Guidance

Small and medium-sized enterprise action plan 2017 to 2022

Updated 15 July 2021

Applies to England

Approvals and governance

The strategy underpinning this action plan will be approved by:

• Edward Argar MP, Minister of State for Health – the Department of Health and Social Care’s (DHSC’s) Minister for small and medium-sized enterprise (SMEs)
• Melinda Johnson – DHSC’s Commercial Director
• Lauren Roberts – DHSC’s SME Champion

Progress against this plan will be monitored quarterly at the department’s Strategic Commercial Steering Group (attended by heads of Commercial across the DHSC family).

The plan will be revised every 6 months. The next revision is due September 2021 to include 2020 to 2021 spend information.

1. Setting the tone

Foreword: Edward Argar, Minister of State for Health

Welcome to DHSC’s SME action plan. This plan sets out the department’s past performance and future aspirations, highlighting the actions we are taking to make it even easier for SMEs to work with the health family. I am proud of the work commercial colleagues have undertaken to date and am excited by the proposals set out within this plan to do even more.

Engaging with small and medium enterprises is a key strategic aim for the DHSC as we look to implement innovative new technologies across our health family.

We will continue to work across government to share best practice and reduce duplication. My commercial colleagues are here to listen and engage with SMEs, so do please get in contact with our SME Champion with ideas and proposals.

Foreword: Melinda Johnson, Commercial Director

I’m proud of the work DHSC has done to date supporting the SME agenda, especially the Leeds SME engagement event we hosted last year in which DHSC played a leading role, bringing SMEs from across industries together.

Engaging with SMEs is a key strategic aim for DHSC. Details on how we plan to do this are within this action plan.

We recognise the barriers SMEs face in contracting with government and DHSC will continue to work to address these with the actions contained in this plan, and with a commitment to continually monitor and improve our work.

The spend profile across the health family has changed significantly due to the coronavirus (COVID-19) pandemic, and therefore we will need to assess the impact this has had on our SME engagement going forward.

Background to the health family

The DHSC single department plan sets out our objectives and how they will be achieved.

DHSC operates in a complex landscape supported by 2 executive agencies and 12 executive non-departmental public bodies (NDPBs) otherwise known as arm’s length bodies (ALBs), along with a number of other agencies and public bodies. The core department (DHSC) and the executive agencies and executive NDPBs comprise the ‘DHSC family’:

• NHS England

• NHS Improvement

• Care Quality Commission

• National Institute for Health and Care Agency

• Public Health England

• NHS Digital

• Health Education England

• Health Research Authority

• NHS Blood and Transplant

• Medicines and Healthcare Products Regulatory Agency

• NHS Business Services Authority

• NHS Resolution

• Human Fertilisation and Embryology Authority

• Human Tissue Authority

• NHS Counter Fraud Authority

The Kings Fund has produced a guide about how the NHS in England works.

Find out more about DHSC’s agencies and partner organisations.

SME objectives

This document sets out the DHSC SME action plan.

DHSC has set a target of 23% by March 2022. This target is based on analysis of annual spend profiles for the 2015 to 2020 Parliament, and a review of accessible spend over the period to 2022.

DHSC promotes and shares best practice procurement across all of the health family but only has influence over those classified within the ‘DHSC family’. This family represents only part of the health system in scope of the SME spend targets.

All other agencies and public bodies associated with DHSC are outside scope. Other agencies and public bodies include NHS trusts and foundation trusts, which are devolved from the department.

This plan, including targets, will be shared internally within DHSC commercial directorate via the procurement cascade and externally with the department’s ALBs via the Strategic Commercial Steering Group.

2. Spend targets

2019 to 2020 SME spend breakdown

In 2019 to 20 the health family spent £3.7 billion.

Of this, approximately £500 million is non-commercial spend. These were payments made between the health family or for items where there is no competition – for example, rent and rates.

The remaining £3.16 billion commercial spend has been used to calculate our SME figure.

The heath family spent £586 million directly with SMES in 2019 to 2020, which is 18.5%. The performance is aligned to that of 2018 to 2019 despite some changes to the health family spend profile understood to be due to COVID-19-related spend in the later part of the year. The heath family spent £56.9 million indirectly with SMEs, which is 1.8%.

