Government sets goal of directing 25% of procurement to SMEs

The coalition has set a “goal” of having a quarter of government procurement directed to small and medium-sized enterprises, it has been revealed.

In its report, Backing small business, the Department for Business Innovation and Skills said in order to meet this aspiration the government would:

• Require departments to publish not only their procurement contracts but data on how many are awarded to small and medium businesses
• Agree action with each department to increase the amount of business going to SMEs
• Introduce a simplified and standardised pre-qualification questionnaire that can be used across central government departments. It will also explore how this can be rolled out across the public sector, including to local authorities and the NHS
• Investigate the use of more open frameworks or dynamic purchasing systems that do not lock suppliers out of contracts for up to four years
• Reaffirm the commitment that 80% of prime contractors are paid with five working days and that prime contractors pass 30-day payment terms down the supply chain.
• Continue the Small Business Research Initiative, which has granted over £36m worth of contracts, helping high-tech SMEs to access government contracts and attract venture capital or other additional financing.

In a statement, the Department said: “The government has a strong role to play in boosting enterprise and helping businesses. Critical to that is giving them access to government contracts, instead of leaving that as the preserve of big business.”

The government said it would also work with social landlords to “tackle the misconception that social tenants cannot start up a business, and encourage tenants to pursue their enterprising ideas”.

The Enterprise Finance Guarantee will be made more accessible to small community finance institutions, with a view to benefitting business starting up in disadvantaged communities.

In a coordinated announcement, the Prime Minister also named Lord Young as his Enterprise Adviser.

David Cameron said he wanted Lord Young – who recently completed a review of the UK’s health and safety laws – to write a “brutally honest” report on what the government could do to help smaller enterprises and start-ups to prosper.

The Prime Minister said: “I feel very strongly about the need to do everything we can to help and promote small and medium-sized businesses. They provide nearly 60% of our jobs and half of our GDP.

“This government has already taken action to back small businesses. But there is so much more that we need to do to back up our commitment to make this country one of the best in the world to start, run and grow a small business.

“I am seeking nothing less than a wholesale change in attitude from my government and I need help to get there.”

The announcements came on the same day as press reports suggested that Serco had apologised for demanding rebates from its suppliers in the light of the government’s spending cuts.

The London Evening Standard said the outsourcing giant had retracted its letter. The Cabinet Office was said to be furious at its attempt to pass on the cost saving programme.