Policy paper

Department for International Trade (DIT) small and medium enterprises (SME) action plan

Published 5 January 2021

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Foreword - Graham Stuart MP, Minister for Exports

Supporting small and medium-sized enterprises (SMEs) to succeed is a core aim for the Department for International Trade (DIT). Accounting for over 99% of all UK businesses, and approximately 50% of all private sector employment and private sector turnover, SMEs are the lifeblood of our economy and the engine room for economic growth. That’s why I’m putting support for SMEs at the heart of our export planning. It’s also why, as you can read in this action plan, we at DIT are seeking to maximise how much of our departmental procurement is spent with SMEs. We know the innovation and problem solving skills of smaller businesses can too often be ignored by government and that quality of public service delivery misses out as a result.

For 2019 to 2020, I am pleased to say 34% of DIT’s spend was with SMEs, narrowly exceeding the government’s SME ambition of 33%. The action plan seeks to make our procurement SME friendly and to work with SME partners to help them to help us succeed. I will be regularly reviewing and monitoring our progress against the action plan with the DIT SME Champion and have asked that the action plan is revised and reissued on an annual basis.

In addition to our SME work we are also developing policy and processes to promote diversity and inclusion in our supply chains. Through ‘meet the buyer/supplier’ events and increased use of webinars we will break down barriers for those wishing to become a trading partner of DIT. We welcome questions, comments or suggestions on how our procurement processes can be improved and I hope anyone interested will speak to us at DITSME-Enquiries@trade.gov.uk.

For the Department of International Trade to be the most effective trade promotion agency in the world it needs to be open to world class SME suppliers. I want to thank all those who have worked with us to date and look forward to more companies joining our support team as we negotiate FTAs, attract more inward investment and turn the UK into an exporting superpower.

Foreword - Tom Hyner, Commercial Deputy Director, SME Champion

DIT has a proud record in SME engagement and consistently performs well against government inclusion targets. SME businesses are already a core part of our supply chain and strategic contracts including in our services supporting UK exporters, in landing new foreign investments and corporately in our digital and interim labour agreements.

The principles underpinning our strategy for SME engagement aim to ensure that we are lowering barriers to entry for SMEs across the full range of our procured goods and services. Through implementing SME friendly best practice such as non-onerous contracts, engaging the market prior to commencing procurement and committing ourselves and our suppliers to prompt payment, we have built a strong base to build from.

This action plan represents an important next step in our maturity in supporting SMEs. Through publishing our plan, making public our main opportunity pipeline and continuing to widely advertise engagement opportunities, we aim to facilitate new opportunities for SME businesses either directly with DIT or in partnership with other firms when bidding for our contracts. In doing so we will build on our existing success and retain our place as one of the best performing Whitehall departments.

As a result of the collaborative cross-government approach to the government’s SME agenda, I have developed 3 key SME procurement principles which are set out in this action plan to ensure that DIT continues to enhance its strong position:

Through our SME action plan 2020 to 2022 we aim to retain DIT’s place as an SME customer of choice and at the forefront of SME engagement in Whitehall.

SME agenda

The UK government definition of SMEs encompasses micro (less than 10 employees and an annual turnover under €2 million), small (less than 50 employees and an annual turnover under €10 million) and medium-sized (less than 250 employees and an annual turnover under €50 million) businesses.

Since 2010 government has launched several initiatives designed to drive forward our economy and make public procurement more accessible to SMEs. The government’s objectives have been centred on the promotion of SME friendly procurement processes and enhanced engagement.

These objectives and initiatives have been enhanced and strengthened through the Public Contracts Regulations 2015 by re-enforcing the role of SMEs. For further information on the steps, measures and reforms the government has taken to enhance and promote SME procurement, please see:

Our department

DIT helps businesses to export, drives inward and outward investment, negotiates market access and trade deals, and champions free trade. We are an international economic department, responsible for bringing together policy, promotion and financial expertise to break down barriers to trade and investment to help business succeed; delivering a new trade policy framework for the UK as we leave the European Union; promoting British trade and investment across the world; and building the global appetite for British goods and services.

Our services are provided in over 100 markets throughout the world. Our work supports productivity and our economy, providing our businesses with access to new markets, and in turn new processes, technologies and better supplies. This improves people’s living standards as they benefit from greater choice at lower prices. Equally, by driving prosperity, trade and international investment, our work contributes to global stability and security, as well as increasing the UK’s influence globally.

great.gov.uk has tailored support and advice for businesses on how to start exporting or increase the amount of goods and services they sell overseas.

You can:

Our SME spend

Our SME spend ambition

DIT has set an overall ambition of 33% of spend going directly or indirectly to SMEs in line with the SME agenda. This is in line with the overall government SME agenda. We are continuing to work on the methodology and data which will support our year-on-year SME targets.

Our SME spend

A breakdown of our spend as reported to the Cabinet Office is provided below. As DIT are a new department, financial year (F/Y) 2018 to 2019 is the first financial year that SME spend data was been reported. For both F/Y 2018 to 2019 and 2019 to 2020 this data provides a holistic view of direct and indirect spend.

DIT Spend with SMEs - financial year 2018 to 2019 Spend with SMEs - financial year 2019 to 2020
Total procurement spend £125,252,217 £152,221,302
Spend with SMEs £47,858,451 £51,804,990
Spend with SMEs as % 38.2% 34%

Our SME strategy

DIT starts from a strong position on SME spend. However, there are challenges to maintaining this performance over time as a high proportion of our SME spend is driven by our larger contracts.

DIT has invested in its commercial policy capability and capacity and has implemented a strategy across the Commercial Directorate to encourage wider SME monitoring and participation in our procurements. In addition to our principles, this strategy will help us to maintain our performance and maintain our vision to increase and cement DIT’s position as one of the leaders of SME spend across government.

Through the 3 key principles of our SME strategy – ‘transparency and accountability’, ‘access to opportunities’, and ‘capability and awareness’ – we will enable SMEs to continue to participate in our competitions and to support us in delivering critical services to UK businesses and the economy. Under each principle is a number of actions, which will identify what we will be doing within the key areas to improve SME participation.

Principle 1: transparency and accountability

Action 1 - SME minister

DIT’s Minister for Exports, Graham Stuart MP, is the Minister responsible for ensuring DIT supply chains are SME inclusive. Minister Stuart will hold regular meetings with DIT’s Commercial Leadership and SME Champion to ensure continual engagement on progress.

Action 2 - SME action plan

In 2018, the Chief Executive of the Civil Service and Permanent Secretary, John Manzoni, contacted all commercial directors to request that each department has its own SME action plan. As part of this request, DIT has developed this action plan, which targets continual improvement with regards to SME spend and inclusivity within DIT supply chains up to 2022.

Action 3 - SME procurement policy

By the end of March 2021, DIT will develop and embed an internal SME commercial policy, aligned to this action plan, which sets out DIT’s procurement standards for SME inclusion and accessibility within our supply chains.

Action 4 - procurement pipeline

DIT will conduct annual reviews of its pipeline data and make amendments where necessary to ensure continual enhancement in order to easily identify procurement opportunities that are accessible for SMEs.

Action 5 - supply chain data

DIT will implement conditions within its procurement documentation, aligned to the SME commercial policy, that will place contractual obligations on our suppliers to report annually on SMEs within DIT supply chains. This will enhance DIT’s holistic view of indirect SME spend.

Principle 2: access to opportunities

Action 6 - lean sourcing

DIT recognised that SMEs may find the significant amount of documentation required to tender for public contracts a barrier. DIT are committed to altering this and are continually looking for ways to make procurement processes easier for businesses to understand and navigate.

DIT will apply lean sourcing procurement principles to all procurement activity and aim to conclude all open competition within the Cabinet Office target of 120 calendar days. DIT has developed and implemented a lean sourcing commercial policy which is aligned to the government’s lean sourcing agenda.

Where appropriate, DIT look to break contracts down into lots and promote the use of the Public Contracts Regulations 2015 Open Procedure as DIT’s default competitive position. This will support the SME agenda by reducing costs for prospective suppliers, reducing the number of large, complex contracts, thereby making our supply chains more accessible to SMEs.

Action 7 - Crown Commercial Service

Wherever possible, DIT will seek to utilise centrally negotiated Crown Commercial Service Agreements, which have been designed with the intention of being accessible to all. The Crown Commercial Service Agreements offer opportunities for a significant number of SMEs through leaner, streamlined procurement processes and prompt payment mechanisms.

Action 8 - collaboration

DIT will collaborate with its suppliers to share best practice, including new reporting practices, on developing, maintaining and enhancing SME accessibility within the supply chain.

Action 9 - contracts finder

DIT, aligning to its proposed SME commercial policy, has placed contractual obligations on all its suppliers to publish sub-contracting opportunities above £25,000 on Contracts Finder.

Principle 3: capability and awareness

Action 10 - working groups

DIT will be a proactive member of all SME-related cross-government working groups. These include, but are not limited to: prompt payment (DIT’s Prompt Payment Data), modern slavery and SME champions.

Action 11 - SME Champion

DIT has nominated Tom Hyner, Commercial Deputy Director, to perform the role as SME Champion. DIT’s SME Champion will work to increase awareness and visibility of the SME procurement agenda within DIT and promote and align SME inclusion with Departmental objectives.

Action 12 - regular forums

The SME Champion will host regular forums with DIT contract managers to ensure continued communication and engagement with contract managers about the importance of the SME agenda and what can be done to support it through the life of a contract.

Our pipeline

We have identified upcoming opportunities to become part of DIT’s supply chain. Future versions of the pipeline will look to include a differentiation of direct and indirect opportunity indicators. As these are upcoming opportunities, please note that timescales and values may be subject to amendment. To access pipeline, procurement and award information please go to https://www.gov.uk/contracts-finder.

See the DIT procurement pipeline for January 2021 to June 2022.

Our risks

Public sector procurement is subject to a framework (Public Contracts Regulations 2015) which encourages free and open competition. This framework is underpinned by the Treaty of the Functioning of the European Union’s 5 principles. These are non-discrimination, equal treatment, transparency, mutual recognition and proportionality. As a result, we are not able to guarantee that DIT contracts can be restricted for award to SMEs.

Risk 1 - source data

DIT’s current reported SME spend data is with all SMEs, regardless of location. It is not UK SME specific. DIT is currently establishing a methodology for collating SME spend data (direct and indirect) for UK SMEs only.

Risk 2

DIT recognise that a high level of SME spend is with a small number of SMEs. There is a risk that in the event a non-SME replacing the incumbent through open competition, DIT’s SME spend ambitions could be significantly impacted. This action plan helps mitigate this risk.

Risk 3

Suppliers fail to publish sub-contracting opportunities above £25,000 on Contracts Finder. As a mitigation, DIT’s procurement documents place this contractual obligation on suppliers and it is monitored as part of our contract management policies.

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