Government takes steps to help SMEs win IT business

New contracts to allow more flexibility

Government IT contracts will be broken into smaller chunks to enable small and medium enterprises (SMEs) to win more business from government, it was announced today.

The Cabinet Office said government IT contracts will be more flexible, starting with application software and infrastructure IT. It wants to introduce caps on IT contracts so there is less money spent on large lengthy contracts.

Liam Maxwell, director of future ICT at the Cabinet Office, said that the CloudStore is the biggest change in government procurement yet. He said it is a good example of separating a large IT contract into several subcontracts.

"IT used to require huge capital and you used to have to buy all of the servers and services in one go. But the CloudStore disaggregates the services, which benefits SMEs because they don't have to bid for large contracts," he said.

Speaking at a briefing in Westminster, Cabinet Office Minister Francis Maude emphasised the importance of SMEs to the UK economy.

"SMEs are a key driver for growth. In 2010 they accounted for 50 per cent of turnover for the UK economy," he said.

Maude said that by the end of the financial year, the amount of government business going to SMEs would double from £3bn last year to £6bn this year.

In central government there will be a rise from 6.7 per cent to 13.7 per cent of business going to SMEs in the same period, he said.

In addition to the new IT contracts, Maude announced a new package of measures to help the government to do business in a more competitive and transparent way.

Maude said that larger private sector companies are looking to help the UK's SMEs win more government business.

Nine companies, including HP and CapGemini, have signed up to publish their government subcontracting opportunities on the government's Contracts Finder website, and one-third of the opportunities that have been put onto the site have been awarded to SMEs.

Nick Wilson, managing director and vice president HP UK, said that HP wants to help the UK's SMEs because they provide "technology innovation and an entrepreneurial spirit that adds value to the government and private sector customers".

Maude said that simplicity has been a problem for SMEs in the past. Yet the first purchase from CloudStore was from the Maritime and Coastguard Agency in a process that took only 24 hours, demonstrating the importance of simplicity, he said.

Other measures that were announced by the government to make it easier for SMEs include prompter payments and an improved complaints service dedicated to SMEs to address unfair practices in the supply chain of government contracts.

In June last year, the Cabinet Office said that the creation of a central government procurement team will save the government £3bn a year.

In a report last year called Small and Medium Enterprise Action Plans, the government said it would increase the use of SMEs within the government supply chain so that each department would do 25 per cent of its business with SMEs.