Concerto have featured on Public Technology.net today as Kevan Davey, Concerto’s Managing Director, talks frankly about the challenge of getting the SME into government work.
The article is as below, if you would like to see the original article please go to Public Technology.net
‘The real reasons SMEs don’t bid for public sector work’
The Cabinet Office and the PM have spoken a lot recently about how SMEs and start up businesses have the ability to fuel the growth the UK needs to aid Britain’s recovery from the recession.
But from where I’m currently sat as an SME technology company that deals mainly with local authorities, as well intended as David Cameron may be, it’s clear that where the public sector is concerned, there are still many barriers to SMEs tendering for contracts. Current procurement practices still make it very difficult for SMEs to apply for and win government contracts.
The problem: many SMEs simply don’t have the knowledge of where to begin to tender, and in many cases the guidance from local authorities in terms of how to go about it, what you must have in place to be eligible to pitch in the first place and how to best present your company to stand any chance of success is hard to find on authority websites and not particularly helpful.
Complexity
I get weekly emails from private sector organisations who have realised that there is money to be made from this complexity and offer their services in the form of training courses to attend to learn how to pitch for public sector contracts. The fact that entrepreneurs have spotted a gap in the market place fuelling an entirely separate training industry around the complexity of public sector procurement clearly identifies that there is a problem with the current situation
The overall attitude to ‘risk aversion’ by public sector organisations is the single major hindrance to local authorities engaging with SMEs. It’s fair enough that local authorities, when spending tax payers money, want to know that it’s being spent “safely”; that companies with which it engages do not suddenly go out of business or where there are maintenance contracts, are doing their job safely and within Health & Safety guidelines, but there are varying degrees of risk which should be dealt with differently to each other. Should a company supplying stationery or installing a new technology system be subject to the same strict measures as an asbestos contractor for example? The criteria and tender process to supply paper clips, is currently the same as anything else even though the risks are enormously different. And it can take between three and six months to get a decision, sometimes longer. What SME with limited staff resources can afford to dedicate such an enormous amount of time to be rewarded with a standard sized contract?
This attitude to risk aversion is inhibiting SMEs from tendering for contracts in the first place; it seems too much effort for little reward at the end. Which brings me to the hoops that SMEs must jump through before being allowed to tender.
Many authorities insist that a company must have been in business for three years, and have three years worth of accounts to show. They require public indemnity insurance, employers insurance, recognised quality systems, as well as environmental policies as part of the initial assessment. In a recent bid I have been involved with the council required £10,000,000 worth of professional indemnity insurance for an IT contract worth £40,000. Another authority set a bar of companies having £1,000,000 turnover as a minimum requirement as part of the initial pre qualification assessment.
Until the Coalition alters the public sector’s attitude to risk and much of the red tape pre, during and post tender, SMEs will focus their attention on other private sector contracts which are decided faster, are often more lucrative and require much less employee time to bring to fruition.
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