New legislation opens up UK Government business to Wales as £11.4billion spent with SMEs
Further reforms offer opportunity for Welsh firms as over a quarter of UK government procurement now with small and medium businesses.
Minister for the Cabinet Office Francis Maude has outlined radical new measures that will be welcome news to small businesses in Wales.
The measures, which came into force at the end of February, will open up UK Government contracts to local small and medium-sized businesses (SMEs) like never before.
Paying businesses on time is critical to the cash flow of smaller businesses in Wales where 60% of SMEs see late payment from customers as a hindrance to growing their business. Under these new rules, the public sector is now required to pay undisputed invoices within 30 days, and this requirement will now flow all the way down the supply chain.
Central government spent an unprecedented £11.4 billion with SMEs in 2013-14, as new figures showed that a record 26.1% of government spend went to SMEs. The new data shows that central government spent 10.3% directly with SMEs, and 15.8% indirectly - meeting the aspiration it set in 2010 for 25% of procurement spend to be with SMEs by the end of this Parliament.
Research also shows that 50% of SMEs in Wales don’t know where to look to find new business opportunities. The Government has launched a refresh of its Contracts Finder website offering a much improved search including by location. The site covers current and future public sector contracts above £10,000 in central government and £25,000 in the wider public sector. It’s free to use, including from smartphones and tablets, and so businesses in Wales will be able to search for contracts close to them.
The new legislation ensures that:
- 30 day payment terms will be mandated down the supply chain - to suppliers and sub-contractors
- Public bodies will have to publish an annual late payment report to sharpen accountability
- The bidding process will be simplified across the wider public sector with complex forms, such as Pre-Qualification Questionnaires, abolished for low value contracts
- The procurement process for public sector contracts will be accelerated.
Read more about the reforms to government buying:
- Reforms make procurement more accessible to SMEs which includes further guidance for contracting authorities
- Public Contract Regulations 2015 guidance
Minister for the Cabinet Office Francis Maude said:
As part of our long-term economic plan this Government is overhauling public procurement to open things up to businesses of all sizes. I am so pleased that our reforms have ensured that innovative SMEs benefited from £11.4 billion of business last year alone. Over a quarter of central government spend now goes to SMEs but we know there’s much more to do to support small businesses in Wales, and these new reforms show just how determined we are to finish the job.
Wales Office Minister Alun Cairns, who today will give a speech to the Institute for Competition and Procurement Studies in Cardiff highlighting the reforms, said:
Small businesses are the engine room of the Welsh economy, creating jobs, driving growth, and attracting investment across Wales. The UK government is right behind small businesses and we want to do everything we can to help them grow and flourish. That why we have radically reformed our procurement process to make it simpler and quicker for small businesses in Wales to bid and compete for UK government contracts.
Lord Young, the Prime Minister’s Enterprise Adviser, said:
Contracts Finder is a world first in terms of scale and ambition. It opens up government business like never before and levels the playing field for SMEs who in the past, didn’t know how to find public sector contracts, let alone bid for them.
Piers Linney, co-CEO of Outsourcery and member of the Government’s SME panel, added:
We know government business has been incredibly complicated and costly to bid for in the past, and that was reflected in the tiny proportion of spend going to SMEs. This new legislation and the new site create a huge opportunity for SME businesses with reduced cash flow risk. They need to educate themselves on their rights under the new legislation and really get under the skin of Contracts Finder to make sure they can seize that opportunity.
Find out more about doing business with government
Case study - Ministry of Defence and Hot Diggidy Dog
About the SME:
Armed Forces ration packs are being spiced up with the introduction of a new hot sauce, created by a former submariner. Hot Diggidy Dog was started by Simon Llewellyn, who runs a small company that produces the sauce at its premises in Barry in the Vale of Glamorgan, South Wales.
Hot Diggidy Dog was born out of necessity when Simon Llewellyn found out he was going to be a Dad back in 2008. He was working as a Global Project Manager in the Oil and Gas industry, and having also worked as an Engineer on Royal Navy Submarines for 11 years, which meant living all over the World for long periods of time.
Their story:
The makers of Hot Diggidy Dog pepper sauce are supplying 75,000 bottles for the military’s 24 hour ration packs as a result of a contract with Vestey Foods UK Ltd. Vestey are contracted by the Ministry of Defence to provide ration packs to our Armed Forces worldwide.
During his time away on 3 month patrols on Her Majesty’s submarines, Simon used to take dried chillies to sea to develop sauces to go with various meals, and one of these recipes became the basis of their flagship, Award winning, Original Hot Diggidy Dog Pepper Sauce. They have been supplying this product to the Armed Forces via Vestey Foods for around 5 years, as a table sauce in 57ml bottle, whilst at the same time conducting extended shelf life testing so that the product could be used in Military Ration Packs. The tests were completed early in 2014 and have since supplied circa 500,000 5ml single servings.
The 1.6 million 24 hour ration packs issued by MoD every year are designed to give deployed military personnel the 4,000 calories they need daily to ensure they are at peak physical and mental fitness during long patrols or operations.
They include traditional favourites such as boiled sweets, baked beans and hot chocolate alongside newer items such as chicken tikka masala, chilli con carne and Oreo cookies. The 5ml vial of Hot Diggidy Dog sauce is the first addition to the MoD’s ration packs since 2010.
How has working with the UK Government helped the SME to grow?
The work for the MOD via Vestey Foods has been a key factor in the company’s steady growth - both the MoD and Vestey Foods have been very open and straightforward to work with, and it has been a pleasure to achieve the needs of all three parties and to build this mutually beneficial relationship. The opportunity to supply HM Armed Forces has seen the company grow steadily from a one man operation to now employing 5 full time and 3 part time staff. With the prospect of future increases in orders and introduction of new varieties, the company hopes to continue this growth and provide many more jobs.
Founder and MD of Hot Diggidy Dog, Simon Llewellyn said:
I lived and loved the Armed Forces for eleven years and so recognise the importance that food plays in morale. What began as experimentation using bags of dried chillies onboard British nuclear submarines has now grown into a rapidly expanding business that, thanks to the MOD, is fast becoming a household name.
The feedback we have received from the troops has been overwhelmingly positive. We are delighted to have won this contract and have enjoyed sharing ideas back and forth with the Ministry of Defence.
Working with Vestey foods and the MOD has given us an in depth understanding into the very high standards that are required, and also the exacting requirements of a highly complex supply chain. As an ex Serviceman, I have enjoyed the structured & open way of working, where communication channels on both sides are open to continually improve product range, service levels and end user satisfaction.