As result of the COVID-19 pandemic, we anticipate large changes to DHSC and health family spend profile in 2020 to 2021. There is a risk that this could impact our SME spend in 2020 to 2021 and going forward.

Table 1: DHSC’s achieved and future targets

Financial year	DHSC SME target	Direct target	Indirect target	Achieved
2010 to 2011	-	-	-	7.0%
2011 to 2012	-	-	-	9.0%
2012 to 2013	-	-	-	13.4%
2013 to 2014	-	-	-	15.4%
2014 to 2015	-	-	-	19.8%
2015 to 2016	-	-	-	22.7%
2016 to 2017	-	-	-	21.8%
2017 to 2018	-	-	-	22.0%
2018 to 2019	-	-	-	22.5%
2019 to 2020	-	-	-	20.3%
2020 to 2021	22.8%	12.9%	9.9%	-
2021 to 2022	23.0%	13.0%	10.0%	-

DHSC’s historic performance

DHSC SME performance has improved since 2010. In 2016 to 2017 there was a slight decrease in SME use, followed by increases in performance in 2017 to 2018 and 2018 to 2019. A slight decrease in % performance in 2019 to 2020 comes from a reduction in indirect spend with SMEs. The direct spend DHSC has had with SMEs in 2019 to 2020 aligns with the performance in 2018 to 2019. DHSC remains focussed on achieving 23% by 2022.

Table 2: DHSC historic SME spend perfromance

Year	Target	Achieved
2010 to 2011	23%	7%
2011 to 2012	23%	9%
2012 to 2013	23%	13.4%
2013 to 2014	23%	15.4%
2014 to 2015	23%	19.8%
2015 to 2016	23%	22.7%
2016 to 2017	23%	21.8%
2017 to 2018	23%	22%
2018 to 2019	23%	22.5%
2019 to 2020	23%	20.3%

3. Procurement pipeline 2021 to 2022

The DHSC commercial procurement pipeline is published to provide information to potential suppliers to raise awareness of commercial opportunities that may be available with DHSC and how we’re planning to procure those opportunities.

This forecast is provided for planned procurements of over £5 million. It does not include pipeline data for NHS Test and Trace or the personal protective equipment (PPE) cell.

4. Simplifying the procurement process

Table 3: non-category specific actions – process and transparency

What	Why	How	When
Conducting ongoing reviews and updating terms and conditions	So that contracts are proportionate to their risk and value	This is covered as part of the procurement strategy for contracts we let. We encourage best practice through standard terms and conditions in the NHS but cannot instruct them in what to do	Ongoing
We will look to simplify contract documentation and share where best practice documentation and approaches exist	To make it easier for SMEs to respond to opportunities	Reviewing of existing documentation internally	Ongoing
Guaranteeing prompt payment to suppliers (5 days for non disputed invoices and 30 days for all others)	Our contracts will include contract terms around payment terms which support SMEs financially and operationally,	We will implement measures such as Procurement Policy Notice 04/18 to assess and manage our suppliers’ approach to payments throughout the supply chain	See ongoing progress about DHSC prompt payment of suppliers
Simplifying procurement documents	Making it easier for suppliers to respond	Via procurement policy team template documents	Ongoing as and when opportunities arise
Automating and streamlining processes using our end-to-end e-Procurement system	Making the process of bidding for DHSC contracts easier and less resource-intensive	New procurement system implemented recently, which we hope will simplify the process of bidding	New system implemented
Publish a comprehensive pipeline of our current and future commercial activity	To communicate potential opportunities for SMEs	On GOV.UK	Periodically updated
Publish all eligible opportunities over £10,000 in value on Contracts Finder	To communicate potential opportunities for SMEs	Contracts Finder	Ongoing as and when opportunities arise
Establish an SME champion working group across the health family	To share best practice across the group regarding SME engagement	Reaching out to policy colleagues and members of the strategic commercial steering group to identify leads from each organisation	2021 to 2022
Public Procurement Review Service (PPRS)	Allows government suppliers and potential government suppliers to raise concerns anonymously about potentially poor public-sector procurement practice	Public Procurement Review Service: scope and remit	Available now and going forward as and when required
Providing visibility of the DHSC short-form terms and conditions for SMEs in advance of working with us. These terms are based on the Cabinet Office for general goods and services contracts with a value below the procurement thresholds	They ensure ‘light touch’ contract terms for low-value contracts and avoids using complex terms which can act as a barrier to SMEs	Procurement at DHSC	Available now

