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November 2018
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De Poel Consulting

Matthew Sanders, CEO for de Poel Consulting, the number one procurer of temporary agency labour in the UK, believes so.

The Government tendering processes excluding small businesses (SMEs) from public sector contracts is not a new phenomenon. For years, this volatile albeit significant group has been prohibited from sharing in the estimated £175Bn of tax payers’ money spent on both goods and services every year.

What makes this issue topical is the current economic climate, which is resulting in a mass of public sector cuts and pressure to reduce public sector spend.

Yet, SMEs are ideally placed to supply to public organisations in these tough times. They can offer more value for money and considerably lower operating costs, better quality service with a direct and personal approach, as well as quick and innovative reactions to industry changes.

With the potential to reduce back-office costs by as much as 30%, SMEs are a perfect and timely solution to the public sector’s primary concern to cut costs. In our case, perhaps in others too, the savings result from increased control over spending, with the side-effect of improved quality.

The problem is not that SMEs are openly discouraged or barred from participating in the bidding process. The difficulties are actually routed in the process itself and the way it operates, preventing small or new companies from being shortlisted. In many cases it is the sheer complexity of the procedure and jargon used, the continuous bureaucracy, unachievable deadlines and endless amount of time, paperwork and costs involved which small businesses just cannot keep up with. The need for insurances and other documents, particularly the ISO 9000, a quality-standards certificate only ever required by the public sector, also contributes to the hassle for small companies, rendering their problems disproportionately high compared with larger firms.

For us, the biggest obstacle lies within the pre-qualification stage of the application, which follows the initial expression of interest. Small firms are invited to answer a Pre-Qualification Questionnaire (PQQ), upon which they receive a score to determine whether they will be sent an Invitation to Tender (ITT). In a report on SME access to public procurement by the All-Party Parliamentary Small Business Group (APPSBG) in April this year, PQQs are said to be: -especially onerous, discouraging SMEs from registering.

As a company, we (de Poel) tend to score highly on every answer we give, except the section which asks for references from existing public sector clients. The system doesn’t account for the work we do with both small and large, third and private sector organisations in a variety of industry-sectors, with 100% positive client testimonials and a track record of providing savings between 6 and 12%. Nor does it consider the fact we do not charge our clients unless we find direct cost savings on their contingent workforce spend, or that our fees are only taken as a per¬centage of these savings. Not having a public sector client already means we score zero or even minus points for this question, and can never progress.

Perhaps the reason the tendering process is so difficult for SMEs is a reluctance to work with small companies or new suppliers, as well as concerns about giving contracts to private organisations over public. However, working with smaller suppliers is no more risky than working with public sector bodies.

The APPSBG report followed the Glover Report in identifying the problems for SMEs accessing public procurement and making several recommendations for change. This is a great start – successfully addressing the need for simplicity, fairness and increased transparency in the tendering process, and calling for targets to be set in terms of the numbers of contracts awarded to SMEs. It also recommends standardising PQQs and increasing opportunities for SMEs to -show off their selling points and -state any specific area of expertise they have – which could be a significant development.

But for us, the report still doesn’t go far enough. Of the 16 proposals specified, not one looks with any detail at the single but critical problem of not having a public sector client already. Ideally, we would urge the sector to start valuing references from private and third sector organisations and begin appreciating the -catch 22- situation here. Without a public client in the first place, no company can ever be expected to get a reference from one.

Then there are concerns about whether the APPSBG recommendations will ever come into practice, with huge amounts of pressure on the public sector already and the prospect of further budget cuts. Perhaps the recommendations could be supported by a wider campaign informing public organisations that alternatives to their current supply process could ease their problems? Companies like de Poel remain hopeful.

But just in case, we have decided to prove our ability to save money for the public sector, by offering to forgo our savings fee, passing on 100% savings to our first public partner.

Click here for de Poel’s website

Please see GPSJ Radio section to hear an interview with Jeremy Galpin of De Poel Consulting.

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