Policy paper

2010 to 2015 government policy: government buying

Updated 8 May 2015

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/buying-and-managing-government-goods-and-services-more-efficiently-and-effectively. Current policies can be found at the GOV.UK policies list.

Issue

We need to save money by improving the way we buy goods and services. We also want to use government’s buying power to help support the economy.

Actions

We have created the Crown Commercial Service to advise and negotiate on behalf of all government departments and the wider public sector, to obtain better value services and save money for the taxpayer.

We are also:

  • making sure that small and medium-sized enterprises (SMEs) have access to government contract opportunities, making it easier for them to do business with us, and making sure that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015
  • making sure that departments publish details of future projects and contracts on the Contracts Finder website every 6 months, giving businesses the confidence and time to invest in relevant skills, labour and capabilities to win these contracts
  • working to obtain simpler, more flexible EU procurement rules in Brussels – this should support economic growth by making the procurement process faster, less costly, more effective for both business and procurers; this will affect more than £45 billion of central government spend (more than £230 billion for the UK public sector) every year
  • helping commissioners of public services to become more effective through the Commissioning Academy
  • using commercial intelligence more effectively to improve the value gained from contracts across government

Background

In 2013 to 2014 our work on efficiency has helped departments save more than £3.8 billion.

Francis Maude, Minister for the Cabinet Office, set up the Efficiency and Reform Group (ERG) in 2010. It aims to make sure departments work together to reduce waste and improve accountability across a range of areas, including information and communications technology (ICT), procurement, projects, HR and property.

Who we’re working with

We work with all departments across central government, suppliers of goods and services, and with the EU to simplify regulations. Increasingly we are also working with organisations in the wider public sector and we’ve established memoranda of understanding with other public sector buying organisations to form strategic partnerships and joint initiatives.

Appendix 1: making sure government gets full value from small and medium-sized enterprises

This was a supporting detail page of the main policy document.

Spending more with SMEs

We are working to help small and medium-sized enterprises (SMEs) – including social enterprises and charities – gain a greater share of central government business.

Our goal is for 25% of central government spending to go to SMEs by 2015 (European Commission definition of ‘SME’). This applies to the money spent directly with prime contractors and the money spent by them on sub-contractors.

We met this goal in the financial year 2013 to 2014. When the coalition government took office in May 2010, central government was spending £3 billion (6.5% of its procurement budget) directly with SMEs. Since then we’ve seen a steady increase in the proportion of spend going to SMEs, and in 2013 to 2014 this stood at 10.3% directly and 15.8% in the supply chain.

We are changing how we do business to make sure that small companies, charities and voluntary organisations are no longer shut out by excessive bureaucracy and poor procurement practices. For example, we’ve made it clear that departments must not rule out SMEs who are financially sound simply because their turnover is low.

Find out more about how the government is open to small businesses.

Commercial skills: government is open to small businesses - are you ready?

Read our procurement guidance: Procurement policy note 02/13: supplier financial risk issues

Crown Representative for SMEs

Stephen Allott is the Crown Representative for SMEs, appointed in February 2011. His job is to bridge the gap between government and smaller suppliers. His main aims are as follows.

Understand the concerns of SME suppliers

Stephen Allott has close links with trade associations representing SMEs, and they keep him informed of the issues and concerns of their members. He also receives feedback on SMEs’ experience of government procurement via the Mystery Shopper service (see below).

Open up government procurement to SMEs

The Crown Representative helps to design public procurement policy and processes. He also gets involved with specific procurements to make them more SME-friendly.

Stephen Allott uses his Twitter account, @SMECrownRep, to publish links to interesting SME opportunities on Contracts Finder and to draw attention to issues affecting SMEs.

He has also put together a list of tips for SMEs bidding for government contracts. See Doing business with government: a guide for SMEs.

The Mystery Shopper service

The Mystery Shopper service allows suppliers to raise concerns about public procurements, including issues relating to unfair practices in the supply chain.

Suppliers and members of the public can use the service to raise issues directly with the Crown Commercial Service, anonymously if they wish.

