Public Sector Contracts for SMEs – should you or shouldn’t you?

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Public Sector Contracts for SMEs – should you or shouldn’t you?

UK government lawyers have created a shorter, more user-friendly public sector contract to encourage smaller businesses (SMEs) to bid for £12m worth of government contracts.

The new standard public sector contract, rolled out across government, gives smaller businesses an easier route to government work. From a financial point of view, not having to wade through dense contracts will save smaller businesses money and resources, an important factor for SMEs when assessing which work to go for, as it has to make financial sense.

The issue of public procurement and SMEs has been highlighted by the collapse of Carillion, with calls for small firms to be paid quicker and have more access to public contracts. The CCS, Whitehall’s procurement arm, first commissioned the department to study existing government procurement contracts after a report by the Federation of Small Business found that many SMEs were reluctant to bid for public contracts because they were too confusing and complicated.

The review found that the standard public procurement contract given to SMEs contained hundreds of pages of terms and conditions that were irrelevant to many less complex deals being agreed.

The review suggested that lawyers could substantially reduce the length of contracts by moving the lengthy contract terms online, which could then be ‘plugged in’ where required.
Stanley said the core terms in the new slimline contract are now just over 20-pages and would not change, with extra terms that plug in if some tailoring is required. He added another key change was the rewording of legal phrases into plain English to help SMEs understand the contract better.

Many smaller organisations don’t have extensive procurement experience – but their skills are important to the public sector and should not be deterred from going for this type of contract.

The new contract will not only make it easier for companies to bid for government work but will also establish a benchmark for good business ethics by integrating some new corporate social responsibility obligations.

The new contract comes three months after the Cabinet Office published figures which revealed government spending with smaller businesses had fallen from 27.1% in 2014-15 to 24% in 2015-16, despite the government’s target for small businesses to make up 33% of its procurement spend by 2022.

This is good news for SMEs and gives businesses chance to look at public sector contracts and not have to spend weeks filling in the forms.  Coupled with the call to pay firms quicker means that the right contract in the right location, clearly assessed so that the company can cope if they won the work, is financially worth looking at.  The key is – don’t put your business in an ‘over-stretched’ or false situation where the work, should you win it, could take you down.

If you would like to discuss this topic with us for your business growth, please contact Stuart Smith at Watersmiths on 07785 556 450.