Public Sector Procurement and SMEs Research

The LSEP recently commissioned research from Sterling Consulting in January 2004 to examine how local SMEs could engage more effectively with the public sector in Leicestershire.

Summary of Research Findings and Conclusions

The public sector is a potentially attractive maket for many SMEs in terms its size of and diversity of requirements. There are attractions for public sector buyers in supporting local businesses of all sizes while continuing to operate a policy of fair and open competition for supply contracts.

Public sector buyers need to consider how SMEs can be encouraged to bid for work with their organisations. The tendency to consolidate smaller contracts into one large contract, strict interpretation of the letter of the EU Directives and insistence on bureaucratic process all tend to act as disincentives to SMEs to engage with the public sector.

More can be done by the public sector to:

• Structure contracts so that SMEs can bid for discrete parts of a larger overall requirement.
• Make SMEs aware of smaller contracts which are coming up and which they might be interested in bidding for.]
• Setting up lists of approved subcontractors which will provide a route through which SMEs can work as an approved subcontractor to a main contractor on larger projects.
• Make SMEs aware of key compliance requirements in the public sector bidding process and help SMEs by developing templates which will ensure that they can meet compliance requirements cost-effectively.

The introduction of e-procurement systems is unlikely to have a major impact on the way in which most SMEs and the public sector engage and trade with each other in the short to medium term. However, e-procurement will help to improve process efficiencies in procurement and should be encouraged on this basis.

For e-commerce and e-procurement to achieve widespread take-up, systems based on a common, open standard (probably XML) are needed. Without this the business case will invariably be destroyed by the need to install expensive interfaces and translation packages. This is the area in which a clear lead from central government is most urgently required.

For more detailled information & key findings:

Resources

Public sector procurement and SMEs research report

A copy of the report can be read here:

• LSEP SME Public Sector Procurement Research Executive Summary (PDF, 38K)
• LSEP SME Public Sector Procurement Research Report (PDF, 154K)

The Procurement Revolution

This research together with new developments in public sector procurement and trading with SMEs will presented at the Procurement Revolution in Leicester on 29 June.

For more information about this important conference: