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The UK government missed its target last year to direct a greater proportion of procurement spending to small and medium-sized enterprises, despite spending a record £21bn on goods and services by small suppliers.
cabinet office put The 2015 target was to increase central government procurement spending on SMEs to one-third of the total within five years, a deadline later extended to 2022.
Total SME procurement spending will rise by £1.7bn to £21bn in the 2021-22 financial year, according to figures released by the Cabinet Office on Tuesday.
That was equivalent to 26.9 percent of total central government procurement spending, up slightly from 26.5 percent a year earlier. When the target was set in 2015, SMEs accounted for 26%.
According to official figures, only six government ministries have met the 2015 target of awarding one-third of contracts to smaller suppliers (defined as companies with fewer than 250 employees).
The Ministry of Culture, Media and Sport allocates 48.7% of its direct and indirect spending to SMEs – more than any other sector. Indirect spending includes spending that is passed on to SMEs through the supply chains of large suppliers.
Cabinet Office minister Jeremy Quinn hailed the “record-breaking figures” in an official statement, noting it was the fifth consecutive year of increased spending by small businesses, but made no mention of missing targets.
But a Cabinet Office official stressed that the government recently introduced draft public procurement legislation aimed at making it easier for small and medium-sized enterprises to win jobs.
“We recognize that SMEs are not currently being treated fairly. That is why we have introduced the Procurement Bill, which will remove barriers for small businesses,” they said.
Federation of Small Business national president Martin McTague said the government “could view the figures as a success” but it was “significantly below” its own targets.
“Failure to contract with a broad range of businesses is bad for taxpayers,” he said, calling on ministers to “rediscover the ambition to make 33 per cent of procurement spend on SMEs”. That goal must be backed by a coherent plan, “otherwise it’s just window dressing,” he added.
The Procurement Bill will require government departments and other public bodies to consider small and medium enterprises when designing contract tenders to make it easier for smaller suppliers to compete.
This will give small businesses a better understanding of upcoming contracts so they have more time to prepare and build a “central platform” where bidders can see available jobs in each area.
It will also reduce the cost of insurance before suppliers bid on contracts and strengthen instant payment rules, forcing public sector organizations to pay companies within 30 days.
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