The Cabinet Office has revealed what some of the government’s main contractors spend with SME subcontractors on central government projects, with Interserve topping the list.
Interserve topped the list of main contractors cited in the Cabinet Office’s Making government business more accessible to SMEs: Two years on report (see attached), with almost 70 per cent of its supply chain spend awarded to SMEs when delivering work for central government clients.
It was closely followed by Laing O’Rourke, which awards more than 63 per cent of its supply chain spending to SMEs on government projects.
The Cabinet Office said the government is “on target” to ensure 25 per cent of its procurement spending goes to SMEs – businesses with fewer than 250 employees and a turnover of less than £43m (€50m) – directly and through the supply chain by 2015.
This is despite SMEs accounting for slightly above 10 per cent of spending at present. The overall direct SME spend from government increased to £4.5bn last year, up from £3bn in 2009/10.
The information was supplied by main contractors for the report, which also claimed that the government has now delivered £2bn-worth of work through project bank accounts.
Overall spending with SMEs in 2012/13 compared with 2011/12 fell in percentage terms at the Department for Culture, Media & Sport, the Department for Work and Pensions, the Home Office and the Ministry of Justice.
It was level at HM Treasury, but went up in all other departments, most notably at the Department of Health (indicative percentage increase of 4.8 per cent based on indirect spend for the period October 2012 to March 2013) and HM Revenue and Customs (6.1 per cent).
Percentage of supply chain spend with SMEs:
Appleyards Professional Services: 57.8%
Bam Nuttall: 56.5%
Emcor FM: 52.8%
Galliford Try: 45.5%
Jackson Civil Engineering: 50.4%
Laing O’Rourke: 63.9%
Lend Lease: 56.4%
- See cnplus.co.uk on Thursday for an interview with Interserve’s construction director Roy Bloom
Interserve executive director Bruce Melizan said: “Where possible Interserve has modified its procurement systems to allow the future identification and tracking of activity with SMEs within our supply chain.”
Mr Melizan added that Interserve’s standard tendering process asks subcontractors to provide examples of using SMEs in their own supply chains, which has enabled the contractor to increase its spending with SMEs on government projects from 60 per cent in 2010/11 to almost 70 per cent in 2012/13.
In June, the FMB’s Improving public procurement for construction report found that framework agreements and complicated prequalification questionnaires are reducing SME access to public sector contracts.
Information provided by the government’s main suppliers and contractors also indicated that SMEs have benefited from a further £4bn in indirect spend through the supply chain for 2012/13.
Last month, the Construction 2025 industrial strategy committed to tackling late payment, simplfying procurement and providing regional pipelines of work to improve SME access to public sector contracts.
Minister for political and constitutional reform Chloe Smith said the figures were “encouraging”, but acknowledged that “clearly more needs to be done to reach our 25 per cent aspiration”.
She added: “We are also seeing more and more prime contractors recognising the value that SMEs can offer, increasing opportunities for smaller suppliers in their own supply chains.”
But Federation of Master Builders chief executive Brian Berry said the report “does not reflect the reality of direct SME spend with smaller builders by the wider public sector”.