Wednesday, 31 July 2013

Business Matters - The Public Procurement Scandal

Interesting article here.  My response is in the comments, and below.

The situation is both better and worse than you describe. The government has changed its 25% SME target from an aim, to an ambition and currently an aspiration. Presumably next year it will be a vague hope. It includes in its definition of SMEs the PPI companies established to run very large projects, which are not the sort of SMEs we all think of.
On the positive side, Francis Maude of the Cabinet Office (and David Cameron) do not appear to have forgotten the aim, despite Eric Pickles drive to consolidate spends (usually with larger suppliers).
Also many of the councils are recognising the benefits of using small (local) contractors, and some such as Leeds City Council have done away with the financial constraints on turnover and insurance for small contracts.
What you have to remember though is that Public procurement is NOT the same as private procurement - the priorities always have to be legal compliance, avoidance of corruption, and a fair, open and defendable process. Value for money inevitably comes further down the list than it does in business. We all contribute to that - when public procurement goes wrong we immediately ask questions about how and why people spent our money, rather than recognising it was a commercial decision that had some risk and didn't pay off (as we might in our own businesses). That contributes to a "backside covering first" approach in public procurement.
Public rules (apart from turnover and insurance) don't need to be shifted in favour of SMES so much as they need to know how to win business, and the contracts/tenders themselves need to be developed in such a way that SMEs can compete. That is process not legislation.
I'm a big believer in SMEs being involved in Public Sector work, and the government can do more to support it, by for example doing more to explain how it works - it is NOT the  same as B2B.

Incidentally, yesterday was the second of our 2 day Bid Writing and Tendering courses run on behalf of Business Growth Calderdale, for University of Bradford School of Management Knowledge Transfer Network.  A free council supported event to give SMEs the information to help them win tenders (including for the public sector). Two more are planned - September and November 2013 - free to Calderdale SMEs.