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Getting a fair deal from public sector framework suppliers

Posted on by darion

By Clive Feeney, below, Group Managing Director, LHC Public Procurement Group

I was very interested to see that Labour has committed to supporting the cause of British SMEs. As the favourite to win the election, at least according to the polls, this could mean new opportunities for economic growth.

When it comes to public sector contracts, smaller companies will be guaranteed a shortlist to give them a fairer chance when bidding for public contracts. This is something that is important to us at LHC. We have been consciously supporting 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 supplier of building frames, we are at the heart of public sector projects such as schools, hospitals and affordable housing. And in a sector that is largely made up of SMEs, you would expect construction to be at the forefront.

But in reality, the approach to the framework is inconsistent when it comes to attracting and engaging designated firms. This means that many SMEs feel it is a closed shop when it comes to public sector contracts – difficult to bid for and difficult to secure.

At LHC we strive to give SMEs a fair advantage, so much so that over the last decade LHC Procurement Group has appointed 1,266 suppliers to our framework, and 1,048 of those suppliers are SMEs. That’s 82.7%.

Looking at last year’s projects (from April 23 to March 24), we awarded 1,356 projects, and 956 of them were awarded to SMEs. That’s 70.5%.

Attract smaller companies

How does this translate into SME revenue? Well, the numbers are just as interesting. Last year, the value of projects at the LHC exceeded half a billion pounds for the first time in our history. Of this, £245 million was awarded to SMEs.

To achieve such a high success rate, we follow several guiding principles:

  • We make every effort to attract smaller and local businesses and under-represented groups during our tender process and in the design of the framework itself.
  • We are keen to engage organisations that have never been involved in public sector projects before and run workshops to ensure they fully understand the process.
  • We take special care in designing our framework to ensure that we do not create barriers that could discourage smaller companies from applying (e.g. unattainable PI levels).
  • Another key element is proactively engaging with underrepresented groups. You should also seek out and engage with industry networks, and there are many of them.
  • Specifically defining expected societal values ​​and technical outcomes, rather than limiting ourselves to what has come before – based in part on an extensive process of collaboration with suppliers and customers before implementing the framework.
  • While many institutions base their decisions on case studies provided by SMEs, we take a more holistic approach. 70% of our evaluation process is based on quality and performance, as defined above, not just price.

It is also worth adding that we talk to clients and end users about their perception of “risk” in the context of working with SMEs; is it real or is it simply a set of rules they have been following for a long time?

In Labour’s plan for small businesses, published in November, shadow business and trade secretary Jonathan Reynolds said there were £30 billion worth of public contracts that could benefit smaller businesses, but that currently 90% of them were still awarded to large businesses.

With the general election just days away, Labour has said it will be looking closely at the treatment of the country’s small and medium-sized enterprises (SMEs), “the heart of our economy”.

It adds that “the voice of small businesses will be embedded in everything we do” and that it “will provide us with the policy framework necessary to enable our small businesses to thrive and grow.”

I think we are doing well at LHC in terms of SME engagement, but we are never complacent. There is always more to do. SMEs are truly the lifeblood of our economy and we will play our part to ensure that they remain that way.

Clive Feeney is the group’s managing director LHC Public Procurement Groupa non-profit supplier of building frames, supplying its services exclusively to the public sector.