A few days ago I wrote here about some questions from a small group of Conservative MPs and the responses from the Parliamentary Secretary for the Cabinet Office, Julia Lopez. The theme was public procurement for “Small Businesses” and one of the MPs who took part was Caroline Ansell from Eastbourne. Because she is a local MP that is how I initially spotted the debate. Three of the questions which came from Caroline and two of her colleagues were identical “What steps the Government are taking to increase opportunities for small businesses to bid for Government contracts.” The other version which came from Danny Kruger included a reference to “the small and medium-sized enterprises sector” The first half of the initial response from Julia Lopez was
“The UK spends £290 billion on public procurement each year. Now that we have left the EU transition period, we aim to make it simpler, quicker and cheaper for small and medium-sized enterprises and social enterprises to bid for Government contracts, as set out in our ambitious procurement Green Paper.”
It is clearly very important for all of us to be able to understand what the Government is intending to achieve so that we can either support them or challenge them if we disagree either through the mechanisms they open up or via our local MPs. That is particularly important in cases when they are asking for responses from those of us who are involved in business which in this case they want by the 10th March which is only two and a half weeks away. Although they did actually publish their document on 15th December I did not find out until a few days ago and that was because a local MP took part in the discussion. Perhaps we need the Government to be a bit more open when they have requirements such as this.
Given the request for us to respond it would have been reasonable if the Conservative MPs and the Government could have stuck very carefully to the subject which they claim they want. Sadly what they having been saying in public along with their written definitions have lacked clarity on subjects that many of us are very familiar with. The questions I have referred to which took place on the 11th of February were under the title of “Government Contracts: Small Businesses” and the website page on which they have set out their request for responses is entitled “Open consultation Green Paper: Transforming public procurement” As I have already pointed out here briefly and a few days ago with a bit more detail, the MPs and the Minister have referred about Small Businesses but also they have referred to Medium Size Businesses and SME’s and yet in doing so so far they have not referred to Micro Enterprises even though an SME reference is meant to include Micro, Small and Medium Sized Businesses.
The website provides us with two documents, one is the 82 page explanation under the heading of Green Paper: Transforming public procurement and then there is a 3 page document with a list of questions entitled Consultation questions. The Green Paper begins with a Ministerial forword and the author of this is Lord Theodore Agnew who among other matters states this
The Government has already reviewed the Green Book to ensure it supports “levelling up” and is taking other steps for example through the National Infrastructure Strategy to ensure vibrant and resilient supply chains.
Now I have no idea what the difference is between a Green Paper and a Green Book. Perhaps that is my ignorance or perhaps this is a classic example of how the Government and some of the MPs are incapable of being clear about such matters. My initial search of the Green Paper or Green Book was the references to the businesses that they are focusing on. The following reproductions show what has been published under the following themes. There is only one large business reference, one medium size business reference, 19 small business references, and two start-up references. I am delighted that there were no SME references although the most deeply concerning information is that in both the debate in Parliament and in the document THERE WERE NO REFERENCES TO MICRO ENTERPRISES.
The UK spends some £290 billion on public procurement every year. This huge amount of government spending must be leveraged to play its part in the UK’s economic recovery, opening up public contracts to more small businesses and social enterprises to innovate in public service delivery, and meeting our net-zero carbon target by 2050. The Government has already reviewed the Green Book to ensure it supports “levelling up” and is taking other steps for example through the National Infrastructure Strategy to ensure vibrant and resilient supply chains.
The Government’s goal is to speed up and simplify our procurement processes, place value for money at their heart, and unleash opportunities for small businesses, charities and social enterprises to innovate in public service delivery.
The procurement procedures for awarding public contracts can be restrictive and create complexity and confusion for buyers and suppliers. This stifles innovation and deters small businesses and start-ups from ever bidding for public contracts. We can get rid of duplication and bureaucracy, making the system more agile and flexible while still upholding fair and open competition. The Government proposes replacing the outdated procurement procedures with a new procedure which will allow for more negotiation and greater engagement with potential suppliers to deliver innovative solutions in partnership with the public sector.
