Small Business

Small businesses back in play after U-turn on public sector deals

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The government has backtracked on a “clumsy and bureaucratic” rule that could have prevented small businesses applying for public sector contracts.

Having promised to open up more government work to small and medium-sized companies, the Cabinet Office provoked anger when it announced that consulting businesses would have to demonstrate 2,200 days’ worth of paid work over a 12-month period. Critics claimed this would create an insurmountable hurdle for smaller and young consultancies, as it would equate to between nine and ten staff working full-time on projects.

The Crown Commercial Service (CCS), the executive agency of the Cabinet Office, has agreed to revise the rule. Consulting companies will need to show they have 2,200 days of experience in either private or public sector work spread over up to three years. This will mean a much greater proportion of small businesses will be able to apply.

Alan Leaman, chief executive of the Management Consultancies Association, welcomed the government’s change of heart. “We are pleased that this requirement has been relaxed and hope that the new framework will provide clients with a strong choice of quality and capable consulting firms, including many of the UK’s excellent specialist and smaller consulting firms,” he said. “I don’t doubt CCS’s good intentions but the first proposal was a clumsy and bureaucratic way of filtering applications that would have unfairly penalised small firms.”

Critics of the original plan said that it threatened to exclude companies that could bring fresh ideas to the table. A CCS spokeswoman said: “We have listened to feedback from potential providers and have revised the criteria accordingly.”

The Cabinet Office has estimated that 27 per cent of the government’s procurement spending reached small and medium-sized businesses in the year to April 2015. The government is aiming to reach 33 per cent by 2020.