National Audit Office on Government Spend with Smaller Firms – Part 3

We are coming back to the recent and impressively thorough / thoughtful report from the UK’s National Audit Office report titled “Government’s spending with small and medium-sized enterprises” today with a look at the recommendations. (See our initial comments here and our second article on the report too).

The NAO calls for government to understand better where (in terms of sectors and buying organisations) using SMEs can be most valuable. As the NAO says: "If the government is serious about increasing its use of SMEs, it will need to focus on those areas where SMEs can deliver real benefits". That leads on to a set of recommendations - we find it hard to disagree with any of them really, although we would raise a few questions about implementation in particular.

As well as the direct SME points, there are a couple that relate to technology; very interesting and they deserve further coverage from us later. Here are the NAO recommendations, with our comments appended.

“Taking a more focused approach to achieving the benefits of using SMEs -

The CCS needs to move from a generic approach of lifting barriers to SMEs bidding for contracts to an approach that involves working with departments to identify areas where different types of SME can bring the most benefit. It should:

  • Stop changing its basis for estimating SME spending

The CCS should settle on a methodology for 2015-16 and ensure that any subsequent years’ data can be compared with this 2015-16 baseline.

(Absolutely right! To be fair, the changes have in part been aimed at making measurement more accurate, but we need some stability now).

  • Identify those areas of government where different providers can bring the most benefits

The CCS should ensure that, as departments develop plans to meet the 2020 target, they are identifying areas of spending where SMEs can have the most impact and the types of provider they would like to encourage in those areas (such as innovative businesses or VCSEs).

(Some departments take this agenda seriously, some don’t. tThe challenge will be to get everyone really thinking about the issue, not just looking at how to fiddle the numbers!)

  • Use best practice to inform future decisions

The CCS should identify where departments are effectively harnessing the benefits of using SMEs and VCSEs. It should disseminate these across government to help departments to shape their procurement and contracts to maximise the benefits from using these providers.

The CCS should also use this evidence to review the impact of SMEs on the public sector marketplace, to inform its own decisions about the quantitative target and central initiatives.

(Evidence -based policy making and evidence-based operational improvement; it’s clear that the public sector should work in that way, including CCS. A bit of brainpower needs to be applied here to get a clearer sense of what works and what doesn’t).

  • Identify where government needs to have oversight of the relationship between prime contractors and their subcontractors

Government should identify areas where the majority of SMEs will continue to operate within a supply chain. In these areas, it should ensure prime contractors’ behaviour does not prevent subcontractors delivering benefits for the public sector. For example, by introducing codes of conduct for prime contractors, or project bank accounts to ensure prompt payments.

(Something we’ve been saying for ages; we’re in favour of the contracting authority taking a more interventionist line with prime contractors in areas such as their use of sub-contractors. We would add to the NAO point here and suggest that how primes manage their sub-contractors should more often be part of the tender evaluation process, and elements of that should also be incorporated into contracts).

In addition, there is a need for greater visibility and transparency of government’s procurement, so the CCS should work with the Cabinet Office and the Government Digital Service to:

  • Assess the feasibility of an integrated cross-government procurement platform to support its commercial strategy

This might be built of many systems with compatible data or a single system. This will require leadership from the centre of government now if it is to be achieved during this Parliament.

(We believe CCS is looking at this but it’s one of those things that sounds easy and in fact would be very challenging to develop and implement. Exactly what would it cover? Is it eSourcing, purchase to pay, supplier information management? So we’re not conceptually against but some caution is needed. Jason Busch would have some thoughts, I’m sure …)

  • As a first step, improve the quality of data in Contracts Finder

The CCS should ensure there are clear lines of governance and accountability for the use of Contracts Finder, particularly enforcing the requirement for public bodies to use it to advertise opportunities.

(Agreed, but how on earth do you police thousands of public bodies and check they’re putting everything on Contracts Finder? That’s no simple task!)

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