Government procurement through SMEs – overcoming historical challenges

Having spent 30 years working in Government, before leaving to join the private sector last year, my opinion of how the public sector makes best use of SME businesses has changed.

In my old role, time was precious and days were jam packed with meetings. I was also constantly contacted by companies small and large asking for a chance to show me what they could offer Government. Many were offering things I already had but I still wanted to listen, it was just that finding time to hear what every organisation, particularly the SMEs, could offer was challenging at best.

Whilst I had great working relationships with a handful of SMEs who had a footprint in my organisations, I could never realistically hope to bring in the widest range of companies to support everything that was going on. And yet clearly the right SME in the right situation can offer huge value, innovation and new thinking to Government.

Recognising the barriers for SMEs

The lack of time (so many companies so few hours in the day) is just one example of a historic problem where SMEs have found it difficult to get access to public sector opportunities.

By and large public sector contracts should be awarded through official government procurement frameworks that are open to all. So getting on the framework and access to opportunity in the first place is the first step in securing government contracts for SMEs. Once that hurdle has passed, SMEs then have to have processes and governance in place to monitor the portals and manage the framework process – starting with the cost and risk to successfully qualify, bid, procure and then manage public sector contracts.

Whilst some of the frameworks, such as DOS, can open an “easy” door to get involved with Government at fairly low cost, equally it is possible for an SME to invest a whole lot of time and money crafting 100 word answers to DOS requests, and still yield no results, particularly where there is no chance to present or meet the potential client and thereby bring personality into the overall bid. Where an SME lacks the relevant information, experiential knowledge or even bandwidth, the hurdles to clear still remain.

Recognising these barriers, the Government has set targets for 33% of all its spend to be with SMEs. This shows there is an appetite for better engagement and a fairer disaggregation of work. That is a good thing. But it doesn’t solve all of the problems.

Government does need to have clearly defined ways of procurement and put in place contracts that have to be tightly governed due to legal requirements to manage public funds. There is a need for robust, transparent and auditable records that demonstrate that public-funded spend is going where it needs to. So frameworks, controls and rules are needed and costs to adhere to for those SMEs are inescapable even if 33% of spend is to go to SMEs.

The Public Sector also want and need suppliers to be agile and to mobilise quickly – flexing up and down resources, absorbing costs, taking on risks and some overheads. And where contracts and projects run smoothly this is all eminently doable.

But where they don’t, or where priorities change this can create financial risk and challenges for some SMEs who may not have the ability to absorb costs inadvertently caused by those changes, for example people resources no longer needed, with little notice and so not being used, not driving revenue and hitting an SMEs bottom line.

Our SME Partner Ecosystem is here to help

Since joining CGI, I have come to believe that when done well public sector procurement can avoid many of these challenges, really help small businesses to grow, increase employment opportunities in disadvantaged areas and increase training opportunities for people in industries with known skill shortages.

In response to the changing public sector landscape, CGI has developed a successful Partner Ecosystem that enables the government organisations that we work with to access an SME talent pool effectively and efficiently, without the extensive supplychain management requirements.

At the same time the ecosystem approach opens the door for SMEs to work in public procurement with less up front effort and reduced challenges of capacity to respond to multiple tenders, or the financial risks of contracting directly.

I believe ecosystem style procurements with revenue share commitments are going to be essential, particularly in a hot technology market for future government procurements.

CGI is in the heart of much of the public sector already and understands what is required to get the job done effectively. By working with SMEs we are delivering to our clients the broadest possible reach of skills, solutions and capabilities. Last year we have delivered some of our largest contracts with SMEs, so we believe that by acting as advocates through our Partner Ecosystem, we like to think we help both the public sector and SMEs to overcome barriers.

CGI runs multiple ecosystems for large private and public organisations – choosing and  appropriately vetting SMEs that fit our culture of exemplary delivery with integrity and care. We have an evolving and extensive directory of go to partners so that, together, we can collectively bring best-in-breed technology and capability to public projects scaling up and down with the changing requirements of each project.

To learn more about our SME Partner Ecosystem, contact me