The Procurement Act comes into effect next week; it is intended to make it easier for small businesses to win public sector contracts.
The Procurement Act 2023 is to become law on Monday 24 February, promising to make it easier for small businesses, start-ups and social enterprises to bid for and get public sector contracts. Some £400 billion is spent each year in the UK on essential goods and services.
It means that the rules that shape how public bodies buy goods and services will change - these bodies include government departments, the NHS, local authorities, universities, schools, social housing organisations, police and fire brigades and utility companies.
The new National Procurement Policy Statement (NPPS) encourages 20,000 public agencies to simplify the tendering processes for SMEs and social enterprises. The move is designed to reduce bureaucracy, drive social change and help small businesses compete for government contracts.
The Cabinet Office has instructed public sector buyers to "maximise procurement spend" with small businesses without compromising on quality or value for money. The government is also proposing that councils could reserve contracts for small businesses to help boost local economies.
The new Act will:
- Simplify bidding processes.
- Make commercial frameworks more open.
- Remove red tape for smaller businesses.
- Introduce 30-day payment terms on more public sector contracts.
"For too long small businesses have been stuck on the sidelines of the procurement process with complicated bureaucracy and a confusing system. That changes today. These measures will mean small firms can more easily offer their expertise to key projects both locally and nationally, helping SMEs to scale up, securing jobs and creating opportunities across the country." Small business minister Gareth Thomas.
"Growth accelerator for SMEs"
Commenting on the new Act, Emma Jones of Enterprise Nation said: "This new approach could see many more opportunities opening up for the UK's small business community to grow. Allowing local councils to reserve contracts for small businesses will have a long-term impact on local economies. Accessing public sector work can act like a growth accelerator for SMEs, encouraging them to develop and invest in new processes, products and efficiencies, as well as take on more staff in their local community."
However, many business owners are concerned that the changes won't level the playing field for small firms. Rory MccGwire, ceo of Atom Content Marketing (publisher of the Donut websites), said: "Legislation such as the Procurement Act is passed with the best of intentions, but on the whole, public sector procurement actually damages the small business sector.
"In the case of small contracts, the numbers simply do not stack up. If you take the whole group of small businesses that are competing for the contract, their combined costs incurred in the bidding process far outweigh the meagre profit of whichever business wins. And sometimes even the winner makes a loss, having submitted such a competitive price in the first place. The companies that do make a profit are the likes of Serco and Capita, which compete against a small number of companies for huge contracts that may run on for several years."
How to find public sector work
From next week, small businesses will be able to look for opportunities on the redesigned Find a Tender service. They will be able to store their core business details on the service and use them for multiple bids, making it easy to share information with contracting authorities. Businesses will also be able to set up alerts for specific types of tender. Businesses that are already registered on Find a Tender will need to re-register from next week.
Businesses can also:
- Read about the new rules on the Transforming Public Procurement landing page.
- Sign up for regular updates.
- Watch the Knowledge Drop videos to learn about the Act.
Written by Rachel Miller.