The UK’s Crown Commercial Service (CCS) says that 90% of the 3,505 companies on G-Cloud 10 are SMEs.

Since G-Cloud was launched in 2012, £3 billion of cloud and digital services have been purchased by government bodies through the framework, with this version alone estimated to be worth £600 million to vendors. CCS says 48% of this spend (£1.4 billion) has gone to SMEs.

Minister for Implementation Oliver Dowden says: “The success of G-Cloud demonstrates how we are breaking down the barriers for SMEs who want to supply to government”.

UK government is targeted with ensuring £1 in every £3 of the £50 billion of annual government spending on contractors and vendors goes to SMEs by 2022. However, it is currently significantly below this target. In 2009, only 6.9% of government expenditure went to SMEs. In 2015-16 (the latest figures that are available), over £12 billion of central government work was delivered by SMEs. 

Government SME Champions meet regularly to discuss how terms and conditions in government contracts can be simplified, payments can be speeded and upcoming contracts communicated to SMEs in order to increase the proportion of spend going to the SME sector. 

Some departments perform well against the government’s target, with DCMS, for example, procuring 45.6% of services from SMEs. Other departments perform less well – DWP (17.4%), HMT (7.5%) and MOD (18.1%). (Official government figures from latest year available 2016.)

The government measures both direct and indirect spending with SMEs, meaning that there’s an opportunity for B2B service providers to assist in this area by taking SME offerings to the government sector. The data suggests that those B2B service providers who resell SME solutions are likely to increase their chances of success in the government sector, by enabling it to meet its SME spending targets. Indirect spending with SME as a proportion of total expenditure is particularly high in departments such as MOD (13.4%), Home Office (11.7%), DFT (12.8%) and DH (12.5%).

However, according to Tussell, an online database of public tenders and government contracts in the UK, around £565 million of government tech contracts are due to expire in 2018. It says SMEs have begun to win a much larger proportion of such contracts, with SMEs making up 62% of the 23,100 suppliers who won government contracts in 2017 (note this is volume, not value).

Critics say that there are still too many instances of contract extensions where there is no competitive element, or a small number of giant outsourcing companies hogging huge contracts despite poor performance. Categorisation is also a bone of contention with AWS UK being categorised by UK government as a SME, despite it by any reasonable measure not being a SME at all. Yes, you could technically argue it might employ less than 250 people but even the bloke down the pub can see it’s just a limb of a gigantic behemoth. To gain the benefits of engaging with SMEs, UK government has to iron out that kind of problem with its figures.

Posted by Teresa Cottam

Teresa helps B2B service providers improve their commercial results and the customer experience they deliver through research, insight and analysis that builds effective strategy. She is a judge of the GSMA GloMo's for customer experience and enterprise innovation, and for the UK Cloud awards. You can follow her on Twitter @teresacottam

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