Government frameworks are failing SMEs

Over 50 percent of suppliers on existing pan-government frameworks are SMEs, according to the Crown Commercial Service (CCS).

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The public sector is failing to make best use of SMEs available to them through nearly 100 live frameworks, according to the latest stats and testimonials from SMEs.

Over 50 percent of suppliers on existing pan-government frameworks are SMEs, the Crown Commercial Service (CCS) says.

However, they gain just 10.5 percent of direct government spending, equivalent to £4.5 billion, according to the latest publicly available figures for 2012/13. The Cabinet Office says that the figures on SME spending for 2013/14 will be released “later this year”.

The government insists that SMEs gain an additional 9.4 percent of Whitehall spending, equivalent to £4 billion, through sub-contracting arrangements with larger suppliers.

But what is not clear is how much these channels are helping the government to achieve its aim of enabling SMEs to gain 25 percent of Whitehall spending by 2015, rising to ‘at least’ 50 percent for spending on ‘new’ government IT.

Most frameworks 'haven't worked well' for SMEs

A common complaint among SMEs is that they are already on government frameworks but fail to win any work despite their best efforts.

These include ‘dynamic’ catalogue-style frameworks such as digital services and G-Cloud but also contracts for a wide range of services including telephony, printing, office supplies and recruitment.

For example, the Digital Services Framework (DSF) was launched in November 2013 with 183 suppliers, 84 percent of which are SMEs. But SMEs gained just 30 percent of the £2.3 million spent through DSF on nine contracts as of May.

Jadu, a software SME that has won work in local and central government, told ComputerworldUK that most government frameworks in the last five years ‘haven’t worked that well’ for smaller companies.

The SME’s founder and CEO Suraj Kika explains that frameworks are often “more of a sales channel you take a customer through, rather than a marketplace where opportunity finds you”.

Further, the company’s experience on DSF “has not been great,” he says. “When you win a contract, there is no guarantee of it materialising into actual work.”

He adds that the framework focuses on getting the ‘best people at the lowest price’, which works well for staffing and recruitment agencies with a roster of contactors, but less well for SMEs ‘whose most value asset is its people’.

He is nonetheless more positive about G-Cloud: “I'm a big fan,” he says. “However, the challenge is still education in government procurement and short contract length. The CloudStore also needs more moderation as many suppliers spam listings.”

Sub-contracted work is not the same

Zoe Cunningham, managing director of software SME Softwire, blasted the lack of progress made by the government on achieving its spending goals at a TechUK event in May.

She said: “The government is not backing up the 25 percent target with engagement with SMEs. We haven’t seen much progress with it. And they are being very overambitious with the 50 percent target. We’re nowhere near it.”

SMEs have also expressed frustration at a tacit acceptance by government that in order to win government work, many of them will have to rely on acting as sub-contractors to big suppliers.

At the TechUK event in May a chief executive of an IT consultancy who wished to remain anonymous, said: “SMEs would much rather work with government directly.

“Going through an SI [systems integrator] means we have to teach the SI what we do, who then has to teach the department. It doesn’t make sense and delays the process hugely.”

Procurement reforms

The government has promised to ensure more SMEs win public sector contracts by introducing procurement reforms by the end of 2014.

The reforms have been in force in central government since 2011, but CCS now hopes to expand them to the entire public sector.

The plans include abolishing pre-qualification questionnaires (PQQs) for low value contracts and standardising them for high value ones. They will also ensure all new contract opportunities are published on the Contracts Finder website and that all suppliers are paid within 30 days.

CCS said it will focus on improving engagement with suppliers before procurements begin and also work to ensure contracts are ‘of the right size’ to encourage more bidders, according to a post on the CCS website.

Many of the policies were recommended by Lord David Ivor Young in his May 2013 report called ‘Growing Your Business’.

However the reforms will now have statutory backing thanks to the “Small Business, Enterprise and Employment Bill”, which is expected to be signed into law by the end of this year, CCS told ComputerworldUK.

On its website CCS said: “We know SMEs can offer customisation and flexibility and provide direct access to expertise and innovation, so where SMEs offer best value for money we want our customers to be contracting with them every time.”

The Crown Commercial Service was launched in autumn 2013 to bring together government’s central commercial function into a single organisation.

CCS includes the Government Procurement Service and various commercial teams within the Cabinet Office and central government departments.

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