December 2, 2023

The Procurement Act – positive news for SMEs

Small and medium sized enterprises will be cautiously celebrating with the announced Procurement Bill gaining Royal Assent.

For us, it is recognition of a problem we have known and experienced for many years – that #SMEs do not have the same resources as multinational and global corporations and therefore are severely hampered in public sector procurement. I am sure I speak for many when I say I am looking forward to the new Act being put into practice. But it still needs to be put into practice.

We are customer driven to achieve the same environmental, social and governance targets as larger tendering firms, and to undertake that as quickly as possible. But SMEs are presented with a challenge – we do not have experts in every discipline, and many smaller companies need help, support and understanding in reaching those targets. Often achieving those can be triggered by winning the very tenders we are trying to achieve the targets for. The Government cites insurance as one of those areas – this is important, but it is only one example.

Challenging the status quo

To challenge the status quo and drive price reductions across government procurement in the long term, smaller, more agile entities must have the opportunity to compete. This Act promises to do that.

This chance could result in smaller management consulting firms tendering alongside their global competitors, or manufacturing companies similar to EUMAR TECHNOLOGY LIMITED competing against conglomerates. But again, the public sector needs to open that door of opportunity and that means having to break the mould of going for the same old suppliers. SMEs have a staggering amount to offer.

One of the things the public sector can do is to weight by size and resource of the organisation – moving away from unit price and cost, to value. Look at the lifecycle of the product or service and the cash flows associated with it. Simply taking that step will improve long-term decision making within the public sector.

Perceiving an unequal playing field

One of the insurmountable walls SMEs face is the public sector’s bold and impressive statements about compliance and non-financial performance metrics. Yet at the same time, we are seeing multiple examples of breaches and inaccuracies portrayed in the media by often much larger organisations.

Verifying the truth of those claims and statements should be at least as important as the initial assessment. But in truth there seems to be limited reflections made public resulting in the door remaining shut on SMEs who can offer more value and a different approach.

Ask us!

The Procurement Act calls on public procurement teams to take action to reflect on, and reduce the many barriers facing SMEs winning tenders. But it is crucially important this is not an internal process of reflection. The public sector needs to ask for help.

SMEs are usually willing to share insight and knowledge. The senior management peers I speak to are always willing to discuss how to improve their sector. We have a lot of experience of competing for tenders or, if I am being honest, being put off by the criteria for applying.

The Government talks about SMEs getting a bigger share of the £300bn on offer. But until it happens it is only written on paper and in a press release. But the intent seems to be there, which is fantastic.

The public sector is facing unprecedented levels of cost and pressure. I am not saying the new Procurement Act will solve those issues but with SMEs making up the majority of employees and skills in the UK, we can bring a lot to the table.

I believe that by embracing vibrant, exciting SMEs in those very sectors where pressure is the most intense, the public sector can benefit from our insight, our innovation and our value.

Let’s work together to make it happen.