Partner Article

Procurement reforms have hindered SMEs and social enterprises

Changes to the procurement process have made it harder for small businesses and social enterprises to win public contracts, a Government select committee heard on Tuesday.

Improvements have been made to the procurement process for public services since reforms were implemented in 2011, however third sector and small business experts warned there is still a way to go.

The Government launched its procurement reform programme two years ago with the hope of reducing public body spending while still providing excellent public services.

The Public Administration Select Committee met on Tuesday morning, chaired by Bernard Jenkin, Conservative MP for Harwich and North Essex.

Witnesses Peter Holbrook, chief executive of Social Enterprise UK, James Allen head of publish services and partnerships for the National Council for Voluntary Organisation and Mike Cherry, policy chairman for the Federation of Small Businesses (FSB) all agreed improvements had been made, but further changes are required.

Commenting on the progress already made in the procurement process, Mr Cherry said although the cabinet office had “clearly understood” past grievances, awareness of the changes amongst small businesses still needs to be enhanced.

Mr Allen agreed, and commented: “What we’re seeing initially is a real interest in involving small business and social enterprises but a lack of experience and cultural understanding around how to do that.”

One key issue identified by the three witnesses was that the Government has upscaled contracts to improve efficiency, but this has created a major barrier for social enterprises, charities and small businesses.

Mr Holbrook, formerly of Green Peace, Oxfam and The Body Shop, commented: “There are a number of very positive developments against the backdrop of significant public sector cuts.

“There is a tendency for the aggregation and upscaling of contracts in the belief that it will create greater efficiency.

“Unfortunately what that has is a perverse consequence which limits the opportunities for small providers, often those who have the ability to innovate, create alternatives and transform public services.

“That actually stifles innovation and competition while we actually need a greater role for social enterprises, charities and small businesses to play a part in public service.”

He added: “Our evidence suggests social enterprises are least confident about the future role they may have in delivering public services currently.”

The Social Value Act, which went live on 5th January, was implemented to ensure a full social value and environmental benefits on all government contracts.

Although too early to assess the impact of the Act, the committee witnesses praised government efforts to cut red tape.

Mr Holbrook also welcomed the Cabinet Office mystery shopper service, which allows people looking for contracts to comment on bureaucratic obstacles, as well as the contract finder service set up by the Government.

The witnesses advised the Government to make improvements to the pre-qualification questionnaire for organisations bidding on contracts, to make contracts fairer and to address issues around late payments in its next steps towards reform.

This was posted in Bdaily's Members' News section by Miranda Dobson .