Computer Business Review

UK tech SMEs still being frozen out of government deals

by CBR Staff Writer| 10 June 2014

Government downgrades 50% SME procurement target to ‘aspiration’.

Ninety per cent of government contracts remain off limits to UK based technology SMEs as Government targets have been quietly dropped, it was claimed yesterday.

Despite setting targets that UK SMEs would fulfil 25% of IT contracts to government and then announcing a doubling of that target to 50% as big suppliers were asked to use SMEs, the UK small business sector has struggled to secure more than 10% of the contracts available, it was said.

"The Government set a target of SMEs getting 25% share of Public Sector procurement by 2015. In August they announced they hoped to double this to 50%, by encouraging more subcontracting from large suppliers to SMEs. It has risen from 6.5% in 2009 to 10.5% 2012/13 but this hardly puts government on track for its target which I understand has in any case been downgraded to an 'aspiration'. There has been some progress with GCloud but it represents a small % of overall Government spend. There are still very significant barriers to SME entry into local and national procurement. As part of our Digital Government Review we have held a number of roundtables in partnership with organisations such as TechUK and BSA. These will feed into our review but it is clear that the Government's effort have generated more press releases than orders," said Chi Onwurah, Labour MP for Newcastle Central, a Labour Shadow cabinet member who sits on the front bench digital group review committee.

Making Government business more accessible to SMEs, Two Years On, a Cabinet Office report issued last year said: "Central government spends £7bn a year on IT, with the majority of the largest contracts that make up this spend coming to an end in 2014-15. We have made sure that the barriers to entry that government put in the way of small businesses have been lifted. Competition in procurements will be encouraged, with no like-for-like extensions to existing contracts. Programmes will be disaggregated for commercial purposes - broken down into components supported by the market to enable many suppliers to bid. This will open the door to new vendors to bid for government business."

But said Onwurah: "Additionally there is real concern that with a number of large scale departmental mainframe contracts coming up for renew in the next three to five years unless Government has a standards based open architecture approach these will be entirely closed to SMEs."

The Cabinet Office was unable to provide a response for evidence of SMEs winning contract share from large systems integrators. Conservative and Liberal party representatives did not respond to requests for comment.

Just this week the DWP, one of the biggest spending departments, repeated the claim that 25% of contracts would go to SMEs.

Onwurah said: "From the beginning this Government has shown a lack of understanding of IT with the Prime Minister boasting of 'cutting ICT backrooms' without seeming to understand that IT is an enabling platform and significant cuts to capability will undermine service delivery. GDS (Government Digital Services) has made good progress in digitalising key transactions in order to save money but that progress has not been as widespread across departments and local as well as national government as the Government's cuts agenda."

Last week saw the publication of a technology manifesto by Think Tank policy exchange. Report here.

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