I was very interested to see Labour’s pledge to support the cause of small and medium-sized enterprises in Britain. As the frontrunner in the election, at least according to opinion polls, it could signal new opportunities for economic growth.
On public sector contracts, there will be a guaranteed shortlist for small businesses to give them a fairer chance when bidding for public contracts.
It’s something that’s important to us at LHC. We have been consciously helping the cause of SMEs for decades, and while we know we can always improve, we are proud of what we have achieved so far.
As a construction framework provider, we are at the heart of public sector projects, such as schools, hospitals and affordable housing. In a sector that is predominantly made up of SMEs, you would expect construction to be at the forefront.
But in reality, the approach to frameworks is not consistent when it comes to attracting and engaging specific companies. This means that many SMEs feel like a closed shop when it comes to public sector contracts – they are difficult to bid on, and difficult to secure.
Here at LHC we try to make sure SMEs get a fair hit, so much so that over the last decade, LHC Procurement Group has appointed 1,266 suppliers to our frameworks and 1,048 of those suppliers have been SMEs. This is 82.7%.
Looking at projects last year (April 23 to March 24), we awarded 1,356 projects, of which 956 were awarded to SMEs. That is 70.5%.
So how does this translate when it comes to the income earned by SMEs? Well, the numbers here are just as interesting.
Project values at LHC last year exceeded half a billion pounds for the first time in our history. Of this amount, £245 million was awarded to SMEs.
To achieve this high rate of success we follow a number of guiding principles:
- We work hard to attract small, local businesses and underrepresented groups throughout the bidding process and in the design of our frameworks themselves.
- We are keen to attract organizations that have not been placed on public sector projects before and deliver workshops, so that they fully understand the process.
- We take extra care when designing our frameworks to ensure that we do not create barriers that may discourage small businesses from applying.
- Proactive engagement with underrepresented groups is another key; Find and interact with industry networks, there are many of them. Removing arbitrary barriers for SMEs such as unreachable PI levels.
- Being specific about desired results rather than just “testing based on what has been done before.”
- Evaluate qualities rather than rinse and repeat previous work. Not lowering the quality threshold – this is crucial – but instead, re-evaluating how quality is assessed. Bid support training with SME groups.
It is also worth noting that we discuss with clients and end-users their perception of “risk” when it comes to dealing with SMEs; Is it real or is it just a set of rules they have followed for a long time?
In Labour’s Small Business Plan, published in November, Secretary of State for Business and Trade Jonathan Reynolds said there were £30bn worth of public contracts that would be suitable for small businesses to undertake, but currently, 90% of them were still awarded to larger companies.
We are 7 days away from the general election, and Labor has said it will carefully consider the treatment of SMEs in this country, “the beating heart of our economy”.
“It will work to embed the voice of small businesses into everything we do,” he adds, adding “ensuring we have the policy framework necessary to allow our small businesses to thrive and grow.”
I think we do a good job at LHC when it comes to SME engagement, but we never get complacent. There is always more to do. SMEs are truly the lifeblood of our economy and we will do our part to keep them that way.