Small companies win competition for Whitehall contracts

The government has claimed that it is delivering on a promise to give more of its work to small and medium-sized businesses after its online procurement platform reached £1 billion in sales.

The digital marketplace, designed to overhaul how the public sector buys digital products and services, has resulted in small businesses winning more than half of these IT deals since it was introduced in 2014.

Almost 90 per cent of the companies competing for work on the marketplace, which has been dubbed the Amazon for government IT, are small businesses, the government said.

The Cabinet Office wants a third of all central government spending to go to small businesses by 2020, which could mean an extra £3 billion a year for such companies. The figure was 27.1 per cent last year.

Matthew Hancock, the cabinet office minister and paymaster general, said: “The digital marketplace means that the public sector now has access to a greater number of new and innovative suppliers, many of whom have never had the opportunity to work with government before.”

Nevertheless, Emma Jones, founder of Enterprise Nation, a small business support group, said that government procurement on both a national and a local scale was not moving quickly enough.

“While there is clearly an appetite at the highest level to see it increase, that message has not yet translated into [enough] contracts being awarded to small businesses,” she said. “Our members tell us the initial pitching system is still too complex, bureaucratic and, at a local level certainly, still weighed in favour of existing large companies and incumbents.

“Making procurement accessible for innovative small businesses would be transformational and one of the best and most tangible things the government could do to help small firms to grow to the next level.”

Luke Aikman, director of Nudge Digital, a small, Bristol-based marketing agency, said that the digital marketplace had helped his business to compete. “Traditionally, [we have not had] the marketing budget to compete with the big consultancies,” he said. “The way in which businesses are presented [on the digital marketplace] lets us set out our stall on an even footing alongside the likes of Accenture or Cap Gemini.

“We’re toe-to-toe and can be compared on case studies, expertise and value for money. Small expert companies like ours will always be able to provide better value for money to the government in our specialised areas. The giants charge out their graduate recruits at similar rates to our directors, who are leaders in their fields.”

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