Making Public Procurement More Accessible

Without doubt, small to medium enterprises (“SMEs”) are big business.  Last year’s government figures speak for themselves – they accounted for 99.9% of the UK’s 4.8 million private sector businesses, 59% of private sector employment and 48% of private sector turnover at the start of 2013.   With this in mind, the government has unveiled plans to assist SMEs with accessing public sector contracts. 

But what does that mean for the public sector? Certainly there has been some positive developments with a report by the Federation of Small Businesses’ finding evidence of good practice across the country with 90% of local authorities taking positive action to assist SMEs.

The government has announced new proposals to make public procurement even more accessible to SMEs.  A four-week consultation starting in September last year outlined a number of “single market” principles aimed at simplifying and standardising the advertising, bidding and payment of public contracts, as well as removing the complexity, cost and inconsistency where SMEs seek to supply to more than one public body. The consultation was followed by the “Small Business: GREAT ambition” paper in December 2013, setting out the government’s programme of policies for SMEs and its commitment to delivering economic growth. 

One of the key drives is to make it easier for SMEs to break into new markets, which has until now been difficult as they lack the contacts, expertise and resources of larger businesses.  In particular, one of the most common complaints in the past has related to the administrative burden that the procurement process places on SMEs and the lack of standardisation of Pre-Qualification Questionnaires (“PQQs”). Some of the changes announced will be of considerable benefit to public bodies as well:

The procurement system is to be streamlined to minimise the burden on bidders.  Firstly, PQQs are to be abolished for low value contracts (below £173,934, the current EU threshold for goods and services procurements), recognising that this can create unnecessary barriers for SMEs applying for public contracts and substantially increase the time and costs of tendering.  Secondly, there will be a standard core PQQ put in place for high value contracts. The abolition of PQQs for low value contracts is likely to be welcomed from both sides and standardisation will hopefully produce savings all round but there may well be public bodies that have concerns regarding this – how will public bodies ensure that bidders have the right skills to perform the contract? How can this be objectively assessed without a PQQ and no consideration has been given to the issue that some low-value contracts can be as complex in their requirements as a higher value.

A single online portal will be set up to help SMEs find contract opportunities. Again, streamlining of the process is to be welcomed.

The potential downside is that there will be increased transparency required from public bodies which will now be required to report its spend with SMEs.  Bidders themselves will also be able to use a new rating service called “Spotlight” to judge public bodies on their procurement credentials, and public bodies will be able to rate their suppliers to enhance the businesses’ reputations. There is a risk that increased transparency may result in more procurement challenges.


The “Mystery Shopper” scheme, which investigates reports of unfair treatment, will be extended to spot-checking public bodies to make sure that their procurement process is SME-friendly. Again, there is the risk that increased accountability may result in more procurement challenges.

The government intends to legislate to affect some of these changes, which will be a gradual process and a period of adjustment for public bodies can be expected.  However, it is likely that these reforms will be implemented and the hope is that a leaner procurement system that encourages bids from SMEs will have a number of wider benefits to all.  Greater access to public contracts should lead to benefits to the public sector including increased competition and innovation, which should bring savings to procurement departments and the taxpayer as well as improved quality of service.  It is also recognised that SMEs can provide value for money without necessarily needing the economies of scale of their larger counterparts, and there is also social value to awarding contracts to SMEs and supporting local jobs.

Further government announcements on the detail and timescale of these proposals are awaited.


Chris Tyrrell and Daniel Collin are from Hill Dickinson LLP

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