Alan Muse comments on the government’s public sector procurement reforms.
Alan Muse
With the government spending £230bn annually on public sector contracts, they offer a huge opportunity for businesses to grow and prosper. However, for too long small and medium sized enterprises (SMEs) have been at a disadvantage in competing against large companies which have the resources to navigate the complexities and opaqueness of the procurement process. This is reflected in the percentage of public sector contracts won by SMEs, which presently stands at 31-38% by value – significantly less than their overall share in the economy.
We at RICS have been vocal about the need for the government to improve SME access to public sector contracts. SMEs are key drivers of the economy and for this reason RICS has called on the government to provide greater support to them and remove barriers impeding their access to public contracts, which are a key means of fostering growth.
There are also advantages for the government in creating a more transparent, open procurement system. Small contractors frequently deliver projects at a comparatively lower base cost than larger, incumbent contractors. In addition, small suppliers often offer more innovative solutions as a result of working with limited resources compared to larger competitors.
We therefore welcomes the government’s reforms of the procurement system to make it easier for SMEs to bid for and win public sector contracts. The government’s plans to create a new website portal listing all construction work, worth more than £10,000, up to 2020 and beyond is a significant step in improving smaller contractors’ access to public sector contracts. The step will do much to help level the playing field between larger and smaller businesses. This measure was one of many recommendations contained within the RICS 2013 Construction Policy. However, we would like to see more action.
There are also advantages for the government in creating a more transparent, open procurement system. Small contractors frequently deliver projects at a comparatively lower base cost than larger, incumbent contractors.
We would urge the government to avoid including projects already attached to major contractors on the portal as they offer limited opportunities for SMEs. In addition, to further support smaller suppliers in the selection process, we advocate the creation of another single portal where SMEs can register their accreditation and references. This portal should make it easier for public bodies to vet contractors as the key selection criteria will be available on one site and therefore should encourage public bodies to consider appointing smaller, lesser known contractors.
Government plans to eradicate overly complex and exhaustive pre-qualification questionnaires (PQQs) for low value public sector contracts is long overdue. RICS has been calling on the government to mandate the use of the much simpler BSI produced PAS91 standard pre-qualification procurement form and would like to see the government push forward with its implementation across the public sector. Furthermore, RICS welcomes a standard approach for PQQs, which should also simplify the bidding process.
As well as making public contracts more accessible, the government is right to address the prevalence of late payment to subcontractors by suppliers, which puts added pressure on SMEs. The introduction of an anonymous complaints system to name and shame the companies who pay late is a simple measure that should deter businesses from falling behind on their financial commitments.
In addition to a portal where SMEs can register their accreditation and references, we would like to see the government create a single portal for SME finance allowing them to more easily discover their options and how they can apply for funding. While access to finance is still one of the biggest challenges facing the industry, with many SMEs and regional companies left out in the cold, in many cases SMEs are unsure of where to go to apply for it in the first instance. It is only through easy-to-access and transparent information that finance can cascade down through the regions and from industry leaders to small and micro-businesses.
We would urge the government to encourage SMEs to invest in new technologies, such as BIM. As industry embraces smarter technology and the economy recovers it is vital that SMEs do not get left behind and that the government supports them in adopting new technologies through grants or fiscal incentives.
As outlined within our Construction Policy, we also call on the government to prioritise public repair and maintenance works. While small contractors can apply for larger projects, generally they do not as they often to do not have the necessary resources to complete the works or to compete with larger competitors. Smaller projects therefore offer quicker economic returns for SMEs and act as a catalyst for economic recovery and growth.
The government has made great progress in making the procurement process more accessible for SMEs. However, more needs to be done. RICS calls on the government to continue its programme of reforms to ensure the procurement process is open, fair and accessible to both large and smaller contractors.
We continue to work closely with the government to implement changes to the tender system. RICS is also represented on the Trial Projects Support Group (TPSG) and therefore is in an excellent position to influence future reforms and guidance.
Alan Muse is director of built environment at the RICS. For more information on RICS’ 2013 Construction Policy and its recommendations on procurement reform visit www.rics.org/uk/tag/construction/
Comments are closed.