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East Midlands Chamber News

£11.4bn Gov't procurement spent with SMEs

Minister for the Cabinet Office, Francis Maude, has outlined radical new measures that will be welcome news to small businesses in the East Midlands.

He said the measures, which come into force today, will open up Government contracts to local small and medium-sized businesses (SMEs) like never before.

Paying businesses on time is critical to the cash flow of smaller businesses in the East Midlands where 57% of SMEs see late payment from customers as a hindrance to growing their business.

Under the new rules, the public sector is now required to pay undisputed invoices within 30 days, and this requirement will now flow all the way down the supply chain.

Central government spent an unprecedented £11.4bn with SMEs in 2013-14, as new figures showed that a record 26.1% of government spend went to SMEs.

The new data shows that Government spent 10.3% directly with SMEs, and 15.8% indirectly - meeting the aspiration it set in 2010 for 25% of procurement spend to be with SMEs by the end of this Parliament.

Research also shows that 46% of SMEs in the region don't know where to look to find new business opportunities.

Today the Government launched a refresh of its Contracts Finder website, at www.gov.uk/contracts-finder, offering a much improved search including by location.

The site covers current and future public sector contracts above £10,000 in central government and £25,000 in the wider public sector.

New legislation which comes into force today ensures that:
● 30 day payment terms will be mandated down the supply chain - to suppliers and sub-contractors;
● Public bodies will have to publish an annual late payment report to sharpen accountability;
● The bidding process will be simplified across the wider public sector with complex forms, such as Pre-Qualification Questionnaires, abolished for low value contracts;
● The procurement process for public sector contracts will be accelerated.

Mr Maude said: “As part of our long-term economic plan, this Government is overhauling public procurement to open things up to businesses of all sizes. I am so pleased that our reforms have ensured that innovative SMEs benefited from £11.4bn of business last year alone.

"Over a quarter of central Government spend now goes to SMEs but we know there’s much more to do to support small businesses in the East Midlands, and these new reforms show just how determined we are to finish the job.”

Lord Young, the Prime Minister’s Enterprise Adviser, said: “Contracts Finder is a world first in terms of scale and ambition. It opens up government business like never before and levels the playing field for SMEs who in the past, didn't know how to find public sector contracts, let alone bid for them.”

Piers Linney, co-CEO of Outsourcery and a member of the Government’s SME panel, said: “We know government business has been incredibly complicated and costly to bid for in the past, and that was reflected in the tiny proportion of spend going to SMEs.

"This new legislation and the new site create a huge opportunity for SME businesses with reduced cash flow risk. They need to educate themselves on their rights under the new legislation and really get under the skin of Contracts Finder to make sure they can seize that opportunity.”