Government 'far off sub-contracting target'

A coalition government pledge to boost small businesses by giving them a 25% share of the state's contracts has floundered, a body of enteprise advisors says.

UK200Group, consisting of independent lawyers and accountants, found that 92 per cent of contractual orders from the government still go to major corporations.

This is despite coalition ministers agreeing when they came to power to reserve a quarter of all external orders with owner-managers in the SME sector, quite apart from the promise to end the era of mega IT contracts.

In fact, only 7.8 per cent of state contracts were placed with small firms in the three months to September 2011, figures for 10 departments show, suggesting the initiative has “barely got off the ground”.

This is tantamount to “ignoring SMEs”, UK200Group added, pointing out that such smaller suppliers accounted for only £227m in contractual orders - out of a total of £3.6bn for the period.

“That the government has not been able to grant more contracts to small or even medium-sized businesses is no surprise to anyone who has tried to go through the hurdles of Pre-Qualification Questionnaires  and tenders,” said Jonathan Russell, of accountancy firm Rees Russell.

“The problem is that government has no concept at all how to approach small businesses, has no understanding how small businesses work and presumes that small businesses have procedures and policies in the same way as big companies.”

He believes the “fundamental flaw” is in civil servants’ mindset, proven, he said, by officials still talking about how small firms ‘need to learn how to sell to government.’ 

“It is the Civil Service that need to learn how to be buyers; as long as the Civil Service presumes that people should sell to them, they will continue to waste public money,” Mr Russell argued.

“The whole current procurement system is from its past track record proved as flawed by the overspends, under delivery and lack of control.  A plea to government - don't run courses for SMEs on how to sell to public bodies, run courses for the public bodies on how to buy.”