Enterprise culture

Elizabeth Cooper looks at the latest developments

Gaining better access to opportunities for small and medium-sized enterprises (SMEs) is not a new issue for contracting authorities in the UK. With competition to win public sector business increasing and the desire to boost economic growth running parallel with ever increasing complexities in EU procurement law, positive steps are needed to ensure that SMEs can tender alongside bigger market players on a level playing field.

This is not just a concern for the UK either – the European Commission is equally driven in ensuring market opportunities are open to wider competition and this forms much of its Europe 2020 growth strategy.  

In April, the Minister for the Cabinet Office, Francis Maude, announced a number of steps designed to implement the Government’s “radical and ambitious” programme to ensure that the huge purchasing power of the public sector is used to foster growth. This programme of reform is designed to support growth and UK businesses, including SMEs, the Cabinet Office said.

Key measures
Key measures for central government included:

•    new commitments from large private sector organisations to publish their government subcontracting opportunities on the Government’s searchable website, Contracts Finder;

•    a new approach to IT contracts: introducing set breakpoints in IT contracts so there is less money locked into large lengthy contracts. The Government said it would look to disaggregate future contracts and deliver flexible, cheaper solutions. This opens up opportunities for SMEs and reduces the cost to taxpayers;

•    prompter payment for SMEs;

•    extending the Mystery Shopper service: where SMEs can complain about procurements and trigger an investigation, the Cabinet Office will now investigate complaints

about unfair practices in the supply chain of government contracts;

•    better dialogue between Government and smaller businesses: a new online tool will help government buyers to engage earlier with SMEs by allowing them to put informal postings about what they need to buy in future online and for SMEs to respond and explain what they can offer.

In 2011, the Cabinet Office had already unveiled further measures including the elimination of the use of pre-qualification questionnaires (PQQs) for all central government procurements under the EU threshold, and the standardisation of the PQQ, with the objective of ensuring cross-Government adoption of a shortened/less onerous PQQ template.

But are key messages getting through to local government officers procuring contracts?

In the survey, we asked: ‘In light of Cabinet Office policy on better access for SMEs, have you reviewed your tender procedures?’ Only 52% of respondents said ‘yes’; 48% said ‘no’.

Time for change
Those saying ‘yes’ cited the following examples of changes made to their tender procedures:

•    Splitting contracts into lots. This is often regarded as not permitted under the procurement regulations. This is incorrect – what is unlawful is breaking down contracts to circumvent the rules.  

•    Reviewing PQQ questions. What questions are permissible and necessary? Consider what level of experience is required and consider how new market entrants may be able to demonstrate similar experience.

•    Simplifying documentation.  Review your standard tender
documents, update them and ensure they are clear.

•    Simplified PQQs including standardisation. This can work in relation to standard questions, but thresholds should be considered on a case-by-case basis.

•    More supplier engagement events. Pre-market engagement is an invaluable tool to alert the SME market to opportunities.  

•    Resilience in financial ratings. Don’t set thresholds too high – or too low. Consider the nature of each contract and what is proportionate.

•    Giving SMEs opportunities to form consortia and inclusion of SMEs in sub-contracting chain. This can include holding events to encourage local businesses to get together with larger suppliers.

•    Work with other organisations to improve communication of opportunities.

The Proposal for a Directive of the European Parliament and of the Council on public procurement (draft 18 October 2012) includes provisions which support increased participation of SMEs in EU contract procurements. This includes self-certification, cutting out the need for all applicants to complete and provide supporting evidence at selection stage, and a financial turnover threshold limited to a maximum of three times the contract value (where proportionate to the contract).

All of these measures should open up market opportunities to SMEs, but will require positive steps to be taken by contracting authorities. As the survey results show, these messages are being heard by at least half of respondents.

Elizabeth Cooper is a partner at Bevan Brittan.