New research shows
New research from Tussell, a data provider of government procurement information, has revealed that more SMEs are now winning government contracts than ever, with over 14,000 different SMEs awarded government business last year.
Tussell’s analysis reveals SMEs are in an increasingly strong position to make the most of the commercial opportunity to work with UK government, a market worth £223 billion last year. This underlines progress made on the government’s pledge to spend £1 in every £3 with SMEs by 2022. An average of 1,746 SMEs won contracts per month in 2017, up from 1,577 in 2016. SMEs consistently make up a majority of the suppliers winning government contracts: two thirds (62%) of the 23,100 suppliers that won contracts in 2017 were SMEs.
Against the backdrop of increasing public scrutiny of large companies receiving government money, Tussell’s data reveals that the UK government is making steady progress in diversifying its supply chain.
Gus Tugendhat, Founder of Tussell said:
“There is currently a false perception that government contracts are restricted to a small, closed group of large suppliers. Tussell’s data reveals that progress is being made on widening the base of SMEs in the government’s supply chain. This is crucial to the government’s pledge to spend £1 in every £3 with SMEs by 2022. Our data indicates clear movement in the right direction.
“Despite these positive signs that public procurement is becoming more accessible to SMEs,the government must now make sure that winning contracts translates into revenue for SMEs. For example, by ensuring that SMEs get a fair share of the value of framework agreements that they are listed on.”
Tussell’s data reveals that local government is leading the way on working with smaller suppliers. In 2017, around half (52%) of SME suppliers in public procurement won contracts from local government buyers.
The largest concentration of SMEs winning government contracts is in the capital, with 2,000 London-based SMEs sharing nearly 4,500 contracts in 2017. However, Scotland and the North East are seeing the fastest growth in the number of SMEs based in these regions winning government contracts, with the North East seeing a 17% year-on-year increase in 2017, followed closely by a 14% increase in Scotland.
The construction sector consistently sees the highest proportion of SMEs winning government contracts. Since January 2015, 68% of construction suppliers to government have been SMEs. Construction dominates public procurement, with construction firms accounting for twelve of the top 20 public sector suppliers in 2017.