Last edited 17 Jan 2021

SMEs and government contracts

On 10 April 2018, the government announced new measures to make it easier and fairer for small-and-medium-sized enterprises (SMEs) to bid on and win government contracts.

In the wake of Carilion's collapse, which highlighted the government's reliance on large suppliers to deliver contracts, the measures will exclude suppliers from major government procurement processes unless they have fair payment practices for their subcontractors. The proposals will also allow subcontractors greater access to buying authorities to report poor payment performance.

Suppliers will be required to advertise subcontracting opportunities through the Contracts Finder website, and provide data showing how businesses in their supply chain are benefiting from supplying central government.

Each member of the Cabinet has been instructed by the Prime Minister to nominate a Small Business Champion minister in their respective departments to ensure SMEs are given a fair opportunity.

Oliver Dowden, Minister for Implementation, said; "This government is listening to the business community and is committed to levelling the playing field for smaller suppliers to win work in the public sector. We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 - and are doing more than ever to break down barriers for smaller firms."

Federation of Small Businesses National Chairman, Mike Cherry, said; "Each year, the UK public sector spends over £200 billion on goods and services from third parties. As such a large and prominent customer in the economy, the government has a pivotal role to play in demonstrating what it is to be a good client. It is right then that the government today announces, as part of a new package to boost SME procurement, that it will clamp down on poor payment practice throughout public procurement supply chains. Companies who pay late should not be rewarded with public sector contracts. We need a robust public procurement process that holds larger companies to account for their payment practices."

Julia Evans, Chief Executive at BSRIA, said; “After recent collapses of corporate companies in the industry, it is clear that vigorous and transparent payment measures are needed coupled with a public procurement process that holds such larger companies to account for their payment practices. Government has set a challenging aspiration that 33 per cent of procurement spend should be with small businesses by 2022 – and it is doing work to ‘break down barriers for smaller firms’. Indeed: SMEs are the pillar of the UK economy and play a crucial role at all levels in the construction industry. It goes without saying that companies who pay late should not be rewarded with public sector contracts."