist’. “The Government is committed to localism – respecting the independence of local authorities and reducing regulation and interference. These proposals undermine that commitment.”

SOLACE said the proposals ignored local government’s “excellent record” in awarding, according to reports, a far larger proportion of its business to SMEs than central government. “This is no accident and these proposals put that hard work at risk,” it suggested.

The submission – sent under the name of SOLACE director Graeme McDonald – also suggested that the Cabinet Office plans:

• Did not support SMEs, but instead benefited larger enterprises. “The proposals could produce perverse results, opening up local procurement opportunities to large, national and international enterprises.”
• Added further unnecessary bureaucracy into public procurement. “While trying to simplify procurement, these proposals could result in adding unnecessary bureaucracy for small-scale procurement.”
• Undermined recent work to encourage spin-outs. “New spin-outs require shelter from competition in their early days and their ability to win additional, small local contracts would be undermined.”

“We are disappointed to see Government reach to its default lever of more regulation and red tape,” McDonald said.

“Local government procurement spend is worth £60bn per annum and 47% is already spent with SMEs. By comparison, central government have spent just 12%. Central government should be learning from local government, not legislating.”

To read SOLACE’s submission in full, click here.