The government tendering process and its affect on the small and medium business sector has long been a subject of media attention. Two years ago, the Sunday Times ran a campaign urging for a better deal for small businesses tendering for public contracts. They accused the government of letting SMEs down in this area by focusing too much on the needs of big business. Two years on, and the topic is still a focal point, sparking debate, controversy and a renewed interest in the matter. Matthew Sanders, Chief Executive of the number-one purchaser of temporary labour de Poel, tells how the road to public contracts may be opening up for businesses such as his own, and how he welcomes prospective changes to the system.
In the past, there have been huge and unreasonable barriers to small and medium enterprises tendering for public contracts. The problem has never been a case of SMEs being openly discouraged or barred from participating in the bidding process. The difficulties have actually been routed in the process itself and the way it operates, preventing small or new companies from being shortlisted and making it difficult for procurement directors to open up their supply base. In many cases it has been the sheer complexity of the procedure as well as the jargon used, not to mention continuous bureaucracy, unachievable deadlines and an endless amount of time, paperwork and costs involved which small businesses just haven't been able to keep up with. The need for insurances and other documents, the ISO 9000 for example - a quality-standards certificate only ever required by the public sector - also contributes to the hassle for small companies, rendering their problems disproportionately high compared with larger firms.
For de Poel, the biggest obstacle has lain within the pre-qualification stage of the application process. In a report on SME access to public procurement by the All-Party Parliamentary Small Business Group (APPSBG) in April this year, PQQs are said to be: "especially onerous, discouraging SMEs from registering". Indeed, despite having small and large clients in a variety of different markets, including organisations from within the third sector, care social housing and waste management industries, and irrespective of being the largest procurer of temporary labour in the private sector, de Poel has so far not been in with a chance past the PQQ stage. This has been solely on the basis that we do not already having a public sector client. To say that we have been placed in a 'catch 22 situation' would be an understatement. Nevermind the fact that we are recognised by the public sector themselves for providing a low risk and efficient business model (only charging our clients a percentage of their savings) and tend to score highly on every application answer we give. Nevermind that we have 100% positive customer testimonials and a track record of providing savings of between 6% and 12% for third sector organisations with the tightest budgets of all. Without a public sector client already, we cannot supply a public body, and the only companies who may overcome this problem are those involved in a second tier supply arrangement. Thus, evidently the government has left little room for public sector procurement officers to consider new suppliers, who are blockaded by a mere technicality.
The good news is that change is happening, albeit very slowly. As a result of de Poel's persistence, a notice was recently issued to all local public bodies by the Office of Government Commerce (OGC) in a previous quarterly update, with specific reference to the problem. It urged local authorities and care trusts not to discount companies who don't have a public sector client already at the PQQ stage if they have other relevant experience, as theoretically, this could be contravening fair competition laws. Whether this will initiate radical change is not yet known, but it does pave the way for a revolution in this area, echoing the problems outlined in this year's report on SME access to public procurement by the All-Party Parliamentary Small Business Group (APPSBG) and reiterating the need for the government to open up the system to give public sector procurement directors more choice in their supply arrangements.
The other significant development in the sector is Harriet Harman's equality bill. Dubbed by some journalists as the deputy Labour leader's attempt to seize control of the £220 billion a year of public contracts in order to drive through an unprecedented equality crusade, concerns have been raised about how this will further affect small business' ability to access public procurement. The plans, which look to preclude businesses from supplying to the public sector unless they can show gender and racial diversity from within their firm, are suspected to make it more difficult for SMEs to bid for public contracts. But to many people's surprise, we at de Poel are somewhat pleased with the measure. With a female sales and marketing director and board member, a female marketing manager and as many as four female senior account managers, not to mention staff from a variety of ethnic and social backgrounds, we welcome an opportunity to promote ourselves to the public sector on the grounds of company attitudes and values. From our perspective, it is certainly fairer and more important that firms are judged on their commitment to equality rather than on whether they already have a public sector client, the latter saying nothing about a firm's ability to supply effectively. What's more, this kind of criteria shows no bias towards large firms, with a commitment to equality possible in companies of any size, and the paperwork to prove it consistent with the number of employees. If anything, rather than intensifying the problems for small and medium businesses, the move comes as a critical first step in the direction of government open-mindedness, and an appreciation of what really makes a good supplier. At de Poel, we'd like to think we are in a position to comment on what makes a strong service-provider, managing the supply of temporary agency labour for as many as 50 national organisations in the UK and some of the biggest players in retail, logistics, waste management and care.
That said, the future of small and medium business' role in public sector procurement remains hazy, and there is a long way to go before businesses will really be able to take advantage of the massive income opportunities the public sector offers. Of course, the same can be said for the reverse. A fairer and less rigid application process would not only open possibilities for business, but for the public sector themselves in allowing them more choice and independence, which in turn, could lead to a stronger supply base as well as massive money-saving
Having identified a significant annual spend on the procurement of temporary labour across our Network Division we were delighted that de Poel was able to work alongside us to deliver overall gross savings of 8.4%, with an impressive 12.4% at one of our locations.
