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Govtech Venture Capital firm Public have recently published a report on ‘Buying into the future’, focusing on how the public sector can improve its access to innovative tech, and bring smaller businesses into the supplier ecosystem. This is a frustrating problem within the Public Sector and start-ups and SMEs continually face barriers to winning public sector contracts, and the report’s authors say that “many start-ups often perceive the whole tendering process as burdensome, and even biased, and so do not even explore the opportunity of public sector work.”

Quoting techUK’s 2018 GovTech SME Survey they point out that “only 32% of SMEs believe that the Government has acted effectively on its political commitment to helping small businesses to break into the public sector over the last five years”. In 2015 it was announced that 33 percent of central government expenditure would be awarded to SMEs by 2020, but according to Public’s report, Central government spending with SMEs “fell from it’s peak at 27% in 2014/15 to 22.5% in 2016/17”. As a result, only 37 percent of respondents to the GovTech SME Survey believe that the government will achieve the expenditure target.

The report outlines several recommendations that “should be taken together to form a single holistic innovation strategy,” with a particular emphasis on market engagement, skills & people, and contracts & frameworks. 

According to the report it has been “widely argued that procuring goods and services from SMEs can guarantee greater competition and value for money”. One reason for this is that it promotes Market Competition and better market engagement. SMEs and start-ups are innovative and tend to create higher quality products, so having a healthy pipeline of these companies will encourage other companies to carry on innovating and keep up with the pace of change. Moreover, early market engagement is crucial because “start ups continue to perceive the government as distant and impenetrable” despite government’s best efforts to engage with the market.

Delivering successful procurement outcomes is also largely based on having the right people with the right knowledge and expertise and developing the incentivisation structures necessary to deliver innovation. In 2017, techUK launched a Civil Servants Survey, which identified a shortage of skills and capabilities as the largest barrier to tech adoption in Government, with 65% of civil servants indicating that a ‘lack of knowledge or expertise’ is a problem. Public’s report confirmed that “staff in government are generally not sufficiently skilled to know what technology can do and what it cannot”.

Frameworks such as G-Cloud and DOS 3 are the processes used when tendering and awarding contracts. These are some of the largest digital framework agreements and are a significant improvement compared to traditional framework agreements. For example, as stated by Public’s report “G-Cloud was introduced by CCS to improve competition and increase visibility of smaller suppliers and it has generated over £4bn of sales” There is still work to be done but purchasing systems like Spark, the Crown Commercial Service’s new SME friendly procurement framework, will allow public sector customers to assess the newest tech and drive innovation in the public services delivery. Its flexibility and agility will meet government’s and the market’s needs and open opportunities for small and medium sized suppliers. You can read techUK’s insight on the framework here.

You can view Public’s full report here.