SME access to local government procurement is part of cost cutting plan

Last week we posted about the Gateley Autumn Seminar Series as part of which David Vayro is presenting on the theme “The Public Sector is still open for business: tips for SMEs”.

One thing we look at is the size of the public procurement market for construction goods, works and services (some £44bn out of a total UK construction spend of £110bn on 2011 figures).

We also look at how central government policy is aimed at promoting SME engagement in that market.

Someone has been listening! Below is an extract from the answers to written questions in parliament on 13 September:

“Roberta Blackman-Woods: To ask the Secretary of State for Communities and Local Government how much was spent by local authorities in procuring goods, works and services in each of the last five years; and if he will make a statement. [117415]

Brandon Lewis: Local authority procurement expenditure in England in each of the last five years is as follows:

Procurement (£ million )
2006-07

51,868

2007-08

54,594

2008-09

57,536

2009-10

61,907

2010-11

61,520

Source: Department for Communities and Local Government Revenue Outturn (RO) returns.
These updated procurement expenditure data have been calculated as the running expenses component of service expenditure net of administration recharges within the authority.

It is clear that there is significant scope for major savings in local authority procurement from the £62 billion spent each year. By making these savings, we can enhance front-line services, save taxpayers’ money and help to pay off the deficit. To encourage that, we are cutting red tape to open up procurement, especially to small and medium-sized firms. While it is up to a local area to decide from whom to procure, local authorities clearly have significant spending power, which should be used to help drive local growth.

Simon Kirby: To ask the Secretary of State for Communities and Local Government (1) what assessment he has made of the implications for his policies of the findings of the Federation of Small Businesses report on local authority procurement practice; and if he will make a statement; [120509]

(2) what steps his Department has taken to encourage and improve best procurement practice by local authorities; [120513]

(3) what steps his Department has taken to encourage local authorities to measure and monitor the proportion of contracts being awarded to small firms in their area; [120514]

(4) what recent steps his Department has taken to encourage local government to make procurement opportunities accessible to small and medium-sized enterprises; [120515]

(5) what recent steps his Department has taken to reduce the barriers in accessing procurement opportunities faced by small and medium-sized enterprises. [120560]

Brandon Lewis: Procurement in local government is a matter for local discretion but the Government is committed to encouraging a more open and level playing field for small and medium enterprises and has taken steps to improve opportunities for them.

Last year the Prime Minister launched a new, free-to-use, online Contracts Finder portal and simplified pre-qualification questionnaire to make it easier and cheaper for small and medium enterprises to bid for public
13 Sep 2012 : Column 310W

sector opportunities. The Secretary of State for Communities and Local Government, my right hon. Friend the Member for Brentwood and Ongar (Mr Pickles), has also made clear on several occasions that he expects pre-qualification questionnaires to be removed for contracts under the European threshold of £173,000.

I welcome the Federation of Small Businesses’ report on local government and procurement. One of its key recommendations was that local authorities should measure and monitor where their procurement spend goes and the impact it has. The Code of Recommended Practice for Local Authorities on Data Transparency encourages local authorities to publish copies of contracts and tenders and also expenditure over £500, (including costs, supplier and transaction information). By increasing transparency in local authority spending, citizens and others are now much better placed to hold their local authorities to account in this regard, including on the proportion of contracts being awarded to small firms in their area.

To support better procurement and commissioning, the Government and the Local Government Association are also opening up access to high quality training products for local authority officers, starting with the Commissioning Academy.

We will be undertaking steps to promote best practice, given the significant scope for major savings in local authority procurement from the £62 billion spent each year.”

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