Small Businesses

House of Lords written question – answered on 30th March 2006.

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Photo of Lord Ouseley Lord Ouseley Crossbench

asked Her Majesty's Government:

What lessons were learnt from the small to medium-sized enterprises procurement pilot projects led by the Office of Government Commerce in the West Midlands and the Department of Trade and Industry's Small Business Services in Haringey.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation)

The pilots demonstrated that direct action with procurers and small businesses can result in increased levels of small businesses tendering for government business. During the pilot project in the West Midlands (June 2003 to June 2004) over 500 small businesses and 17 partner organisations from central and local government participated. At the start of the pilot, 14 per cent of the small businesses had successfully tendered for government contracts. Of contracts awarded through the pilot's opportunities portal at 30 June 2004, 26 per cent were won by small businesses helped in the pilot, and 26 per cent of businesses involved in the Haringey pilot increased their turnover.

The following lessons were learnt:

1. That small businesses liked and used the central portal on which public sector procurers advertised opportunities. Subsequently the Office of Government Commerce (OGC) has supported the Small Business Service (SBS) to develop a web-based national opportunities portal on which public sector procurers can advertise contract opportunities easily accessible to small businesses (mainly those of a financial value beneath EU thresholds). The portal is due to go live in spring 2006 1 .

2. That it will help if government develop supply chain guidance that raises awareness of the potential of small businesses among key suppliers to government. The Haringey pilot found that prime contractors in some sectors were more open to developing supply chain activities than in others, and recommended engagement with key prime contractors at a national level. As a result of the pilots, OGC has developed guidance on supply chain management and is working with both key suppliers and procurers to ensure that opportunities for small businesses in their supply chains are visible and accessible.

3. That training for small businesses on how to tender helps small business to win tenders. The Small Business Service has worked with the nine regional development agencies to train over 3,000 small businesses based on content produced by OGC.

4. That training for procurers is necessary to complement small business training and to encourage consistency. Over the past 12 months OGC has trained over 800 procurers nationwide focusing on the benefits of appropriate use of small businesses and a diverse supplier base; and how to remove obstacles.

5. That a standardised pre-qualification questionnaire (PQQ) is a useful tool to cut down on bureaucracy. OGC has developed a standard, simplified pre-qualification document based on a self-certification model, specifically for use in procurements with a financial value beneath EU thresholds, and is now leading on the nationwide promotion of its use.

6. That good practice and experience need to be shared. Haringey Council has disseminated its experience from the pilot to other boroughs though the London Regional Centre of Excellence.

7. That local authority procurement processes should be explained on council websites—the SBS, Office of the Deputy Prime Minister and the Local Government Association have promoted this through the small business concordat (a voluntary, non-statutory code of practice which sets out what small firms and others supplying local government can expect when tendering for local authority contracts).

8. That the link between procurement strategy and the local community strategy should be recognised. The OGC has published guidance on the use of social clauses in procurement.

1 (EC directives apply to public sector procurements above certain monetary thresholds. For central government, these thresholds are approximately £100,000 for goods and services and £4,000,000 for works)

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