RIA Response to Public Procurement: Growing British industry, jobs and skills QUESTION 1a: To what extent do you agree or disagree that mandating large contracting authorities with spend over £100m p.a. to set 3-year targets for their procurement spend with SMEs and VCSEs and publish annual progress against these targets, would help increase spend with SMEs and VCSEs? Mostly agree. QUESTION 1b: If you wish to explain why you do or do not agree that the proposed measure reflects or delivers the policy intent described above, please do so here. 1.
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The targets set in 2015 by the UK government to achieve 33% (minimum) SME spend by 2020 had a clear positive result, shown in part by the overall increase in Network Rail’s SME spend over several years, from 12.77% in 2017/18 to 33.11% in 2023/24, with a peak of 40.15% in 2020/21. For future reporting, RIA recommends that spend reporting be separated into: a. Categories (for example, HR; utilities (hard); utilities (soft), etc.), which would facilitate more detailed analysis of the data and enable supplier groups and trade associations to monitor progress more effectively. b. Direct spend (expenditure with SMEs contracted directly by the Contracting Authority) and indirect spend (expenditure with SMEs through the Contracting Authority’s Tier 1 and Principal Contractor supply chain). This approach offers a clearer picture of overall spend. It should be noted that determining an entirely accurate figure for SME spend presents significant challenges, as the Contracting Authority depends on reporting from their supply chain. The complexity increases in the lower tiers of the supply chain. Clarifying the definition of an SME is important, including consideration of small businesses owned by larger enterprises based overseas. To reduce administrative workload for Contracting Authorities, it is worth considering whether suppliers should indicate their SME status during the tender process, such as ticking a box on an ITT or whether they can indicate it on the Central Digital Platform. Implementing this could support improved tracking, particularly if extended to procurements conducted by Tier 1 suppliers.
QUESTION 2a: To what extent do you agree or disagree that extending the requirements of section 70 of the Act to publish information on (i) all payments made under public contracts and (ii) payments under notifiable below-threshold contracts, would help increase spend with SMEs and VCSEs? Disagree. QUESTION 2b: If you wish to explain why you do or do not agree that the proposed measure reflects or delivers the policy intent described above, please do so here. 1.
The proposed measure will likely not directly increase spend with SMEs and VCSEs, as it doesn’t introduce any new requirements around where the spend should be going. However, it could facilitate improved analysis of client spend by trade associations and supplier forums, especially looking at spending trends over time.