Sector News
Small Suppliers and Public Contracts – a Happy Ending to their Stories, We Hope

We know that smaller suppliers have traditionally been reluctant to bid for public sector business, mostly owing to the complexity of the systems that weight it towards large companies. In the UK, central government put initiatives in place to help SMEs onto a fairer playing field, and we have written many times on our site about why SMEs do or don’t bother to compete. The situation has not greatly changed yet – it would seem.

Our rather sceptical take on government targets in 2015 was: “… there is remarkably little evidence that the policies to promote the use of SMEs as suppliers actually have any real, measurable economic benefit. That does not mean the policy is wrong, but the lack of evidence means that we might perceive this as more politically driven (it is popular with the voters) rather than an economically driven initiative.”

And, in response to our article, Small Businesses – How Can They Win More Government Contracts? a guest author wrote the excellent “SMEs and Public Sector Procurement – An SME’s Perspective (in two parts), completely from his own personal experience.

So, we were interested to see one initiative that came to our attention at the end of last month — an encouraging story for some small suppliers and we hope it will be a benchmark for others. “Exciting changes are under way opening up new markets for smaller businesses …” said Produce Business UK.

The story goes like this:

“Tendering to supply local government, hospitals and schools has historically not been a simple matter, but a pioneering pilot scheme relating to the provision of school food has begun in Bath & North East Somerset.  Until now, it was customary for one supplier to be appointed for each food category. ‘Local farmers and smaller suppliers said that the previous system made it difficult for them to participate,’ says Richard Howroyd, head of strategic procurement and commissioning at Bath & North East Somerset Council (BathNES).  ‘As a council promoting local food, it made sense to look at local procurement.’”

“So councillors decided to make the process much simpler for small, independent producers to supply food to BathNES’s local schools. ‘The contracts are being set up so that producers could supply anything from 1 to 60 schools – so you don’t need to be a big business to get involved,’ councillor Martin Veal, BathNES cabinet member for community services explains.’”

Clearly, the problem of logistics comes into play. Organising the distribution of food from numerous suppliers is difficult, but the council has employed a dynamic purchasing system (DPS) to enable more than one supplier to be appointed for each type of product. More suppliers can join a contract after an initial one is set up. The approach has been defined as ‘more inclusive’ where ‘qualifying producers and suppliers can be listed on one platform and be considered for purchase.’

An independent online food store called Fresh-Range is setting up a new distribution centre and will take responsibility for all orders and deliveries. “By consolidating orders and creating just one delivery drop per site, it will also result in environmental improvements from a reduction in carbon emissions.”

It would seem a simple, but effective, solution – and we wish it success. Of course, you must ask – is it scaleable? Can it succeed nationwide? The article thinks so – “Bristol City Council is planning to take a similar approach while other local authorities are looking with interest at the way in which dynamic purchasing is being used as it has made tendering so much more accessible than traditional methods.” And similar approaches are under way in Wales in particular.

It seems apt to also mention here The Yorkshire Purchasing Organisation (YPO) – which we wrote about on our Spend Matters UK site. This is the largest supplier to the education sector, providing everything from access to frameworks in sectors such as Energy, to directly delivered goods, from stationery to sports equipment, IT equipment to medical supplies. A recent major growth area has been around catering. YPO is owned by 13 local authorities, and a further 31 authorities are associate members that participate in an element of profit sharing. An element of profit sharing is the money returned to all clients, £2.1 million in total last year.

Let’s hope these initiatives are the beginning of happy endings for all small-supplier stories.

You can read the full article ‘Public procurement pilot shows promise for small producers’ on the Produce Business UK website.