SMEs and Public Sector ICT Procurement
The October Salon gave delegates the chance to come together to discuss the opportunities and challenges Small to Medium Enterprises face in winning and delivering business in the Public Sector. The lead discussants were Peter Ferry of SME Wallet Services and Scott Bell who is Head of Procurement Reform at The Scottish Government.
Peter Ferry opened the Salon by speaking about experiences he has had with Public Sector Procurement throughout his career so far. Working for Microsoft as a link man between the Public Sector and local SME ICT firms in Scotland, as an observer of digital public services development and procurement in Estonia and through his innovative start-up company, Peter has a wide angle perspective in working with government procurement framework. Peter explained that larger companies dominate procurement due the prescriptive nature of the process and that selling ICT services is a frustrating task for small businesses. Meeting procurement rules and requirements for larger contracts is expensive and difficult and as a result, these opportunities are frequently only feasible for large systems integrators to take on. The cost of employing the bid and engagement management teams is an unaffordable commodity for most SMEs. Other participants in the Salon agreed with this point but suggested that SMEs may find that a pro-active, two-way relationship with a LSI could provide them with better pathways to securing government procurement.
From the point of view of public bodies, the salon heard that working through procurement with SMEs can be quite challenging for both sides. An example used during the salon was when a council goes out for procurement for a business system. They quite often get businesses bidding for contracts who do not have the particular experience the council are looking for and unfortunately, the council does not have the time to invest in the developing the service they need. At local government level everyone is still quite independent. This means big firms get the majority of contracts because they have a ready-made product. Sadly this frequently means the users do not get a tailored solution which fits their business needs exactly.
Peter conceded that the situation is improving in terms of best value, but there is still much more that can be done to give Government agencies access to the ideas and innovation that SMEs can bring to bear. The UK and Scottish Government have recognised the imperfect competition and have taken steps to award a greater share of business to smaller businesses. Edinburgh City Councils’ new ICT contract with CGI is an example of the opportunities the Government is trying to provide for Small to Medium sized businesses. Both lead discussants also praised the Scottish Governments implementation of the CivTech pilot scheme. It has brought a much-needed breath of fresh air to government procurement by issuing open technology challenges instead of constrained procurement exercises.
The second lead discussant, Scott Bell, acknowledged that there is a genuine requirement for Government procurement regulations to remain in place. However, we should not make them a constraint that stops innovation entering the market. One of the main constraints to innovation, risk, is a feature of the Public sector rather than Public Sector Procurement and unfortunately, innovation quite often introduces risk. It may be that one government portfolio may be less risk adverse and good procurement in this case should be open, transparent and this will enable innovation. In other cases, the best choice for a public body is to be a market follower as this is where the best return comes for the taxpayer. The question is how do you decide where the efficient frontier of an investment portfolio lies? Scott would like to find out how the Government can help Public organisations embrace the pragmatic or sensible risk associated with innovation. If you can use an entrepreneurial and innovative mind set to fix the problems the government needs fixed then that is where opportunities can be developed.
The delegates seemed to agree that both sides of the procurement process need to work together openly and early to have a better procurement experience. It was evident that the Government’s acceptance of the CivTech scheme is seen as a big positive and everyone will be hoping this project is a success. This project may change how public bodies work to meet citizen’s needs.