New research suggests government contracts promise yet to be fulfilled
The UK government recently set a target of awarding 25% of all contracts to SMEs by 2015, but a new report shows there is a considerable way to go.
According to the ‘Making government business more accessible to SMEs: Two years on’ report, the figure is current hovering around 10.5%.
It isn’t all bad news though, as it represents a 4% rise since 2009, although it appears the government target is unlikely to be reached.
If the current growth trend was to stay the same, the figure by 2015 would be around 15%, a staggering 10% behind the target.
These figures represent a massive opportunity for businesses in the public sector, if government practices can be improved.
Chloe Smith MP, minister for political and constitutional reform, has highlighted that the government is aware that the growth is not being experienced at the desired rates.
“These figures are encouraging, but clearly more needs to be done to reach our 25 per cent aspiration,” she said.
“We are clearer about the task ahead; we have much better data than in the past and, through our ongoing engagement with SMEs, a better idea of the remaining ‘roadblocks’ that we need to tackle.”
If more SMEs can enter the public sector then the market should become more competitive, which could then see widespread advantages for the economy. The alternative could see companies turn to measures involving significant business restructuring in an attempt to survive.
It is, however, also a case of ensuring that both parties involved support each other, as many SMEs cannot take on the financial risks that their larger competitors might be able to.
The Department of Innovation and Skills recently released another £116 million worth of funding for businesses to improve the global competitiveness of their supply chains.
This came via the Advanced Manufacturing Supply Chain Initiative and is at least a starting point in a bid to help SMEs in the public sector.
Next up, the government will need to find a way of judging each individual business on its own merits to decide how public contracts can assist.
By Phil Smith