Level playing field for SMEs?


At the Treasury, on a cold February morning in 2011, David Cameron stood up to address a room packed with entrepreneurs and small-business leaders. He wanted to shed light on the foggy world of public procurement, calling for it to be “much more small-business-friendly”, so that smaller firms had a better chance of pitching for, and winning, big contracts out for tender. By ending a “hugely wasteful and inefficient” system, Cameron said, the government would “relight the fires of entrepreneurship”.

Around the same time as his speech, sitting in her office in Aylesbury, Bucks, Sara Murray had decided her small company, Buddi, would pitch for the Ministry of Justice (MoJ) contract to replace the electronic tags worn by offenders. Murray believed she had the best product and the only technology designed and built in the UK. This was one of the biggest government contracts in the world. There was nothing to lose.

In August, the government finally announced its “preferred bidders” for the new contract, which will replace the current tags. From early next year, more than 20,000 offenders in the UK will begin to be tracked with devices using GPS technology, pinpointing their every movement to within a few feet. Justice secretary Chris Grayling called it “the start of a revolution in how we supervise offenders”, adding that “…all of this is going to be done with world-class British technology designed and built by the kind of business we want government to work with more.”

This technology wasn’t developed by a multinational tech firm in China or the US, but by a British company based in Aylesbury. Buddi was one of four firms to be selected by the MoJ, and the only SME. It was rightly chosen because the ministry realised it’s the best company for the job and the only one to have developed the technology, which is being used by 70 per cent of UK police forces. However, the pitching process was a long and costly affair. The bigger competitors had more staff in their pitching teams alone than Murray had in her entire company. And in the period Buddi was working on the pitch, it won separate contracts in five other countries, highlighting just how long the process here took.

Last year, Buddi received a 20 per cent stake from hedge fund Odey, providing cash which will have helped it devote the extra time and manpower needed to meet the drawn-out procurement process.
But while the government should be applauded for choosing Buddi as its poster child for British SMEs, how many others have missed the boat for other contracts because they were not able to meet the bureaucratic demands of the pitching process? Or, on the flip side, what a savvy investment by Odey and shouldn’t other big investors consider funding SMEs in a similar position, more often?

In his 2011 speech, Cameron set a target of awarding 25 per cent of funds from public contracts to SMEs by the end of this parliament. This may still be reached. However, SMEs account for just 10.5 per cent and a recent report carried out by market research firm Opinion Leader claimed that 26 per cent of SMEs said it had become more difficult to win public-sector contracts.

So, has Cameron failed in his promise to help SMEs? Or is the government still committed to helping those companies that can’t do it on their own and are unable to attract investment? In September, it announced another shake-up of the procurement system to try to help SMEs. This will include putting all public-sector contracts over £10,000 on a website (making them easier to find); scrapping lengthy pre-qualification questionnaires for low-value public-sector contracts and introducing a single set of standards to bid for high-value contracts; and a prompt payment promise across the whole supply chain, supported by an anonymous complaints system.

So it seems to be making the right noises. But is this enough? Last month, Conservative MP Matthew Hancock was made skills and enterprise minister. As a former aide to George Osborne, there are hopes he might have sufficient oomph at getting the concerns of SMEs heard in the right places. Only time will tell if all these moves will help other SMEs in pitching for bigger contracts. But if they don’t, and UK enterprise misses out, it will be a criminal waste, for which a tag won’t be required to identify the culprit.



About author

Will Iredale

Will Iredale

Will Iredale joined The Sunday Times in 1999, where as a staff reporter he specialised in home news and investigations. After eight years he left and became a Director at PR firm MacLaurin Media, before launching Iredale Communications in 2013, advising some of Britain's leading businesses and brands on their media profile. Iredale has also written a book about Royal Navy fighter pilots during the Second World War, to be published by MacMillan in May 2015.

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