As the registration opens for small and medium-sized enterprise (SME) public sector contracts, a new report from the Institute for Government has found that that the largest suppliers are winning more Government business. Last year, roughly a fifth of all central Government procurement spending was spent with so-called “strategic suppliers”, which are companies that receive over £100 million per year from Government contracts.

This report, Government Procurement: The Scale and Nature of Contracting in the UK, argues that this situation is risky for the Government in the light of the fact that its top three suppliers have all experienced financial difficulties recently. This has highlighted problems with the outsourcing model used and raised questions about whether public services are adequately protected from supplier failure.

The report also reveals that the Ministry of Justice, the Department for Transport, the Department for International Trade and the Department for Environment, Food & Rural Affairs spent more than half of their entire budgets with external suppliers last year.

However, with the Government now planning to increase its use of SMEs, service providers wishing to apply for public sector fast-tracked, lower value contracts in the new year are now able to register. These lower value contracts do not require a tendering process and are not advertised as their value is below the EU threshold requirement. The Government is aiming for a third of its spend on outsourced service and supply contracts to be with SMEs by 2020.

Last reviewed 10 January 2019