A new report on public sector attitudes to spending with SMEs has found that close to a fifth (18 per cent) of public sector organisations currently have no plans in place to work with more SMEs in 2022.
This comes despite the Government’s pledge to increase local government spending with SMEs to 33 per cent by 2022, up from 26.7 per cent compared to the 2019/20 financial year.
Whilst over three quarters (79 per cent) of respondants from public sector organisations support the government spending pledge, just under half (44 per cent) doubted the feasibility within the agreed timescales. A similar number of respondents shared that their organisation does not currently proactively approach SME’s with tender opportunities (42 per cent).
The majority of respondants who felt the SME spending target was deliverable currently sit within Central Government and Higher Education organisations, suggesting a potential disconnect at local government level.
The report indicated that there are significant numbers of organisations and authorities who feel that there are barriers to working with SMEs. For 64 per cent, SME bid and competition capabilities are a concern, and over two fifths (42 per cent) named the ability to scale service delivery appropriately as a worry. Two thirds (32 per cent) listed risk management and a lack of confidence in SMEs as a barrier to working with them, whilst a similar number were upfront about preferring to work with well-known, established suppliers.
The publication of the report comes as part of YPO and Go4Growth’s new partnership, announced earlier this year. The partnership aims to raise awareness and knowledge of public sector procurement contracts to SMEs across the UK, and encourage public sector organisations to engage with SMEs to understand the procurement benefits they can bring.
Gavin Rimmington, Head of Public Sector at YPO said:
“This report shows that there is an overwhelming majority within the public sector who wish to work closely with SMEs, which is a positive step for the sector and a vote of confidence for the future. YPO is here to support and offer guidance to public sector organisations worried about working with SMEs, to help understand perceived barriers and find solutions that create real benefits to local government.”
“We’ve seen first hand the benefits that can be had. For example, whilst public sector organisations might have concerns around scalability, they may not have considered this in line with the flexibility of a dynamic purchasing system and working with multiple SMEs in a coordinated approach. This is just one example of how YPO is looking at solutions suitable for the public sector.”
Gillian Askew, Director at Go4Growth, added:
“There are many reasons for SMEs to feel positive about working in the public sector and we hope that raising awareness through this partnership will make businesses take notice of this potential. Competition and bidding processes can seem intimidating, but we’d encourage all those interested to contact us for help and advice. From the results of the report I am more optimistic than ever for the future of SMEs within public sector procurement, especially after a tough couple of years through the pandemic. It’s clear that 2022 will be a positive year for progressing the amount of SMEs on government contracts and we looking forward to seeing the positive impact our partnership with YPO will bring in helping these business to grow.”
Encouragingly, just over a fifth (24 per cent) of respondents estimated that SMEs already make up between 51 - 100 per cent of their procurement spend, and two thirds (66 per cent) of respondents either already proactively completed outreach to SME’s, or have plans to do so.