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Report of the Digital Government Review


Small Suppliers

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Both major parties have set targets of 25% of government spend going to small businesses to increase both innovation and economic growth. Labour have also committed to allowing public sector organisations to reserve some contracts for social enterprise. Where possible spending money directly with these smaller organisations will be the most effective model, if a supply chain contains multiple parties then each can be expected to need to pay for overheads and create profit margins. The current government is expected to miss the 25% target so further action is required.

The reduction in the number of frameworks, increased use of frameworks with the characteristics of G-Cloud and improving the search capabilities of online marketplaces will assist with meetings these goals. The use of innovation challenges and open roadmaps, as discussed in previous chapters, will also open up new opportunities and routes for small organisations to engage with the public sector.

Despite this there will still be cases where procurement rules and legislation are too onerous, or where a contract is too large for a small supplier to work on its own and needs to work either as part of a consortium or with a large supplier.

We would expect that the new Small Business Administration that will be set up by BIS under a Labour government would assist with some of these challenges, potentially even creating a small business equivalent of the Compact between government and civil society [167] to define the relationship, but we would also recommend rapid action on the supply chain relationships between large and small suppliers. These relationships are critical but many companies are unsure of how they could or should operate.

Recommendation 29

Priority: Medium

Cabinet Office should develop and publish guidelines for how suppliers are expected to work together when multiple suppliers exist in supply chain.

Government should also encourage large suppliers to publish their own codes of conduct/policy. While these may not be legally enforceable it will set a model for expected behaviour and provide a point of reference when suppliers form contractual arrangements or have disputes

[167] The Compact document can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/61169/The_20Compact.pdf while a National Audit Office review can be found at http://www.nao.org.uk/wp-content/uploads/2012/01/National_Compact.pdf

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