By February 2015, the Mystery Shopper service had investigated 818 cases: 4 out of 5 of these resulted in a positive outcome where changes are made to existing procurements or recommendations are accepted for future contracts. These outcomes included government changing current or planned procurements, or the supplier gaining a better understanding of the procurement process. Mystery Shopper also made 511 spot checks of procurement opportunities advertised on Contracts Finder.

We publish the results of investigations into the cases received. See Mystery Shopper results for details of the cases investigated so far.

Find out how to use the Mystery Shopper scheme and follow Mystery Shopper on Twitter: @govmysterydhop.

Sally Collier, Government Deputy Chief Procurement Officer, discusses the Mystery Shopper scheme

Sally Collier, Government Deputy Chief Procurement Officer, discusses the Mystery Shopper scheme

Greater transparency

We are being more transparent to enable the public to hold public bodies and politicians to account. As part of this, in May 2010 the Prime Minister announced that:

  • all new central government ICT contracts over £10,000 will be published online from July 2010
  • all new central government tender documents for contracts over £10,000 will be published on a single website from September 2010, with this information to be made available to the public free of charge
  • all new central government contracts over £10,000 will be published in full from January 2011

See how departments are doing: Transparency Progress Reports.

From 1 April 2015 the wider public sector will also be required to publish contracts on Contracts Finder. Find out more about Transparency requirements for publishing on Contracts Finder.

Contracts Finder

Contracts Finder is an online service that lets you search for information about public sector contracts. You can use the service to:

  • search for current contract opportunities over £10,000
  • find out what’s coming up in the future
  • look up details of previous tenders and contracts

You can sign up to get free email alerts with suitable opportunities.

A number of government’s main suppliers have signed up to publish their government sub-contracting opportunities on Contracts Finder. This will give SMEs more information than ever before on sub-contracting opportunities in government.

Before using Contracts Finder you may find it useful to read our guide on Tendering for public sector contracts.

A new approach to IT contracts

Government IT contracts are becoming more flexible to create opportunities for SMEs and to reduce the cost to taxpayers. This started with 2 areas: application software and infrastructure IT.

We are introducing ‘break points’ in IT contracts. At set times during the course of the contract we will review the terms and conditions to ensure we are getting the best value for money.

And in cases where we would once have entered into a large, lengthy contract with a single supplier, we now aim to divide our requirements into smaller packages to allow cheaper, more flexible solutions.

Prompt payment for SMEs

Cash flow is critical to the survival of SMEs. The government’s policy is to pay undisputed invoices within 5 days, and it is a condition of every government contract that sub-contractors are paid within 30 days. We are also exploring new ways to ensure SMEs in the supply chain receive payment at the same time as the prime suppliers. This will include introducing Project Bank Accounts - already used successfully in the construction sector - to sectors such as defence and facilities management.

So that sub-contractors are paid within 30 days, we are making sure that:

  • departments monitor prime contractors’ performance as part of their contract management processes
  • SMEs are encouraged to use the Mystery Shopper service to report instances where payment is slipping
  • the Crown Representatives team, which coordinates the government’s approach to the management of main suppliers across all departments, strongly encourages prime contractors (suppliers working directly for the government) to pay sub-contractors more quickly than 30 days

From 26 February 2015 new contracts in both central government and the wider public sector will contain these requirements, and require that similar terms are passed on to sub-contractors. Find out about Paying invoices in 30 days down the supply chain.

Simplifying pre-qualification

For all central government procurements under the EU threshold (approximately £113,000), we have eliminated pre-qualification questionnaires (PQQs) entirely (except for 2 departments, which continue to use them for security reasons). Buyers are free to choose the best procurement method for their individual circumstances.

For larger procurements we have moved towards greater use of the ‘open procedure’. This makes sure that suitable applicants are not eliminated without their full bid being considered. If procurements need a pre-qualification questionnaire, a straightforward PQQ has been put in place for use across government.

Find out more about Requirements on pre-qualification questionnaires.

Further information