What SMEs should look for to get a fair deal from public sector framework providers

I was very interested to see that Labour has pledged to champion the cause of Britain’s SMEs. As the front-runner in the election, at least according to the polls, it could signal new opportunities for economic growth.

With regard to public sector contracts, there will be guaranteed shortlisting for smaller firms to give them a fairer chance when bidding for public contracts.

It’s something that is important to us at LHC. We have been consciously helping the cause of SMEs for decades and while we recognise that we can always improve, we are proud of what we have achieved so far.

As a construction framework provider, we’re right at the heart of public sector projects, such as schools, hospitals and affordable housing. And in a sector that is predominantly made up of SMEs, you would expect construction to be ahead.

But in reality, the approach to frameworks is not consistent when it comes to attracting and bringing onboard appointed companies. It means that many SMEs feel that it’s a closed shop when it comes to public sector contracts – hard to bid for, and hard to secure.

Here at LHC we try to ensure that SMEs get a fair crack of the whip, so much so that over the last decade, LHC Procurement Group has appointed 1,266 suppliers to our frameworks and 1,048 of these suppliers were SMEs. That’s 82.7%.

Looking at projects last year (April 23 to March 24) we have awarded 1,356 projects and 956 of those were awarded to SMEs. That is 70.5%.

So how does this translate when it comes to income gained by SMEs? Well, here the figures are equally interesting.

Last year project values at LHC surpassed half a billion pounds for the first time in our history. Of that, £245million was awarded to SME firms.

To achieve this high success rate we follow a number of guiding principles:

We work hard to attract smaller and local businesses and underrepresented groups during our tender engagement process and in the design of our frameworks themselves.
We are keen to attract organisations that have never been appointed to public sector projects before and provide workshops, so they fully understand the process.
We take extra care in the design of our frameworks to ensure that we don’t put in barriers that might dissuade smaller firms from applying.
Proactive engagement with under-represented groups is another key; looking for and engaging with industry networks, and there are plenty of them. Removing arbitrary barriers to SMEs such as unattainable PI levels.
Being specific on outcomes desired rather than just “testing based on done it before”.
Evaluating qualities rather than a rinse-and-repeat of previous work. Not lowering quality threshold – this is crucial – but instead, reassessing how we evaluate quality. Bidding support training with SME groups.

It is also worth adding that we discuss with clients and end users what their perception of “risk” is when it comes to engaging with an SME; is it real or is it just a set of rules they have followed for a long time?

In Labour’s plan for small businesses, published in November, Shadow Secretary of State for Business and Trade Jonathan Reynolds said that there were £30 billion worth of public contracts that would be suitable for smaller businesses to deliver but, currently, 90% of them are still being awarded to big businesses.

We are 7 days away from the General Election and Labour has said it will be looking carefully at the treatment of SMEs in this country, ‘the beating heart of our economy.”

It adds that it will “hardwire the voice of small business into everything we do,” adding, “making sure we have the policy framework needed to allow our small businesses to prosper and grow.”

I believe we’re doing well at LHC when it comes to SME engagement, but we never get complacent. There is always more to do. SMEs really are the lifeblood of our economy and we will be playing our part to keep it that way.

Clive Feeney is Group Managing Director of LHC Procurement Group, a not-for-profit construction framework provider delivering exclusively to the public sector.
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