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Yesterday the Cabinet Office brought to a close its consultation on how to make public sector procurement more accessible to small and medium sized enterprises (SMEs). The consultation is in part a response to Lord Young’s report Growing Your Business, published earlier this year which recommended far simpler and more consistent systems for SMEs to sell to government.
Procurement from SMEs, including small design businesses, can bring staggeringly better value for government
Our view expressed in our response to the consultation, is that procurement from SMEs, including small design businesses, can bring staggeringly better value for government. Great progress has been made, particularly in Whitehall, but government is currently not making enough of the innovative and the cost savings which can be achieved by working with smaller suppliers.
We've seen first-hand the impact small design businesses can have on public services through our projects like the Design Bugs Out Design Challenge which aimed to combat Healthcare Associated Infections (HCAIs). The Commode, by PearsonLloyd, one of the five products developed through this Design Challenge, is currently featured by NHS Supply Chain, the main procurement route for staff in the NHS. It's an example of where an innovative product has made its way into mainstream procurement channels. But in our experience the Commode is an exception.
The vast majority of design businesses are SMEs and access is the key barrier for them to supply to government. The time and cost involved with the public sector tendering process is still prohibitive, contracts can be difficult to find and the supplier selection criteria are not always transparent. Track record also counts for a lot, making it difficult for new entrants to tap into government as a market.
Low awareness in the design sector of government as a potential client is also an issue. The vast majority of design businesses and agencies would not think that their skills set can bring real value to government and do not view the public sector as a market for their services.
Construction is another important sector to the UK and us; contributing £89.5 billion to the UK economy in 2011. Current procurement practice tends to favour large firms and to exclude the pioneering SMEs on which the sector’s future development depends. Many SMEs have all but given up tendering for public sector work, as the chances of success are extremely low. Younger architecture, landscape design, and other related firms are also missing out on many projects, such as colleges and schools, theatres, galleries and public spaces, which require exactly the level of creativity, personal commitment and thought that they offer. If smaller firms are unable to access this market, then design talent will be stifled. Furthermore the consequences of procuring second-rate design has long term implications for both the quality of the built environment, and the UK economy.
The recent work by Peepshow Collective and Studio EMMI at the children's and young adults' wards at University College Hospital in Euston (pictured right), is a brilliant recent example of design let loose in a public sector building.
There have been some really positive steps in government, largely from the Government Procurement Service, towards making procurement easier and more transparent for SMEs. The need for pre-qualification questionnaires (PQQs) for contracts under £100,000 has been removed for central government contracts, although they continue to be used by other parts of the public sector, and contracts over £10,000 are now published on the government's Contracts Finder.
It is good that streamlining procurement has been made a high profile issue, but there are still only a limited number of creative businesses working with government and on the Creative Solutions, Execution and Related Services framework. Lord Young’s report contains some interesting findings about the economic contribution and growth of small businesses to the UK economy; micro businesses account for 32% of private sector employment as well as 20% of private sector turnover and the number of micro businesses has increased by 40% since 2000.
If small businesses are the lifeblood of the UK economy we should be making business with government easier for them, including design businesses. We hope the review will introduce changes that create the most fair and open procurement processes to ensure we have the best design companies for the job.
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