SMEs and public procurement (part 2) – Spikes Cavell data

We looked yesterday at the apparent confusion between Government targets based on the number of contracts to be won by SMEs (small and medium enterprises) and the value of contracts won. But what does the current situation show?

Spikes Cavell probably analyse spend data from more public sector organisations than anyone.  Through their 'Observatory' suite of tools, and now Spotlight on Spend, which we've featured before and seems to go from strength to strength, they have a load of data - with particular strength in the devolved UK public sector; emergency services and local authorities in particular.

I asked them to  do an analysis of the current situation, and they came up with two rather fine charts, both of which show the percentage of spend going to SMEs  (value, not volume) for a range of sectors. If you left click on the chart you'll get a more easily readable version.

Now it is worth saying that the central Government number may be distorted to some extent because Spikes don't have data from the very largest Departments (e.g. MOD, DWP).  So their central government is skewed towards smaller departments, non-departmental public bodies etc.

Here is the chart with local authorities split into their component types.

Even with the caveat about central Government, the data suggests that very significant parts of the public sector are already achieving the 25%  target, on spend not volume, and indeed are going way beyond that.  I found this quite surprising, until you remember that some of the very biggest spend categories in local authorities are categories such as social care, and local transport, markets actually dominated by SMEs.

The Spikes Cavell data will also of course enable tracking of spend, and trends will emerge; which is when we can see if recent initiatives (such as changes ot the PQQ process) are actually having the desired effect.

Tomorrow we'll look at another key source of data - the Government back -office benchmarking study - and see what additional insight that can give us into the situation, particularly in the large central Government areas.

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Voices (4)

  1. Final Furlong:

    A good point Christine, but I would argue that the social care market has been, and will be, going forward, particularly in the context of Personal Budgets, dominated by SMEs. I’ve led major transformation initiatives within social care in two of the countries largest county councils, and in domicilliary care, for example, 90% the suppliers in the room (part of pre-procurement, market engagement exercise) were SMEs. In respect of care homes and nursing homes, true, there were (and are) large national players, but there are also many smaller-to-mid-sized enterprises, particularly in learning disabilities.

    To support your point main, however, you’ve reminded me of a very relevant story. In one of the councils, they had adopted a ‘spot-purchasing’ model for all of the nursing home placements. The vast majority of placements were purchased from ‘individual’ nursing homes, operating as independent businesses, and yet the vast majority of these were owned by one suppliers. The supplier admitted that these homes competed with each other for business, from the same council. There were 600 placements and 364 different prices. Their Regional Sales Director didn’t have a clue of course – until we told him.

    Coupled with the notion that, for example, one major care home provider owned two other major players, but decided not to change their names (so to buyers they would be regarded as competitors?) this is, indeed, quite a complex area.

  2. Christine Morton:

    Also adding that this consolidation is happening in the children’s foster care market, too (though I hate hate hate referring to it as a market because I don’t believe children should be classed as commodities). But same as in adult social care, there are conglomerates making inroads into the foster care .. market.

  3. Christine Morton:

    The social care market is not entirely made of SMEs, as you (and your ailing portfolio) know. I wonder how Spikes Cavell would classify some conglomerates with multiple trading names. For example, as Alex Ranson can tell you, one of the largest social care providers has ~46 trading names due to strings of acquisitions. Councils send remittances to each of the 46 trading names. Chances are, by size, those names *look* like SMEs, but because of their ownership, they should be classed as part of the larger conglomerate.

    Anyone from Spikes Cavell care to comment on how they manage this?

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