Getting Full Value from SME suppliers

DEPARTMENT FOR WORK AND PENSIONS

Stephen AllottCrown Representative for Small & Medium Enterprise11 March 2014

What is an SME?

2 Getting Full Value from SMEs

Staff Turnover, €m

Micro <10 <2

Small 10 to 49 2 to 10

Medium 50 to 249 <50

SMEs must be “autonomous”. There is a complicated definition of autonomy but it means not owned nor controlled by another enterprise

EU headquartered

SMEs retain their SME status if they outgrow the limit for both the rest of that financial year and the whole of the following financial year

3 Getting Full Value from SMEs

Key SME Programme Reforms

Changing buying behaviours and supporting achievement of the 25% aspiration

Direct spend with SMEs has increased

4

% of total Central Government spend on Goods and Services

In FY12/13

9.4 % is spent indirectly with SMEs

10.5% is spent directly

FY11/12 vs FY12/13 direct spend

7 key steps to working with SME suppliers

5 Getting Full Value from SMEs

1. Understanding that the goal is “Getting Full Value from SME suppliers” This means buying from an SME supplier every time they are the best value for money.

2. Setting Optimal Contract Sizing i.e. Knowing when Big is Beautiful and when Small is Beautiful

3. Using optimal lotting structures

4. Getting the Best (SME) Bidders Bidding

5. Getting them to Do Good Bids (we already have a fix for this by hosting bidding skills seminars)

6. Winning the hearts and minds of the customers (to be happy to buy from suppliers new to them)

7. Avoiding common pitfalls in delivery by providing appropriate help in contract management to both buyers newly buying from an SME and to SME’s supplying for the first time.

The EU directive will help

6 Getting Full Value from SMEs

 ¶ Transposition within 2 years but planned for late 2014  ¶ Buyers will have to sub-lot or explain their reasons. The Recitals suggest that reasons could include restricting competition or making execution hard. ¶ Turnover caps limited to 2 times the contract value  ¶ Buyers can limit the number of lots any one bidder can win ¶ Pre-market engagement explicitly permitted ¶ Greater use of supplier self-declarations where only the winning bidder has to submit

certificates ¶ Poor prior performance is explicitly permitted as grounds for exclusion ¶ Simplification of the rules on Dynamic Purchasing Systems ¶ Ability to reserve awards to VCSEs for a limited period ¶ E-marketplaces expressly permitted ¶ Minimum times for responses are cut by a third to allow for faster procurements

Further opportunities

7 Getting Full Value from SMEs

1. Moving away from risk aversion and taking a proportionate approach to risk

2. Being driven by customer needs rather than procurement processes

3. Make more use of SBRI

4. Mobilise the supply chain to increase their use of SMEs and encourage prompt payment

GDS are driving change from the heart of Government

5

Exemplar projects

Oversight of central

government projects

New procurement

channels

GDS

127 digital projects 25 exemplar projects including: Electoral

registration, Rural support (CAP), PAYE for employees, Criminal Record Check & Visa Applications

Approve technical aspects of projects Facilitate pre-market engagement with

departments Advise on technical architecture Build skills & drive behavioural change in

departmentsPromote Open Standards

G Cloud Digital Services Framework (DSF) Simplification of the framework tendering process

SME spend on G-Cloud is going from strength to strength

8

G-Cloud 3 83% of suppliers

are SMEs 58% of total spend

is going to SMEs

G-Cloud 4 84% of suppliers are

SMEs

£m, invoices

Through G Cloud SMEs win over two thirds of Central Government IT business

%, invoices

Improving the Cloudstore means...

Making it easier for suppliers to upload catalogues

Simplifying the accreditation process

Increasing awareness of the Cloud store amongst the Government customer base

12

Expanding the product range on Cloudstore to meet the needs of Government customers

Getting Full Value from SME suppliers

DEPARTMENT FOR WORK AND PENSIONS

Stephen AllottCrown Representative for Small & Medium Enterprise11 March 2014