Richard Tottman says procurement cuts = fewer contracts = bad news for SMEs

There was an interesting article on the Supply Management blog the other day - which, to be pedantic, isn't a blog at all (look up the definition and you'll see what I mean). It's actually a random collection of articles by Supply Management staff and "outsiders", but there is the occasional gem in there, usually from David Atkinson...

Anyway, enough of that carping.

This piece was from Richard Tottman, a Principal Consultant at Qinetiq Commerce Decisions (we plan to write about them shortly as well - a very interesting organisation). But here he was highlighting his recent discussions with public sector procurement people, who were being encouraged, as he put it, "to place contracts that encompassed more and more capability".

This strategy of fewer, larger contracts obviously reduces procurement's workload and, as he says,

"...gets them ready for yet more job losses. Simply put, if the number of contracts isn’t reduced the remaining staff will not be able to cope with the workload in the future".

So more business goes to prime contractors, which of course makes it harder for smaller firms to win work, as there are fewer contracts in total and those that are let are often too large for SMEs. As Tottman says, "Small businesses will need to rely on the usual prime contactors to share the work. Let’s hope the slim pickings do not lead to famine".

This coincides exactly with our observations over the last few months. It also fits, for instance, with the Surrey and West Midlands Police outsource, where the reason for the single partner strategy seems to be mainly to avoid the need for further competitions and more procurement effort.

It also has implications beyond just the difficulties it causes for small firms. We;ve been thinking about this recently, and it seems that this devleopment could have serious implications for the procurement profession in the public sector, for markets and suppliers, and even bring to the fore wider issues around politics and governance in the broadest sense.

We'll take a look at those issues after Easter, but in the meantime, do read Tottman's piece.

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