Digital Marketplace for Palatable Procurement

Published on in Alcove Business, News, Technology section

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Alcove has just been accepted on to the G-Cloud 7 framework, meaning our Software As A Service is now available to purchase on the Digital Marketplace here.

The point of the marketplace is to make it clearer, simpler and faster for the public sector to buy digital products and services. The plan? To make procurement a far better process for both supplier and customer. We applaud that! It’s a kind of supermarket for public sector services where you can search using key words, which hopefully goes some way to cutting a path through the public sector procurement jungle for small companies.

Total spend through the marketplace has been increasing year on year, and is likely to be in the region of £400m this year, split nearly identically between SMEs and non-SMEs. The figures are well laid out here. What is not clear is how much of this business was spent on start up companies (companies less than 5 years old and a turnover of less than £2m).

Previous analysis by Spend Network, an open data business, highlighted the difficulty of doing business with government as a small, young company. They looked at three years worth of procurement transactions from central and local government, finding a total spend of £68bn with identifiable suppliers. Of this spend, just £1.8bn (or 2.7%) went to start ups.

In the past, the local government agenda has focused on economies of scale, paving the way for the big outsourcers to secure massive contracts and significant market share. However, there does appear to be a growing belief in SME engagement in public procurement as the best way to deliver value for money for local government. As well as increasing competition and market innovation; working with SMEs may offer wider social value like stimulating the local economy, offering apprenticeships or providing better service choice.

Other public sector moves which have helped small companies include requiring the entire public sector supply chain to be paid within 30 days; abolishing pre-qualification questionnaires for low value contracts; and the requirement to publish all public sector contracts in one place on Contracts Finder. The payment terms in particular are a godsend to small companies for whom cashflow = survival. It stops them being punished by high interest payments to banks or invoice factoring fees, which often erode any profit margins. The Government has talked a lot about the UK being a start-up economy but this can only work if companies are not wasting money on things like unnecessary interest payments. It is good to see them leading by example.

Local government already does a lot of work with SMEs and the voluntary sector but anything that can be done to make life easier for both parties is welcome, particularly in light of current budgetary pressures and rising demand for services. Local Authorities are able to make savings by using their spending power strategically, getting the best value for money by shopping around. The Digital Marketplace goes some way to helping them do this.