A package of measures has been introduced to level the playing field for smaller businesses bidding to win Government contracts.
The Government plans to exclude suppliers from major public sector procurements if they cannot demonstrate fair and effective payment practices with their subcontractors. It's one of several measures designed to enable more small firms to supply goods and services to the public sector.
In addition, subcontractors will be given greater access to buying authorities to report poor payment performance. Suppliers will also have to advertise subcontracting opportunities via the Contracts Finder website and provide information showing how businesses in their supply chain, including SMEs, are benefitting from supplying to central Government.
The prime minister has written to members of the Cabinet asking them to nominate a small business champion minister in each department to ensure that SMEs are given a fair opportunity.
The most recent figures from 2015/16 show that the Government spent £5.6 billion directly with small businesses. When sub-contracts to small businesses from larger suppliers was taken into account, total spend rose to £12.2 billion.
Oliver Dowden, minister for implementation, said: "This Government is … committed to levelling the playing field for smaller suppliers to win work in the public sector. We have set a challenging aspiration that 33% of procurement spend should be with small businesses by 2022 - and are doing more than ever to break down barriers for smaller firms."
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: "As such a large and prominent customer in the economy, the Government has a pivotal role to play in demonstrating what it is to be a good client. It is right then that the Government … will clamp down on poor payment practice throughout public procurement supply chains. Companies who pay late should not be rewarded with public sector contracts."