Government sets out plan to woo small suppliers

The Cabinet Office has revealed a number of measures designed to encourage small businesses to tender for and win government contracts, including caps on IT contracts and a 'dating agency' service
Written by Tom Espiner, Contributor

The Cabinet Office has outlined a raft of measures to make it easier for small businesses to land government IT contracts, including caps, breaking deals up into chunks and a 'dating agency' for interested firms.

Francis Maude

Cabinet Office minister Francis Maude has announced a number of measures designed to encourage small businesses to tender for and win government contracts. Image credit: BIS

The measures, aimed at delivering on the government's promise to enlist more SMEs as suppliers, were introduced by Cabinet Office minister Francis Maude on Friday. The government will start by putting limits on the size and duration of contracts to supply application software and infrastructure IT, Maude said at the Public Procurement Briefing 2012 conference.

"We are introducing set breakpoints, so there's less money locked into large, lengthy contracts, which are actually the bane of our lives," Maude said. He noted that large IT contracts have previously been so unwieldy and expensive that they have plagued governments.

The caps come in on Friday, the Cabinet Office said. For application software contracts, the breakpoints will be every four months, and for infrastructure contracts, every 12 months. These will allow the government to take stock of the contract, to see if the relationship is working, according to the Cabinet Office.

Tendering will also be made more accessible to small businesses by breaking contracts into their constituent parts. The government plans to begin "chunking-up contracts into modules of a scale that IT suppliers can aim for", Maude told ZDNet UK.

The government is on track to award 13.7 percent of its contracts to SMEs by the end of the financial year, according to the minister. Its "aspiration" is for 25 percent of contracts to go to small businesses, but it cannot set that figure as a definite target, Maude said.

"It would be illegal to say 25 percent has got to go to SMEs, because that would skew it to the UK market too much," he told ZDNet UK.

Small firms will be paid at the same time as large suppliers for contracts, as "timely access to cash is of course critical to the survival of many SMEs", Maude said. 

'Dating agency'

In addition, the government plans to begin setting up meetings between small businesses and government departments, so its buyers can get an idea of what the firms can offer at an early stage of the procurement process. The 'dating agency' idea builds on the Cabinet Office's 'Dragon's Den' initiative announced in April last year.

"We will trial an SME 'dating agency' service that will help departments to identify and engage with innovative SMEs at the earliest stage of the procurement process," Maude told the conference.

The idea is to "take one segment of the market and do speed-dating" between firms and potential government buyers, Liam Maxwell, ICT futures director at the Cabinet Office, told ZDNet UK at the event. "We need to know who's out there, and link up with them," Maxwell said.


From April, government customers will also have an online tool to informally post wishlists of what they want to achieve, according to Maude. The tool will allow small businesses to respond with offers.

Companies that wish to sub-contract will be encouraged to form consortia to choose systems integrators (SIs), rather than systems integrators choosing subcontractors, Maude told the conference. In the meantime, nine systems integrators and large enterprises have signed up to publish details of sub-contracting opportunities on the Contracts Finder website. These are HP, Airwave, Amey, Balfour Beatty, CapGemini, Capita, Level 3, Logica and Serco.

The government plans to extend its 'Mystery Shopper' trial, which gives small firms a place to complain about inconsistencies in its procurement process. By mid-February, a year after starting, the trial had seen 151 cases, of which 111 cases had been closed.

As another check, small businesses will be asked to give government departments a star rating to show how well they are working with suppliers. The first department to be rated will be the Cabinet Office in May.

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