In a speech on economic development in January this year, UK Prime Minister David Cameron addressed the need to develop businesses in sectors that will be key to the UK’s economic future. The government’s plans to foster development include direct changes to government procurement practices to foster contract awards to innovators.
The Prime Minister acknowledged a tendency for government agencies to take the safe path, passing over well qualified smaller companies in favour of the big service providers. For years it was said “Nobody gets fired for buying IBM”. In government circles it seems the same could be said for entrenched service providers like Accenture and Capita (see Cameron’s speech on Government Procurement from February this year).
Now, all government departments are being urged to consider smaller, regional suppliers of goods and services. The Government’s goal is to award 25% of contracts to small and medium enterprises (SMEs). This echoes Cameron’s pre-election opinion that public procurement needs to move towards “a culture that’s a little bit more experimental and is prepared to take a bit of a leap sometimes with a small organization.” This includes ensuring that businesses that are “inventive and doing exciting things” win contracts to supply services to government, rather than simply awarding work to “the big players.”
The market is bracing for a shake-up in the UK’s public procurement rules to make it feasible for smaller players to compete effectively, even if they don’t have a mountain of pursuit money or specialist departments to monitor compliance. Two driving principles are transparency and simplicity.
At the EU level, the European commission is consulting on the simplification of public procurement rules.
In the UK, the government now publishes the full tender and contract documents for all newly awarded central government contracts worth over £10,000. A new service, Contracts Finder, also acts as a repository of information on small and large live bid opportunities, making it easier for smaller companies to identify potential sales.
Improvements to government procurement practices making it easier for capable smaller operators to win business will always be welcome. Hopefully, these changes will also reduce the need for government decision makers to engage in mind-bending creativity to keep more than one “compliant” bid in the running. The big suppliers with proven national scale might not be losing sleep just yet, but the desire for change is in the air.