Procurement policy notes (PPNs)

The Cabinet Office releases procurement policy notes when there is new policy or a change to an existing policy note. These notes provide guidance on best practice for public sector procurement. The following is a selection which may be particularly relevant to SMEs:

Reserving below threshold procurements:

• PPN 11/20: reserving below threshold procurements

Increasing accessibility to public contracts:

• PPN 03/15: reforms to make public procurement more accessible to SMEs

• PPN 05/11: further measures to promote small business procurement

Paying suppliers on time:

• PPN 05/15: prompt payment and performance reporting

Increasing visibility of tenders and contracts:

• PPN 08/20: introduction of Find a Tender

• PPN 07/16: legal requirement to publish on Contracts Finder

5. Engagement with the SME community

Table 4: non-category specific actions – early engagement

What	Why	How	When
Holding SME engagement events	To listen to SME feedback to remove potential barrier	DHSC held an SME engagement event in Leeds in summer 2019 and we are in discussions around doing a Government Commercial Function North SME event across a number of government departments	2021
Consider SMEs during procurement strategy development	Designing service requirements that are accessible to SMEs	using category strategy documents explaining how SMEs will be considered in individual categories	Ongoing
Participating in Cabinet Office project ‘SME initiative – debiasing procurement’	To improve feedback given to SMEs following a procurement process	Working with the behavioural insights team (BIT) to assess feedback given to SMEs from previous procurements and their thoughts on the debrief information provided	In progress: suppliers have been contacted and interviews taken place to receive feedback on the debriefs
We will work with the Federation of Small Businesses (FSB)	To better communicate the work being undertaken across the DHSC family and how suppliers can get involved	Cabinet Office to make introductions between DHSC and the FSB	2021
Preventing barriers around SMEs not being able to access procurement opportunities as a result of their scale	To enable SMEs to access more opportunities	Breaking procurements down into lots	Ongoing
Providing a named individual for SMEs to contact at any point in the procurement process	To make it easier for SMEs to raise questions or concerns with the department	Via this action plan	Ongoing to continue to share contact details
DHSC has facilitated the adoption of the Home Office’s Accelerated Capability Environment (ACE) network by NHS Test and Trace (JBC)	This provides Official Journal of the European Union (OJEU)-compliant access to about 200 SMEs. This route is key to delivery of key projects in this field	DHSC is conducting a number of Digital Outcomes and Specialists (DOS) procurements to ‘stand-up’ Digital services or consultancies who can be deployed at pace in the event of the second COVID-19 wave. This will create a core group of SMEs that can be used to supplement the NHSX team delivery at a local and national level	Winter 2020

6. Supply-chain activities

Cross-DHSC family working

The DHSC family have established a cross-organisation group, the Strategic Commercial Steering Group (SCSG).

This group brings together the commercial leads within DHSC and all ALBs. It has several workstreams who review the way the health family work together.

One of the workstreams focuses on key procurement categories and establishing category plans to standardise the way we go to market. This workstream is called Category Champions.

DHSC category leads will establish category strategies for the following areas:

• professional services
• ICT and digital
• clinical and medical
• corporate services
• social care
• NHSX
• capital infrastructure

The group works with Crown Commercial Service (CCS) to ensure that the category strategies support the work being undertaken across government.

These plans will include specific information around how SMEs can be engaged within the relevant categories.

For more information on the development of these plans, please contact Lauren Roberts the DHSC SME Champion.

Actions by category

Professional services

DHSC is reviewing professional services procurement. The output will be a clear category plan demonstrating how DHSC will procure professional services, including how we will engage SMEs.

The group are represented on the CCS Professional Services Forum. This ensures that category strategies support the work being undertaken in category reviews, and that we are able to influence the structure of procurements across government.

Timescale: DHSC category strategy to be established by March 2021.