The Government wants to open up public procurement to a more diverse supply base, making it easier for new entrants such as small businesses and voluntary, charitable and social enterprises to compete and win public contracts.
We can act now to raise the bar on the standards expected of all suppliers to the public sector and ensure that outstanding small suppliers are able to secure more market share, increasing productivity and boosting economic growth.
Much of the bureaucracy that suppliers complain about in a public procurement process arises because of the fear amongst buyers of a decision being challenged in the courts. Most of this comes from ambiguity in the procurement regulations that create a particular vulnerability in the supplier selection and contract award stages. The current processes for legal review cost too much time and money; small businesses in particular find the process too resource-intensive to pursue. In this Green Paper we look at the options to reform the legal review system as well as tackling claims over minor issues that delay contract awards. We want to tackle vexatious claims which slow down delivery and speed up dispute resolution.
In producing this Green Paper, the Cabinet Office has engaged with over 500 stakeholders and organisations through many hundreds of hours of discussions and workshops. This has included stakeholders from central and local government, the education, and health sectors, small, medium and large businesses, the charities and social enterprises sectors, academics and procurement lawyers.
The Cabinet Office is also responsible for the Public Procurement Review Service (PPRS). The PPRS was established in 2011 (then known as the Supplier Feedback Service) to informally investigate concerns raised by suppliers, particularly small businesses, relating to public procurement practice in England (similar functions operate in Northern Ireland, Scotland and Wales) and support continuous improvement across the public sector. The PPRS has statutory powers set out in the Small Business, Enterprise and Employment Act 2015 to investigate the performance by contracting authorities of their functions including actions relating to entering into a contract and the management of that contract. The PPRS publishes its findings but it does not have powers to enforce them or make judgements. Since 2011, the small team in the PPRS has investigated over 1800 cases and unlocked over £8m in late payments owed to suppliers both by contracting authorities and in the supply chain.
There are currently too many sets of regulations with overlapping and complex rules. They are challenging to navigate for commercial teams and suppliers alike. The procurement regulations are particularly burdensome for small businesses.
This will not only benefit contracting authorities but improve the experience for suppliers, removing bureaucracy and making it easier for start-ups and new entrants to public sector markets to access these opportunities on an equal footing.
There are also relevant factors beyond this, such as pre-procurement processes related to R&D and award, the Small Business Research Initiative (SBRI) and the PreCompetitive Procedure to engage and support industry more comprehensively.
This proposal is not without risk. Removing the link to subject matter of the contract may introduce a barrier to small businesses as the procurement may have requirements that are perceived by some as disproportionate.
The evaluation must address the quality of the product or service supplied by the supplier, its efforts to control costs, its timeliness and compliance with schedules, its conduct of management or business relations, its performance in subcontracting with small businesses, and other applicable factors (e.g., payment of tax).
In this new open framework, new entrants have the opportunity to be awarded a place on a framework agreement during its term. This would be of particular benefit to small businesses in facilitating their access to procurements because they have more opportunities to participate.
Our procurement review system is a traditional court-based system; it is rigorous, thorough and trusted, but suppliers and contracting authorities tell us it is also lengthy, expensive and complex. Small businesses, charities and social enterprises in particular find the process too costly to pursue.
However, we recognise that the rigour and structure that contribute to its excellence can be a hindrance in cases where a quick resolution is sought or for businesses (especially small businesses, charities and social enterprises) who may not be able to bear the cost of a lengthy process.
We propose legislating to further tackle payment delays in public sector supply chains and give small businesses, charities and social enterprises deep in the supply chain better access to contracting authorities to expose payment delays.
Prompt payment is a significant problem for many businesses, including small businesses within public sector supply chains.
smaller suppliers were more likely to receive four and five star ratings and less likely to receive one star ratings, compared to larger businesses.