Transcript Slide 1

Government Procurement from
SMEs
NATIONAL FEDERATION OF BUILDERS PRINCIPAL CONTACTORS’ GROUP CONFERENCE
23 October 2012
Stephen Allott
Crown Representative for Small and Medium Enterprises
The Coalition Agreement
“We will promote small business
procurement, in particular by
introducing an aspiration that 25% of
government contracts* should be
awarded to small and medium-sized
businesses and by publishing
government tenders in full online and
free of charge. “
May 2010
Chapter 2 – Business
* Central Government, by value including
both direct spend and in the supply chain
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Getting Full Value from SME suppliers
We must find instances where SMEs deliver
better value for money than current suppliers
We cannot spend more taxpayers’ money to
increase the SME %
The goal therefore is to Get Full Value from
SME suppliers to reach the 25% aspiration
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SME Programme: Getting full value from SME suppliers
Introduced the
SME Crown
Representative
for SMEs –
they have a
voice at the top
table
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Easier to find
opportunities to
do business
with
Government –
Contracts
Finder,
Dynamic
Marketplace
Reformed the
procurement
process
‘removing
barriers’ –
abolished PQQ
below £100k
services
threshold .
PAS 91 above
threshold
SMEs given
new channels
of comms.
including
Mystery
Shopper
Focus in
departments
and reporting
spend with
SMEs
Big is not
always
beautiful –
starting in ICT
contract length
and size will be
reduced . Goal
is optimal
contract size
for VFM
What does the Construction strategy say about SMEs?
“The industry is highly fragmented with over 300,000 businesses employing
2m workers, over 99% of which are SMEs”
“The Government has investigated, jointly with industry, the use of
frameworks and concluded that well managed frameworks which add value
and are correctly sized are beneficial. On the other hand, “lazy frameworks”
which are unmanaged and wrongly sized can be problematic.
“Fair payment down the Supply Chain has been made a contractual
requirement on all new Central Govt. construction..... Project Bank
Accounts ... will be monitored as a model for the future”
“Enable / encourage a genuinely integrated supply side proposition ...”
“To seek and deliver product and process innovation at all levels of the
supply chain.”
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Update on SMEs in the Construction Sector
SMEs are an integral part of the industry and its supply chains
After 7 years of work, Project Bank Accounts are now the default in
Central Government. Payments via PBAs will be £2b this year rising to
£4b next year. There are pockets of take-up of PBAs in local
Government with central Government providing advice reactively.
In both local and central Government, frameworks are increasingly
awarded by value bands and geographic location.
The focus of Government Construction Strategy has been to level the
playing field enabling SMEs to compete. Getting Full Value from SME
suppliers requires going further. Examples of proactive SME supplier
development are starting to happen; Canary Wharf being a good
example.
Prime contractors are being encouraged to publish opportunities on
Contracts Finder.
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Feedback I have had from the industry over the past year
Late payments are a very big issue
The SME procurement agenda is really crucial for SME contractors
Larger contractors now picking up smaller work which they then sub-contract.
PAS 91 (standard construction PQQ) is still not ubiquitous and needs to be pushed
further
Some SMEs are concerned that the required technology investment in Building
Information Modelling (computerised drawings) is a barrier for SMEs
“Death by accreditation”
Local authorities are the most important area.
Some local authorities are still creating very large frameworks.
Note that Central Government does not have direct influence over local government
procurements
7
Supplier Feedback Service – “Mystery Shopper”
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What are the key issues raised?
Cases per category
Total cases – 276 (31 Aug 2012)
Breakdown of PQQ issues
Total cases – 85
PQQ
85
Procurement Strategy
59
Transparency
Specification
ITT
Financial requirements
36
Length and relevance of
some questions
20
Assessment and
Scoring
31
Process favours larger
suppliers
16
Other
13
9
4
16
216 cases have been resolved. 77% of those with a positive outcome
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Procurements below EU threshold (£100,000) and above £10,000 are now published
on Contracts Finder
Additional data feeds:
- Bit Delta Solutions
- Due North
- Bravo Solutions
From Jan 2011 to Nov 2011;
of 4259 contracts published,
1478 were awarded to SMEs.
10
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Next steps
3 key success factors for the SME programme overall:
 Ensuring each department delivers – with a particular focus on the
largest spenders
 Prototyping the breakdown of larger direct procurements into smaller
contracts which enables getting full value from SME suppliers so that
we have some successful examples on which to build.
 ICT is the most promising area.
 Working with Primes to design and deliver programmes to increase
their SME %
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Reaching out through social media
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