Clinical and medical

DHSC has established a new approach to procuring clinical and medical consumables across the NHS through Supply Chain Coordination Limited (SCCL). SCCL remains committed to achieving government’s SME target.

The DHSC family procures clinical and medical consumables outside of this agreement. Work has started to review procurement routes and make best use of SCCL.

Find out more about SCCL, including questions and answers for SMEs (page 10) in NHS Supply Chain’s frequently asked questions for suppliers.

SCCL achieved an SME engagement rate of 35.3% in 2018.

Technology

The ICT and digital team are currently supporting the development of business cases with a number of ALBs for software and services, ranging from replacement of customer relationship management (CRM) systems to aid in business transformation, to systems to interact with community pharmacy and reduce the impact of GP appointments for repeat prescriptions.

Internally to DHSC, the team is assisting on designing specifications for a system for pharmacy to engage with the licenced manufacturers of medicines, and the Future Service Programme which redesigns the way in which the IT departments will work (after the ATOS contract ends).

The team are promoting the use of Crown Commercial Frameworks such as (DOS) and G-Cloud 12, both of which have a high proportion of SMEs within their compliant tender panel, and therefore increasing the visibility of opportunities to SMEs.

Timescale: DHSC ICT and digital category strategy to be established by March 2021.

Corporate services

The corporate services team tend to make use of the CCS frameworks which are utilised across government. There are some organisations within the DHSC family and wider NHS who have agreements outside of the CCS frameworks.

The Category Champions will look at best value routes to market in building category plans and will make recommendations to the DHSC family. The Category Champions will also work to influence national frameworks to ensure they are meeting SME requirements.

Timescale: DHSC corporate services category strategies established by March 2021.

7. Risks to the delivery of the plan

The DHSC family makes extensive use of CCS frameworks to simplify the procurement process. There is a risk that certain frameworks do not meet the requirements of the DHSC family. Therefore, alternative routes to market are explored during procurement strategy development. This will be managed through collaboration with CCS to influence their procurement strategies.

The uncertainty of EU Exit results in resource shortages as procurement colleagues are redeployed and supplier uncertainty to supply chains. This may delay delivery of some of the projects. This will be managed on an ongoing basis as issues arise and clarity on what EU Exit means is better understood to supply chains.

There is a risk that during the development of ‘SME friendly’ solutions, the number of SME providers can become large. We will manage this by ensuring procurement solutions are manageable for buyers and suppliers through early engagement.

As result of the COVID-19 pandemic we anticipate large changes to DHSC and health family spend profile. There is a risk that this could impact our SME spend in 2020 to 2021 and going forward.

8. Case studies and examples

Facilities management

In January 2018, DHSC commenced the re-procurement of facilities management services for its buildings. The procurement strategy identified the CCS Framework as the best route to market.

DHSC worked with CCS to undertake a supplier open day, explaining the contract requirements and to understand what suppliers were able to achieve.

The procurement needed to show how as a buyer we would:

• proactively encourage SMEs into their supply chains
• increase the use of apprenticeships
• maximise sustainable solutions

The contract went live in November 2018.

9. Wider considerations

Non-category specific actions: indirect SME spend

The DHSC family will grow indirect SME spend by:

• working with key suppliers to encourage SME participation within existing supply chains
• placing requirements on prime contractors to advertise sub-contracting opportunities, where appropriate through the update of DHSC terms and conditions
• requiring prime contractors to provide data on sub-contractors, in particular to confirm that payments are being made promptly, and commitments on their spend with SMEs are being honoured in line with PPN 18/01

Timescale: ongoing

Non-category specific actions: NHS trusts

The department has a number of interventions that stimulate spend with SMEs from the NHS:

• developing and maintaining standard terms and conditions of contract specific for the NHS to use when procuring goods and services, including specific ICT terms
• maintaining a ‘Master Indemnity Agreement’ – a mechanism enabling the NHS to assess the latest innovations on loan or gift
• monitoring prompt payment to the supply chain
• running regular video cascades for DHSC and ALBs
• funding a professional skills network for NHS procurement professionals
• maintaining an internet-based portal, allowing the department and NHS organisations to share documents and information

Data shows that the NHS on average currently spends 12% directly with SMEs.

Timescale: ongoing