New 2015 Procurement Regulations – Will SMEs benefit from the changes?
Posted by Gemma Waring on February 13, 2015
The official public contracts regulations which govern UK public sector procurement have been published and are coming in to force on the 26th February 2015.
One of the main aims of the regulations and their precursor strategies ( such as Europe 2020 and the Lord Young report) was to encourage more participation from SME companies in tendering exercises and ultimately to get more SMEs supplying to the public sector.
The current government set the lofty target of 25% of government spend going to SMEs by 2015, a target which is a long way from being met so the key questions for organisations looking to supply into the public sector in light of the new regulations are 1) What has changed? and, more importantly, 2) What does this actually mean for me?
What has changed?
Some of the more significant changes in the new regulations are:
- Tendering documents have to be available from the date of OJEU advertisement – no more registering interest and chasing for updates from the contracting authority.
- Reduced timescales for procurement – on average they have reduced timeframes by a third and have introduced the new Accelerated Open procedure for OJEU tenders and have prohibited the use of a PQQ stage for low value contracts.
- Contracting Authorities are now only allowed to ask for suppliers to have a turn over that is twice the value of the contract they are applying for.
- New mandatory exclusions mean companies with individuals who have been found guilty of Terrorism or Serious Crime offences must be excluded from the competition – unlikely to affect the majority of companies.
- New discretionary exclusions means that poor performance on a previous contract (including any damages paid not just cancellation of contracts) can be grounds for exclusion for up to 5 years.
- Buyers are now being ‘encouraged’ to break contracts down into smaller lots – not as strong a measure as most hoped for as it could have been mandated for all contracting authorities.
What does this mean for you?
The over all impression SME suppliers might take from the new regulations is that there are a number of conflicting changes that means they are being impeded rather than encouraged to participate.
For example, the limitation on the company turn over to contract value ratio would largely be seen as a positive step for SMEs but without mandating buyers to break contracts down in to lots, many SMEs might still find that contracts remain out of reach due to their size.
There are also the conflicting ideals between reducing red tape and the removal of PQQ stages for low value contracts. Given the issue stated above about larger contracts and restrictive turn over requirements, SMEs are often encouraged to tender for smaller contracts to break in to the public sector but now these will effectively be run as an open procedure, it will mean more work for SMEs and more form filling – draining resources with no guaranteed return on investment.
Although the introduction of E-Certis or a European Single Procurement Document will alleviate the burden somewhat, these will not become mandatory in the UK until October 2018, leaving a period of more than 2½ years in which suppliers have lengthy documents to fill in rather than the less burdensome PQQs documents – only putting in additional resources if successful at this stage.
Only time will tell what impact the changes will make and the Crown Commercial Service has advised ‘more guidance’ will be forthcoming on implementing the Lord Young Report but for now its hard to see how SMEs will benefit, certainly in the short term, from the changes in the new regulations.
Perhaps a lack of input from the business sector in the consultation phase can be attributed to this or a lack of practical awareness from the public sector of the rigors of tendering for SME companies and the strain it places on resources.
Either way it seems there is a way to go before SMEs can access the market as simply or effectively as they would hope to.
These changes are only a selection of issues SMEs need to consider as part of the new regulations – we will be posting separate blogs in the coming weeks on ‘How suppliers can prepare for Life Cycle Costing Questions’ and ‘Changes to Procurement Procedures’.
Our Successful Tendering courses are all being updated to incorporate the changes to the legislation and what it means to you – our course programme can be found on our website.